Shipowners from containers, bulkers, tankers to passenger vessels will need to find solutions to comply with the new regulations. Refiners will need to adjust crude inputs and production to meet the demand for lower sulphur fuels. Finally, fuel suppliers and traders will need to adjust the operating infrastructure to supply new fuels and establish new supply routes that link the refinery supply of compliant fuels with shipping demand. 

 

 

 

Currently, there are three methods of compliance with the impending reduction in the permitted levels of sulphur emissions.  Although these options are likely to achieve the same goal, all three undoubtedly involve considerable cost and have advantages as well as disadvantages.

 

OPTION 1 – USE VERY LOW-SULPHUR FUEL (VLSFO)

 

ADVANTAGES

 

VLSFO can be used in most existing, conventional marine diesel engines and should produce acceptable reductions in SOx emissions, without the need to install high CAPEX scrubbing equipment.

 

DISADVANTAGES

 

  • Cost: The longer and more involved refining process makes VLSFO much more expensive compared to traditional HSFO. It can cost up to 50% more, therefore greatly increasing the running costs of vessels 

 

  • Availability: as oil companies work to switch production to this relatively new (and more involved) refining process. Some ports have inadequate supplies of this VLSFO. While this has only been a comparatively minor inconvenience (with just two ECAs along a ship’s global route), from January 2020; shifting to the use of VLSFO globally, the supply of adequate amounts of LSFO will come under considerable strain, which may serve to increase prices even further.    

 

  • Catalytic (cat) fines: The marine industry, have expressed considerable concern regarding the build-up of cat fines inside ships’ engines that use VLSFO. These cat fines consist of small particulates of aluminum or silicon, introduced into VLSFO during its longer refining process. As we have already seen with vessels that regularly visit the two existing ECAs and opt for using VLFSO, added maintenance costs, diligent, regular checks for cat fine build-up by ship’s engineering staff, and expensive cleaning of engine cylinders are all vital if engine breakdown or power reductions due to cat fine build-up are to be avoided. 

 

OPTION 2 – CLEAN THE EXHAUST GASES BETTER BEFORE THEY ARE RELEASED

 

Manufacturers are competing to provide ever-improving, increasingly efficient exhaust gas cleaning systems (scrubbers) that can be installed on vessels that continue to operate using HSFO. These scrubbers work by scrubbing the exhaust gases produced by ship engines with greater efficiency before their release into the atmosphere, to achieve the levels of emission that are acceptable.

 

ADVANTAGES

 

If these scrubbers work, then it may be possible to continue to use HFSO as fuel, and, with HSFO currently being only two-thirds the price of VLSFO, continued use of HSFO would help keep the fuel costs down, especially as it is anticipated that the price of HSFO may reduce significantly, once 2020 arrives. As Paul Fanning, Editor of Marine Propulsion & Auxiliary Machinery has concluded, adopting this approach may be a clever move. With the current, plentiful supply of HSFO around the world, there should be no issue over finding adequate supplies in ports, at least for the time being. The risks associated with the cat fines found in VLSFO would also be reduced, therefore avoiding the expense involved in monitoring and removing them.

 

DISADVANTAGES

 

  • Cost: The installation of new, adequate scrubbing equipment can be very costly. It has been suggested that it may cost up to US$10 million to install such equipment per vessel. For many vessels, such a financial outlay will not be viable, especially for older, smaller vessels. However, such equipment costs may be mitigated by lower fuel costs. For example, if a vessel were to consume 150 metric tons of fuel per day, the price differential between HSFO and VLSFO could see the cost of such equipment paid for out of the fuel cost savings per ship within two years of operation.

 

  • Breakdown: Relying on the scrubbers to achieve the low levels of permitted SOx emissions required would expose ship operators to huge operational headaches should scrubbing equipment ever break down while the vessel is at sea. If there is no alternative LSFO stored on board, the vessel, unable to scrub its exhaust fumes adequately, may be forced to stop immediately and turn off its engines, or risk being fined/impounded for breaching the new MARPOL emissions limits after January 1, 2020. Ships’ crews will need considerable training if they are to use such new and complex equipment correctly if the vessel is to achieve the hoped-for exhaust gas scrubbing efficiency.

 

  • Supply: While HSFO may be in plentiful supply around the world now, as more operators switch to VLSFO, we can expect a reduced availability of HSFO over time, as refining companies switch the focus of their production of maritime fuels to VLSFO.

 

OPTION 3 – USE LNG  (OR LIQUID HYDROGEN) AS THE FUEL SOURCE

 

To avoid the issues associated with fuel oil completely, some vessels are using alternative types of fuel, such as liquefied natural gas (LNG), which is a considerably “greener” alternative to oil. Vessels designed to carry LNG as cargo have already been using some of the cargo they carry to fuel the vessel.

 

ADVANTAGES

 

Generally, reduce SOx emissions by 90% – 95% and is seen as probably the longer-term solution to the ship fuel emissions issue. It is also likely to attract subsidies or other incentives from national governments to attract shipowners to adopt this solution.

 

DISADVANTAGES

 

  • Cost: In most cases, it would not be economically viable to convert existing ships to run on LNG. An existing, conventional marine diesel engine cannot be switched to run on LNG, and the vessel would need to be re-engined, which would prove costly.

 

  • Supply: Few ports have the storage or refueling capability to support the large-scale adoption of LNG fuel. In many ports, LNG is currently not available at all.

 

  • Loss of cargo space: One of the main reasons why shipowners are hesitating over the adoption of LNG as fuel is the large amount of space on board vessels that the fuel store and insulation equipment require. Larger ships may have to sacrifice up to 3% of their cargo space in order to store the LNG and its associated equipment onboard. On a 20,000 - TEU+ vessel, that may mean as much as 500 TEU in lost earnings. The subsequent loss of revenue to the ship operator may not be viable. Recent announcements of orders for the latest generation, 22,000 TEU containerships18 have demonstrated differing views within the shipowning world about the fuel type these vessels will use, with some being ordered with diesel engines, while others will be fueled by LNG. 

 

 

 

 

 
 

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