Robin Meech has been closely involved in the debate to reduce marine emissions over the past two decades undertaking analysis for the IMO, the EU and Environment Canada related to refining regulations. He has been involved in scrubber technology for over ten years and is the co-author of the recently published report "Outlook for marine Bunkers and Fuel Oil to 2030" which provides a detailed analysis of our sector and investigates the introduction of a global sulphur cap.
Recently analysis (*) demonstrated that there is insufficient distillate material available to introduce the global cap of 0.50% sulphur in 2020 as prescribed in Annex VI of MARPOL, but did conclude that it will be feasible in 2025. Annex VI currently only defines the introduction in either 2020 or 2025. Hence, should the International Maritime Organization (IMO) consider a more phased approach between the current 3.50% and 0.50%? Introducing an intermediate phase will reduce emissions compared to delaying until 2025 to introduce the 0.50% cap as well as improving future compliance.
There are a wide range of options in terms of the numbers of phases between 3.50% and the introduction of the global cap of 0.50% in 2025, but the first consideration is the feasibility. Will there be sufficient lower sulphur fuel available to permit global compliance? The analysis to date suggests that the following should be feasible:
Year of Introduction
Maximum sulphur %
There are of course other options, but simplicity may be an important consideration so as to encourage enforcement and compliance. The current introduction of the 3.50% cap appears to be progressing successfully but this has little impact on bunker prices or the environment. Achieving a significantly lower sulphur level will be much more complex, as demonstrated with the relatively slow initial compliance with the European ECA. Introducing only one intermediate sulphur level will be less complex and hence is probably preferred. Introducing a phase down before 2025 is feasible at 1.50% but would significantly change the form of Annex VI.
The preference may be for Option B since 1.50% bunkers are more stable and easier to handle on board than 1.00% fuels, the increased demand for distillate will be easier to meet and hence the 1.50% will be at a lower price. By 2020 the price differentials between 3.50% and 1.50% bunkers will be higher than today as the price between distillate and residual products will have increased as demand for distillates grows more rapidly than residuals, while refiners catch up with their investment in fuel oil conversion. The sulphur price differential will be sufficient to encourage the fitting of scrubbers for global trading in 2020 further reducing SOx and PM emissions.
Introducing a global cap of 1.50% in 2020 compared with remaining at the 3.50% cap until 2025 would reduce global SOx emissions by 46,000 tons and PM’s by 7,000 tons over the five year period. The corresponding figures if a 1.00% cap was introduced in 2020 would be 58,000 tons SOx and 7,600 tons PM’s.
Another approach might be to designate that specific areas, such as the Atlantic Ocean, adopt a 1.50% cap followed by, for example, the Pacific until the complete globe is constrained. However, this is less likely to encourage compliance and would be complex to administer. It could require a fuel change while rounding the Cape Horn.
It might benefit all parties and the environment if the IMO was to determine the future form of Annex VI before 2018, as is currently designated. The current uncertainty is delaying refiner investment in fuel oil conversion and the fitting of scrubbers to the detriment of the environment.