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Baltic ICS lecture on 2020 Sulphur Cap
Posted on Thursday, September 27, 2018
Baltic Institute of Chartered Shipbrokers lunchtime
lectures, 26 September
Over 70 delegates turned out in London yesterday to attend the
latest in the Institute's joint lecture series with the Baltic
Guy Platten, newly appointed Secretary General of the
International Chamber of Shipping, opened the session after the
welcome remarks from the Institute of Chartered Shipbrokers'
director, Julie Lithgow. The conference hall was packed with young
brokers and their experienced colleagues looking for valuable
insight into this hot topic.
As the industry draws ever nearer to the 2020 deadline, the
event provided the perfect forum to assess the change required,
industry progress and explore the possible impacts on the shipping
markets. John Bradshaw, Technical Director, International Chamber
of Shipping, carefully led the audience through the incoming
changes already affecting the shipping industry.
Annex VI of the IMO MARPOL Convention (2008) specifies the
sulphur content of marine fuel reducing from 3.5% to a maximum of
0.5% starting on 01/01/2020 on a worldwide basis. The current
transition period is intended to provide the shipping industry with
time to implement solutions and be ready for the beginning of a new
In view of the Global Sulphur Cap ship operators, bunker
suppliers, oil refiners and all parties involved in shipping need
to find effective solutions in order to address these fast and
pressing challenges resulting in prohibition on carriage for
Mr Bradshaw confirmed that shipowners represented by the
International Chamber of Shipping are committed to a successful
implementation of the regulation, but also noted - they do not
control the fuel supply chain.
He suggested that only new refineries are geared up to provide
compliant fuels. And that the availability of compliant fuels as
well as compatible fuels will be one of the main challenges for
shipowners preparing for new blends.
The speaker then addressed the other options available such as
retrofitting as well as alternative powering options. Sulphur
cleaners (scrubbers) offer an effective solution for reducing
sulphur emissions as they allow ships to meet IMO regulations while
still consuming high sulphur fuels. Although retrofitting is a
complicated technical procedure and requires expensive investment
with equipment and installation in the order of several millions of
US$ depending on the vessel - it can be proved an advantageous
option for operators since it increases the resale value of the
ship. Additionally, scrubbers may strengthen owners' position
against high fuel oil prices in the future.
Another solution is the use of liquefied natural gas (LNG) as
fuel. LNG is an alternative and less expensive fuel with zero
sulphur content and excellent combustion properties. Again large
investment is required both for ships and transport and storage
facilities. At the same time within the global supply chain there
are relatively few LNG terminals which provide the necessary
storage and supply facilities with the result that shipowners have
not gone down this route.
Fuel blends, compliant with the 0.5% sulphur cap may provide a
less expensive solution, though this can lead to huge problems both
for vessel and crew. Apart from the cost, blending fuels from
different sources and with different sulphur content levels can
cause destabilization of the final combustion, mechanical problems
and serious effects on the safety of the ship.
Overall, as the transition period comes to its end in 18 months,
it seems that the involved parties are not well prepared to face
the upcoming changes and strict regulations. New legislation,
technical issues, fuel switchover problems, fuel availability and
increased cost of bunkers are some of the main issues that ship
operators and bunker suppliers will face in the near future.
The lecture was followed by a lively Q&A with questions and
discussion on LNG demand forecasts and the influence on prices;
whether the cost of scrubbers will decrease due to larger scale
take-up; the penalties for non-compliance; the likelihood of
another delay/deferment to the implementation deadline; the
potential impact on the scrappage market.
At the end there was an opportunity to continue discussions with
a networking lunch.
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