SOx 2020 & Shipping — a crash course
You may have seen a lot of news lately about SOx and ships, but perhaps you're having trouble grasping what it's all about; can you really tell your MEPC from your MARPOL? If not, don't worry - you're certainly not alone. It might be a big issue, but it's also one that's rather specialist. With this article I hope to demystify what's going on. For the sake of brevity I will focus on providing a good outline, rather than getting bogged down in details.
Let's start with a simple question: why is SOx a big issue for shipping, but not for automobiles or aviation? The reason has to do with the different fuels used. To understand why fuels are different we need to start with crude oil, which naturally contains sulphur. During refining crude oil is separated into different parts, or fractions. The lightest (fluid), most valuable, fractions are distilled off to become fuel for jets and cars. The refining process continues till all that's left is a heavy (viscous) residual product, which contains nearly all the sulphur. Some of that residual product becomes the High Sulphur Fuel Oil ( HSFO) that's powered ships for the last half century. I've spared you a lot of the details, but that's the gist of it.
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We will get to why SOx is a particularly big deal for shipping, but first let's deal with the relationship between sulphur and SOx. When an engine is running, sulphur in fuel will be combined with oxygen to form SO2 or SO3, which are collectively referred to as SOx. If there's a lot of sulphur in the fuel, as in ships' HSFO, then there'll be a lot of SOx in the engine emissions. Conversely, if there's nearly no sulphur in the fuel, as with road fuels, then there'll be very little SOx - it's chemistry, not alchemy. Ship fuel has thousands of times as much sulphur as road or avaition fuel, hence its SOx emissions are relatively high.
You may be thinking that doesn't fully explain why there's so much attention to SOx and you'd be right; it doesn't. The focus comes from the fact that SOx is bad news for human health (respiratory problems) and for the environment (acid rain). Knowing this, it's fair to ask why shipping uses HSFO at all. There are several reasons, which include that HSFO is a relatively inexpensive yet energy dense fuel and that shipping was a considered a good outlet for residual fuels. Those aren't good enough reasons by today's standards, but bear in mind that it was first used decades ago when its dangers weren't as well understood. Also, todays standards are changing, new regulation is coming.
On January 1st 2020 there'll be a monumental change in sulphur regulation - the global cap for the maximum allowable sulphur content in fuel will change from 3.50% to 0.50%. It's not the first sulphur regulation for the industry, but it does dwarf all that has come before it in terms of impact. Before going further, let's spend a moment on how shipping is regulated. It's a global industry, so fittingly, it has a global regulator: the International Maritime Organisation (IMO) which is a daughter organisation of the United Nations. IMO, which is London based, has a Marine Environmental Protection Committee (MEPC) which develops global sulphur regulation. That regulation is part of the International Convention for the Prevention of Pollution from Ships, 1973 as modified by the Protocol of 1978, the short name for which is 'MARPOL'. So now you know your MEPC from your MARPOL.
For the majority of ships compila\nce will be achieved by switching fuels. A few percent of the world's fleet will comply instead by installing a device called a 'scrubber' that removes sulphur fuel engine exhaust. There some other compliance options too, but at least initially, they'll be used on only a tiny portion of the world fleet. No matter which approach is taken, shipowners face profound economic, operational and commerical consequences. One point to stress about this is that the industry can meet this challenge, but with one critical proviso: the entire industry needs to be onboard (sorry, pun). Deliberate non-compliance will provide a huge cost saving and, hence a grosssly unfair competitive advantage. Importantly, non-compliance is also contrary to the interests of human health and the environment.
The 2020 global sulphur cap change presents a challenge for the industry, but the same also goes for officialdom regarding enforcement because as compliance costs increase, the role of enforcement in maintaining fair competition also increases. Just determining non-compliance can be tricky. For instance, how can the sulphur content of the fuel a vessel is using mid-ocean be known? Even if it is known, would anything actually be done about it if it was non-compliant? Concern for these matters led Wallenius Wilhelmsen to start the Trident Alliance, a group of shipping companies who support the robust and effective enforcement of sulphur regulation. The 'Trident' in the name is a reference to the alignment - as with the tines of a trident- of health, environment and responsible industry's interests. Trident Alliance has played a central role to drawing attention to the need for effective enforcement, which has been met with a good response by MEPC.
IMO's MEPC meet every 8 months or so and they just had their 73rd session, or 'MEPC 73'. One of the big issues at MEPC 73 concerning sulphur was the proposed 'carriage ban on non-compliant fuel'. I'm pleased to say MEPC formally adopted the carriage ban, a move, I'm even more pleased to say, that was supported by prominent industry representative groups. The 'carriage ban' will prohibt vessels from having HSFO onboard from March 1st 2020, unless the vessel is equipped with a scrubber or unless it is being carried as cargo. The importance of the carriage ban is hard to overstate: it greatly strenghtens the hand of the enforcement authorities - they won't have to prove where or when HSFO was used, just finding evidence of it onboard can be sufficient to establish non-compliance.
Adoption of the carriage ban generated a lot of headlines because it was an unmissable signal of IMO's commitment to the full and effective implementation of the new global cap from 1st January 2020, as is right and proper. With the adoption it's worth taking a step back and reflecting for a moment on the enormity of what just happened. Not only is the industry for the most part going to switch away from the fuel it's been using for the last fifty years, it's also supporting a regulatory change that would make having that fuel onboard an offence. Although there's still room for shipping to improve on many fronts and that progress on them will won't satisfy all, I think with recent developments signal a profoundly positive change - the ark (intended) of the industry is tending towards sustainability.