Niels Bjørn Mortensen examines the marine fuels landscape as it currently stands and the changes new regulations are likely to bring
Speculation is rife on the future of marine fuels at the moment, mainly due to a few very significant IMO regulations. These regulations are emissions related and two specifically relate to sulphur in fuel - MARPOL Annex VI and the 0.5% cap on sulphur in fuel set to take effect in 2020, commonly known as the sulphur cap. The final emissions-related regulation still under development is the IMO initial strategy on reducing greenhouse gas emissions from ships.
MARPOL Annex VI
MARPOL Annex VI is a regulation on air pollution that stipulates that fuel oil burned within Emission Control Areas (ECAs) shall contain no more that 0.1% sulphur. It took effect on 1 January 2015 and was, despite several doomsday predictions, rather smoothly implemented. In fact, the anticipated price increase in compliant 0.1% sulphur fuels turned out to be a price decrease, much to the surprise of bunker traders.
When Annex VI was adopted in 2008, the general consensus held that the 0.1% sulphur limit would be met by Marine Gas Oil (MGO), also known in ISO standard 8217 as Grade DMA. However, as early as 2014, oil companies launched fuel products which differed significantly from the ISO distillate definition while remaining compliant with mandated sulphur limits.
The first was ExxonMobil with HDME 50, and not long after, other oil companies launched similar products, often referring to the products as hybrid oils. The advantage of these hybrid oils – particularly for ship operators and charterers – is their price point. Although they are more expensive than Heavy Fuel Oil (HFO) they are cheaper than the ISO distillate grades.
2020 Sulphur Cap
In October 2016, IMO decided that – from 1 January 2020 – marine fuels combusted outside ECAs shall contain no more than 0.5% sulphur. Just as with MARPOL Annex VI in 2015, the expectation was that the 2020 regulations would be met with distillate fuels such as MGO or Marine Diesel Oil (MDO, Grade DMB in ISO standard 8217). And those expectations are being, again, proven definitively wrong by hybrid oils.
Given that hybrid oils can meet the 0.1% sulphur limit, if follows logically that they would easily meet the 0.5% sulphur limit set for 2020.
According IMO’s annual global fuel report, there are several million tonnes (Mt) of Heavy Fuel Oil in the market currently that contain less than 0.5% sulphur. This represents the relatively small amount of oil required to satisfy the 2015 ECA market. In comparison, the 2020 sulphur cap will require a replacement (or sulphur removal method) for some 200-250 Mt of HFO, annually.
Will there be enough low-sulphur fuel oil?
So will there be enough low-suphur fuel oil? And, if not immediately, then when will sufficient amounts be available in the world’s major bunkering ports? And will international versions of the US’ Fuel Oil Non-Availability Reports (FONARs) be in widespread use?
Gas to the rescue?
Liquefied Natural Gas (LNG), Liquefied Petroleum Gas (LPG), methanol and ethanol offer an alternative to petroleum-based fuel while still meeting Sulphur cap requirements.
These fuels are very light weight with low energy density, meaning that they take up considerably more storage space than fuel oils. A tank containment system including insulation for LNG may require up to three times as much space – space which, on most ships, could be used more profitably for cargo or passengers.
Biofuels have been used for road vehicles for decades in some countries, and shipping is beginning to explore the petroleum alternative.
Early biofuels were, in large part, derived from plants used for food, such as maize (corn), but more recent grades have been developed using non-food plant materials. Some of these have used the stalks and leaves cast off from corn harvests, for example, but the latest bio fuels use algae.
Biofuels’ advantage in this context is that it does not contain sulphur. The drawbacks are that it is still more expensive than oil, studies have shown its environmental impact to be unsustainable and some bio fuels can have quite high Nitrogen Oxide (NOx) emissions when burned, which are also regulated under MARPOL Annex VI.
The great scrubber debate
One non-fuel-based alternative that allows owners and operators to meet IMO’s sulphur requirements is installing emissions abatement systems or exhaust gas cleaning systems – popularly referred to as scrubbers – on their vessels.
Vessels operating scrubbers can burn oil with as much sulphur as the scrubber system can wash out of the exhaust gas and still be in compliance with IMO regulations. In practice, this allows operators to purchase the cheapest fuel oil available.
Initial Strategy on reduction of Greenhouse Gas Emissions from ships
There is one other IMO regulation forthcoming that factors into the overall fuel picture, but it is not a concrete regulation, as yet.
The IMO Initial Strategy on reduction of Greenhouse Gas Emissions (GHG) from ships is an agreement that calls for shipping to ”reduce CO2 emissions per transport work, as an average across international shipping, by at least 40% by 2030, pursuing efforts towards 70% by 2050, compared to 2008 ... and to reduce the total annual GHG emissions by at least 50% by 2050 compared to 2008 ...”
With an anticipated increase in world trade of 3% annually, which will increase demand for global transport, the IMO GHG goals are truly a tall order for shipping.
Emission reduction targets will hold 2008 emissions levels in shipping as a benchmark, and those levels are well documented. It has been suggested that the first goal, amounting to a 40% reduction in emissions in terms of tonne-miles, might be within reach through a combination of utilising presently known technologies, slow steaming and economies of scale.
The second goal, a 50% reduction in total CO2 emissions, will call for new thinking. There is no way shipping can reach that goal with the fuels and technologies currently in use.
A 50% reduction in total CO2 emissions will call for new thinking. There is no way shipping can reach that goal with the fuels and technologies currently in use.
One possible emissions reducing technology that could get the industry part way to its goal is not a new technology, but rather a very old one used in new and innovative ways: wind propulsion.
Shortly following the oil crises of the 1970s, several projects were developed to show how fuel could be saved by applying support sails on types of cargo and passenger ships, and similar projects are being trialled now.
Wind propulsion offers fuel costs savings in the current petroleum-based market’s short-term mindset, reduces CO2 emissions in the medium term and meets the long-term goal of moving away from petroleum altogether. The Liberty sailboat being developed by Denmark-based Blue Technology features a 200 m trimaran with 110 m masts supporting fixed sails (prototype image below). In optimal conditions, the vessel should be able to do more than 25 knots using only wind power. The vessel’s carrying capacity will be 2,000 cars or 1,100 20’ containers (TEU).
Wind propulsion can save fuel costs, reduce CO2 emissions and help transition away from petroleum
Not all ships are suited for masts and sails, of course, so bio fuel might be an intermediate solution to reducing shipping’s total CO2 emissions. Bio fuel is considered CO2 neutral as the organic material used for producing it is part of the present global CO2 account as compared to burning 100 million years old fossil fuels. In reality, the fuel’s CO2 neutrality will largely depend on its production methods.
Hydrogen is another possible future fuel, particularly if it can be generated without a carbon footprint. One carbon-free method of generating hydrogen fuel that already exists uses electric power capacity from other renewable energy sources such as windmills to split water molecules into their component hydrogen and oxygen atoms. As a clean burning fuel, the exhaust from burning hydrogen is water; however, hydrogen would require liquefication to make it viable in shipping, which is another energy heavy process. In order to remain liquified hydrogen must be cooled and kept at -253°C.
Finally, nuclear power is an obvious alternative when considering carbon-free fuels. Nuclear power is already in widespread use on naval vessels and submarines around the world. Russia, for example, has operated 10 nuclear powered ice breakers since 1959, and nuclear power has been tested in four commercial ships by four countries: USA, Germany, Japan and Russia. Although nuclear-powered commercial ships have proven to be technically possible they have not yet become a great commercial success. However, with new compact reactors, possibly fueled by Thorium, nuclear power could yet be one of the routes for shipping to reach its decarbonization targets and mitigate its impact on climate change.
Only one question remains, then: when will ship operators start taking a holistic view of what these regulations are trying to achieve and use every combination of options available to them to reduce their emissions?
While the fuels landscape may seem complex, there are only few alternatives to traditional fuels and we will need to use them all.
Master mariner and naval architect Niels Bjørn Mortensen is one of the industry’s pre-eminent regulatory experts. His has headed BIMCO’s marine department, served as Maersk Maritime Technology’s director of regulatory affairs and chaired the Danish Shipowners’ Association technical committee. He also sits at the Danish Maritime and Trade Court as an expert judge.