The European Sulphur Cap 2020 Conference in May will offer the ideal meeting place for an industry preparing for a major shift in power and propulsion
Riviera Maritime Media’s Sulphur Cap 2020 Conference, to be held in Amsterdam on 8-9 May, could not be timelier. The event falls just before the six-month countdown to IMO’s global sulphur cap begins. By that critical stage, most shipowners will have selected their compliance options and fuel suppliers will be offering greater visibility of how they plan to cater for a marine bunker market in flux. That will allow for more detailed discussions about the technical, operational and financial impacts of compliance.
The conference also comes a week before an important meeting of IMO’s Marine Environment Protection Committee (MEPC). At that meeting many decisions will be debated that will affect the smooth implementation of the sulphur cap. The Sulphur Cap 2020 Conference offers a perfect opportunity for delegates to judge industry sentiment on outstanding sulphur issues and prepare themselves for the decisions that will be taken, or at least discussed, during MEPC74.
Nowhere are the remaining regulatory uncertainties of the sulphur cap more apparent than in the field of exhaust gas cleaning systems. Scrubbers are expected to grow rapidly in number beyond 2020, by which time (according to Clarksons Research) they will already account for 10% of global tonnage by capacity. As a significant compliance option and one facing several uncertainties, scrubber topics will feature heavily at the conference, occupying nearly a full day of proceedings. Exhaust Gas Cleaning Systems Association director Don Gregory will chair an introductory session outlining the current status of scrubber uptake, regulation and the potential challenges.
Highlighting the current uncertainty on the subject, Mr Gregory points to the sixth sitting of IMO’s Pollution Prevention and Response sub-committee in February where revisions to IMO’s guidelines on scrubbers were due to be accepted. Instead, those considerations were shunted to MEPC74, while an extensive agenda around compliant fuel occupied most of PPR6. The meeting was punctuated by concern over scrubbers, including a European Commission proposal – to be discussed further at MEPC74 – suggesting the global harmonisation of open-loop scrubber washwater discharge standards.
Don Gregory (EGCSA): Uncertainty remains for scrubber users
Mr Gregory describes the outcome of that meeting as disappointing. Although the sub-committee, after pressure, accepted that scrubbers are an approved alternative method for complying with the new sulphur rule, the acceptance was grudging. The chair called for administrations to submit further studies into washwater, complicating matters for scrubber users – especially the majority using open-loop systems.
“The outcome is particularly disappointing because companies who have invested in scrubbers are the only ones who are ready for compliance,” notes Mr Gregory. He explains that changes at an IMO level are more concerning than ports introducing their own washwater rules. Ship operations in port waters reflect such a small percentage of sailing time that it does not affect the business case for shipowners.
Looking ahead to MEPC74, Mr Gregory anticipates further submissions on scrubbers, although at this stage any changes will only be made long after the sulphur cap enters force. By then, things may have changed entirely. Scrubber numbers are expected to keep growing beyond 2020 and as uptake increases, so will support for them.
Michael Herson (The Strategy Works): Comparing 2020 compliance choices with the wider decarbonisation of shipping
The Sulphur Cap 2020 Conference wil also provide an opportunity to look beyond 2020, with exclusive market research igniting debate as to the future of maritime propulsion. The Strategy Works managing director Michael Herson will present the results of a specially commissioned survey looking at environmental compliance towards 2050.
The study, the result of 50 in-depth telephone interviews, follows an earlier report for Marine Propulsion and Auxiliary Machinery, published in January 2018, which predicted how the industry was planning to comply with the sulphur cap. That research highlighted ultra-low sulphur fuel oil and distillate fuels as preferred choices for much of the global fleet and captured the market’s conflicting stance on the use of scrubbers and LNG. Now, says Mr Herson, it is time to look further ahead.
“In the first study we asked people what their intentions were,” says Mr Herson. “Now we know what shipping companies are going to do, it is interesting to compare 2020 compliance choices with the wider decarbonisation of shipping going forward.”
The responses cover five sectors of the shipping market, including shipowners representing more than 1,700 ships. Sulphur is the starting point. Mr Herson notes, for example, that while few shipowners are considering using exhaust gas scrubbers as their only compliance method, more than half of owners will use scrubbers on at least one of their vessels in parallel with low sulphur fuel.
“Although the [PPR6] sub-committee accepted that scrubbers are an approved alternative method for complying with the new sulphur rule, the acceptance was grudging”
The analysis at the event will present more surprising insights, says Mr Herson. “There are other factors driving people to scrubbers besides a quick payback, including technical and commercial concerns about compliant fuel – among them compatibility of blended fuels from different ports, pricing and availability. Even less settled is what the industry thinks is going to happen next. That includes reaction to the prospect of open-loop scrubber bans or restrictions at a regional level.”
Elsewhere, the research considers industry opinion on LNG as a compliant fuel. While some view LNG as a positive interim step towards decarbonisation, others believe that methane slip outweighs any potential reduction in greenhouse gas emissions.
Legislative concerns expressed in the responses include the ratcheting up of the Energy Efficiency Design Index and IMO’s data studies into the measurement and reporting of black carbon emissions. Even the implementation of ballast water management legislation continues to concern some, with most ships due to fit systems between 2019 and 2024 under IMO’s installation timeline.
Finally, the study explores the direction of travel towards 2050, including perceptions of the range of alternative fuels that will aid industry decarbonisation. “20% of the sample believes current technology won’t cut the mustard,” says Mr Herson. “But 30% think positively that digitalisation will optimise data collection, leading to energy efficiency improvements.”
Collaboration will be essential to the development of new carbon-neutral technologies. The Strategy Works will present a matrix highlighting several such partnerships already in place. The study concludes with optimism, says Mr Herson. He believes that the industry is rising to these formidable challenges.
For many, the focus will be on the changes that are happening as 2020 approaches. Fuel testing consultancy Veritas Petroleum Services (VPS) has been on the frontline of fuel concerns in the run up to the 0.5% global sulphur cap. According to group commercial and business development director Steve Bee, the company has been inundated with requests for information about fuel quality – many of which he will be answering at the European Sulphur Cap 2020 Conference.
“The sulphur cap has been the topic of conversation for the last couple of years since we were informed of the date. Even though we are only 10 months away, several shipping companies have yet to decide upon their fuel strategies. Partly because of that, several suppliers haven’t yet stated which fuels they will be providing, where, in what volumes and at what price.”
For companies like VPS, this is very familiar. When IMO introduced 0.1% sulphur emission control areas on 1 January 2015, compliant fuels had only began emerging on the market six to eight months in advance. There are lessons to be learned as 2020 approaches.
“In 2014 we saw a lot of blending of residuals at 1.0% sulphur level in ECAs and issued probably our highest ever number of bunker alerts,” says Mr Bee. But overnight on 31 December 2014, distillate fuels surged from representing 20% of samples at the VPS Europe lab to 40%, as the ECA limit switched to 0.1%. That extra volume bought new challenges.
“We saw a huge increase in off-spec distillates,” he says. “There were flashpoint issues where more volatile fuels had been blended in, as well as waxing and cold flow problems.”
Residual fuels improved in quality initially in 2015 due to reduced levels of blending. But over the interceding years the quality has decreased, says Mr Bee. As a result, some of the challenges experienced today – cat fines, poor stability and sediments - are likely to further increase from early 2020.
Partly due to the experience of 2015, the industry may be more prepared for the challenges ahead. VPS is exploring how it can improve protection for shipowners by sampling and testing for parameters beyond the ISO 8217 marine fuel requirements. The company’s bunker alert programme already offers some protection by highlighting short-term fuel quality issues at ports. Using this information, owners can choose different fuels or even different ports at which to take on bunkers if they see a problem.
New technology may also play a part in alleviating concerns about bunker quality. One area for concerns is the supply chain, notably what happens to the fuel between the refinery to the vessel. Describing this leg as a “mystery tour”, Mr Bee explains that fuel can pass through many different holders, each one offering the potential to introduce quality issues. Assuring fuel logistics by using blockchain technology could be an answer.
“We would urge the industry to embrace aspects of blockchain,” he says. “If the industry was more self-regulating in that way it would be beneficial for everyone.”
By the time of the conference in May, the low-sulphur fuel picture may have become clearer. “Hopefully a lot more people will have decided how they are going to tackle 2020,” says Mr Bee. “But there will still be questions about availability and pricing, and a lot about compatibility of fuels between ports. People will be looking for answers about how to treat these newer fuels.”
Rolf Stiefel (WinGD): Advocating LNG as a bridge towards non-fossil fuels
For some, a long-term perspective will be more important. Engine developer WinGD’s vice president of sales and marketing Rolf Stiefel argues that the industry must look beyond 2020. “I’d almost say the sulphur cap is a non-event for us,” he says. “However shipowners comply, our engines will burn the fuel. The question is whether the fuel itself is compliant and stable and whether fuels will be compatible with each other.”
Mr Stiefel, who will take part in a panel discussion on engine challenges, will take up WinGD’s position that LNG is one of the industry’s best ways forward. This is not just as a sulphur compliance strategy – there are, he notes, cheaper options – but to progress towards decarbonisation goals.
“We are not claiming LNG is not a fossil fuel, but it offers the possibility to reduce emissions right away,” says Mr Stiefel. “No other technology is available that does that. Discussion of hydrogen and ammonia for example is useful looking towards 2030-2050, but not for ships being delivered within the next 10 years.”
Where owners are told to train their sights is important, Mr Stiefel says. He fears that shipowners may consider LNG but hold off because they believe that other lower carbon technologies will be available imminently. But such technologies and fuels – of which hydrogen and ammonia fuel are just two possibilities – may be decades away. Especially, adds Mr Stiefel, in the volumes at which they will be needed for commercial shipping.
WinGD is advocating LNG as a bridge towards non-fossil fuels, while investigating other ways in which two-stroke engines can contribute to shipping’s decarbonisation. These include carbon-neutral fuels – the first two vessels fitted with WinGD’s X-DF dual-fuel engines are already bunkering bio-LNG, Mr Stiefel notes. Hybridisation is also on the agenda.
He explains: “How can we combine the main engine with other power sources? We are looking at options including integrating electricity generation near, or even within, the main engine, as well as how we can push power into the propulsion train.”
These are small gains. Wind-assisted propulsion, Mr Stiefel notes, could reduce greenhouse gas emissions by 5-10% depending on the ship and route. But an accumulation of small wins is needed to meet IMO’s ambitious 2050 target, which requires an improvement in efficiency of 70% per tonne-mile across the industry.
The industry’s longer-term emission targets lead Mr Stiefel away from favouring scrubbers as a solution to the sulphur cap. “I don’t believe they are dangerous or harmful to the environment,” he says. “But they do not advance shipping towards reducing CO2 emissions. Fuel consumption goes up when you use scrubbers, which is counterproductive to greenhouse gas targets.”
The IMO has set broad targets for greenhouse gas emissions reductions in 2030 and 2050. It will add detail to these ambitions by 2023. Whatever form the legislation takes, WinGD will be hoping to see a level playing field for all shipowners and consistent enforcement, says Mr Steifel. He also has a view on the form that legislation could take.
“An accumulation of small wins is needed to meet IMO’s ambitious 2050 target”
“We need to improve the Energy Efficient Design Index (EEDI) so that includes not only propulsion but auxiliary engines and the other energy consumers,” he says. “Combining the EEDI with the Data Collection System would integrate the way ships are designed and operated.”
A curve showing the energy efficiency of each vessel type could then be established. IMO could then legislate for improvements, pushing the curve towards zero emissions. If such a measure included making ship efficiency data publicly available, there would be even more incentive for shipowners to improve their vessels.
“It would be very helpful to charterers because they would be in a position to see which vessel they want,” says Mr Stiefel. “We need to make what the industry is doing visible. Those investing in more sophisticated technologies and tonnage need to get a reward for it.”
The shape of future regulation and responses to current regulations – these are the discussions that will characterise the European Sulphur Cap 2020 Conference. Coming at such a crucial juncture for the shipping industry, there has never been a better time to join the debate.
For more information on the upcoming Sulphur Cap 2020 Conference, Awards and Exhibition, please click here