IMO2020

The International Maritime Organization (IMO) has introduced new regulations to reduce marine pollution caused by the shipping industry. This change will affect the entire shipping industry.

What?

IMO2020 is the first and the largest in a series of steps by the IMO to reduce emissions in response to climate change. IMO2020 emission regulation means that ships will have to significantly reduce their emissions both on the high seas and in coastal areas. IMO2020 concerns regulation on the use of low-sulphur fuel. To date, ships have been able to use fuel with a Sulphur content of up to 3.5 percent. Beginning in 2020, this Sulphur content must be 0.5 percent or lower. Stricter 0.1% Sulphur regulations will remain in some emission control areas in Europe and North America.

When?

The new IMO2020 emissions regulation will come into force on 1 January 2020, but in order to comply on Jan 1st, carrier need to retrofit their ships during Q4/2019.

Why?

This new regulation will significantly improve the ecological footprint of the shipping industry. IMO2020 will make the shipping industry significantly greener.

Which solutions are available?

In general, there are three options for container vessels (including the disadvantages):

Converting to low-sulphur fuel oil (LSFO0.5%)
More expensive
Using Exhaust Gas Cleaning Systems (EGCSs)
Few experiences
New ships have to be built
Deploying ships powered by liquefied natural gas (LNG)
Few experiences
New ships have to be built
Infrastructure not sufficient

Which solution will be implemented?

Using low-sulphur fuel oil will be the key solution for the shipping industry and it is the most environmentally friendly solution in the short term.

What are the costs?

To comply with the regulation, the industry will have to either start using low sulphur fuels or invest in new technologies that have yet to be thoroughly tested in practice. In either case the costs will go up, because compliant fuels as well as investments to new technologies will be expensive. The spread between high-sulphur fuel oil (HSFO) and low-sulphur fuel oil (LSFO0.5%) might be 250 US dollars per ton by 2020 or even more, therefore the final amount is unpredictable at this point of time.

We at Fr. Meyer’s Sohn are in contact with all carriers to be informed about current and future developments and adjustments in order to support you with the latest information at any time.

Author

Nadine Kinscher-Masur

Corporate Head of Marketing at Fr. Meyer's Sohn

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