The International Maritime Organization (IMO) sees 2020 as a year of great change. Last October, IMO announced that they will be implementing a new environmental regulation that will take effect on the first day of the New Year.

Effective January 01, 2020, the new IMO Low Sulfur Regulation requires all sea vessels operating outside of the Emission Control Areas (ECAs) to reduce the sulfur content in their marine fuel oil from 3.5% to 0.5%. This regulation is in addition to the 0.1% sulfur limit already effective for marine vessels operating in the Emission Control Areas (ECAs).

Ships operate using one of the cheapest oils in the world called Bunker Fuel. It’s cheap simply because it’s dirty. In a nutshell, it’s “leftover oil” after high-grade fuels, like diesel or gasoline, are extracted from crude.

What to expect

With this new regulation along with the current regulations, the IMO envisions to reduce sulfur emissions from marine vessels worldwide by 85%. IMO’s main goal in implementing this new regulation is to protect the environment by significantly curbing air pollution caused by the marine vessels.

Vessel Carriers have 3 options to be IMO Compliant:

  1. To use more refined fuel with only 0.5% sulfur content
  2. To install scrubbers to wash away the engine exhaust
  3. To convert their vessels to use liquid natural gas

These are the three fuel types that play a big role in defining the cost impact of IMO 2020:

  1. High Sulfur Fuel Oil (HSFO) w/ 3.5% sulfur content – current fuel type used by majority of the marine vessels worldwide, which will be allowed until December 31, 2019. On January 01, 2020, this type of fuel can still be used provided the vessel is equipped with scrubbers or an exhaust gas cleaning system.
  2. Very Low Sulfur Fuel Oil (VLSFO) w/ 0.5% sulfur content – IMO compliant fuel type, which will be effective on January 01, 2020 if vessel is not equipped with scrubbers.
  3. Ultra Low Sulfur Fuel Oil (ULSFO) w/ 0.1% sulfur content – currently used by vessel operating within the Emission Control Areas (ECAs).

Each carrier will find the method and solution that works best for them.  Eventually it is expected this will lead to revising their pricing schemes.

Questions? Please contact us – call 303-365-1000 or email us anytime and we will be happy to assist you.