The International Maritime Organisation (IMO)’s revised greenhouse gas (GHG) regulation for marine fuel will dent residual fuel oil demand, but the market could persist on demand from oil tanker and dry bulk vessel owners, and on production from decarbonised petroleum refineries, reports argus media.
The IMO in July changed its marine fuel emissions directive from emissions from combustion to lifecycle emissions . Before that decision, ship owners were looking to mitigate emissions from fuel combustion only. Some were mulling installing sulphur oxide (SOx) and CO2-capturing scrubbers on board of their vessels, continuing to burn high-sulphur fuel oil (HSFO), and paying to dispose of the captured CO2.
Agreement on reducing greenhouse gas emissions
IMO members agreed to reduce greenhouse gas emissions by at least 20pc, and preferably 30pc, by 2030; by at least 70pc, and preferably 80pc, by 2040; and to net zero by 2050, from 2008 base levels. If ship owners are able to dispose of their on-board captured CO2 and oil refiners can decarbonise their refineries at costs below the price of sustainable marine fuels, then residual fuel oil and marine gasoil (MGO) for bunkering demand could persist past 2040.
Companies pledged net zero emissions
Container shipping companies — including Maersk, Hapag-Lloyd, Ocean Network Express, CMA-CGM, Matson, and Evergreen — and cruise ship companies — including Royal Caribbean, Norwegian Cruise and Carnival — had pledged net zero emissions by 2050, even before the IMO rule change. These companies have been actively exploring the use of biofuels and are commissioning methanol-burning, methanol-ready and ammonia-ready vessels.
Container ships, bulk carriers and tankers were the biggest marine fuel consuming vessel categories. Internationally, containerships burned 61.7mn t residual fuel oil and MGO, while bulk carriers burned 57.9mn t and tankers burned 41.4mn t. Those volumes represent 31pc, 29pc and 21pc, respectively, of fuel oil and MGO demand, according to the latest IMO data, from 2021. Cruise ships burned 3.2mn t, or 2pc. IMO’s marine fuel data collection system takes into account ships above 5,000 gross tonnes.
In July, carbon-free fuels such as B100 biodiesel, bio-methanol, green hydrogen and green ammonia were priced at 2, 4.4, 4.6 and 4.9 times the price of VLSFO in northwest Europe.
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Source : argusmedia
