The level of sulfur in marine fuel, before it passes through an exhaust gas cleaning system or scrubber, could rise from current levels to 4.2% in 2020, an industry expert told Platts on Thursday.
Why does it matter?
The current de facto level of sulfur in bunker fuel is more commonly 2.9% than the maximum legal limit of 3.5%, Damien Valdenaire, science executive of refinery technology at industry body Concawe, said Thursday on the sidelines of the International Petroleum Conference in London.
Once the International Maritime Organization caps sulfur content in marine fuel emissions at 0.5% in 2020, scrubber-equipped ships could burn fuel containing 4.2% and still emit no more than 0.5% sulfur from their exhausts, he said.
A second industry source said he understands some scrubbers could clean up to 5% sulfur fuel and still meet the 2020 restrictions. He added that one major may be able to offer 7% sulfur content fuel for the purposes of scrubbing.
But not all ships equipped with scrubbers would necessarily be able to use fuel with sulfur content of this level.
How will it help?
Removing sulfur with water sprayed through the exhaust becomes progressively more difficult as vessel size — and thus fuel consumption and exhaust volume — increases, and larger vessels like the bigger types of container ship could struggle to scrub exhaust from fuel oil with more than 3.5% sulfur content down to 0.5%.
High sulfur fuel oil, with a maximum sulfur content of 3.5%, is the prevailing bunker fuel burnt on the high seas and the industry will have to grapple with significant changes once that cap falls to 0.5% on January 1, 2020. After that, only vessels equipped with a scrubber will be allowed to burn fuel with a higher sulfur content.
Concerns over Price Stability
There are some concerns about the price, stability, and compatibility of compliant 0.5% sulfur fuels that will be on offer in 2020 and scrubbers ostensibly present a way around this.
Ships’ crews already know how to handle HSFO. Price-wise, the spread between 0.5%S marine fuel and HSFO is significant.
One lot, equivalent to a 1,000 mt contract, of Calendar 2020 0.5%S marine fuel FOB Rotterdam barge-3.5% FOB Rotterdam barge traded February 19 at $160/mt. This was the first trade following the launch of ICE’s 0.5%S marine fuel contracts that day.
S&P Global Platts Analytics forecasts that around 2,200 vessels will be fitted with scrubbers by January 2020.
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Source: Platts
