Donald Gregory takes a look at the cost and technology implications of the emissions regulations facing the shipping sector
The Uruguay round of the world trade talks between 1986 and 1994 was the beginning of a rapid expansion in world trade, much of which was transported by merchant ships. Following the Uruguay round came the emergence of the BRIC nations with China set to dominate economic growth rates for over ten years. This set the scene for a shipbuilding spree and continuous, brisk growth in marine transport. Shipping enjoyed a heyday with commensurate bunker demand growth from around 180Mt to over 320Mt over a 20-year period.
Despite the imposition of air emission controls in many industrial sectors, the shipping industry only began to discuss this subject in the late 1980s. Papers submitted to the International Maritime Organization (IMO) highlighted the effects of acid rain and acidification on northern European forests and fauna. Also emerging were studies assessing the human health impacts. Concerted resistance from both refiners and merchant shipping may have delayed, but failed to halt the inevitable regulations curtailing emissions to air from the combustion of marine fuels, in particular sulphur oxides (SOx).
The MARPOL conventions 73/78 comprises of six annexes. Annex VI was added in 1997 and regulates emissions to air from shipboard sources. The first impact of Regulation 14 dealing with emissions of SOx was the entry into force of the first Sulphur Emission Control Areas (SECAs) with an operating limit of 1.5%S fuel. The regulation also allowed the use of exhaust gas scrubbers to reduce SOx emissions to a level equivalent to using a fuel with the prescribed sulphur limit. The first SECA, later to be known as an Emission Control Area (ECA), was the North Sea and the Baltic Sea.
Nearly 30 years since those first papers raising concerns about the impact of SOx emissions were presented to IMO, the organisation is faced with confirming a 2020 entry into force of a global sulphur cap of 0.50% or to delay implementation until 2025. Regulation 14 allows for a postponement if it is judged that there will be insufficient fuel available.
The decision will have profound implications. The work on low sulphur fuels and emissions compliance technologies as an alternative to traditional marine fuel oils started in the late 1990s. Although it is currently assumed that the vast majority of compliance will be achieved through the use of 0.50%S fuel, it is unlikely that this will be an economically sustainable option. Now exhaust gas scrubbers are one of the principal alternative options for ship operators.
Switching to low sulphur fuel to cut emissions
An internationally trading ship burning 30 tonnes of fuel/day and operating for 5000 hours/year at sea will consume 6000 tonnes of fuel annually in the main engine. At a $250/tonne differential between 0.50%S fuel and normal high sulphur fuel oil (HFO) that effectively adds just over $300/hour operating cost or $1.8M annually. Although no one can forecast a market differential, there is no doubt that a displacement in demand for HFO of around 150 Mtonne to 200 Mtonne will depress its value substantially.
The recent order by a major cruise line operator of a duo of LNG powered vessels is a major step towards LNG becoming an independent energy source, previously confined to a handful of vessels operating in the North Sea and Baltic Sea. On the fringes, methanol is being evaluated on what is pretty much an experimental basis. Both these fuel choices break the golden rules of bunkers: ‘marine bunkers should be widely available, easy & safe to store and handle, and a consistently low cost energy source’.
What we should note about LNG and methanol is that these fuels are not only addressing SOx emissions but that they are intended to be used to comply with Tier III NOx emissions.
Unfortunately, it seems inevitable that a 0.50%S fuel will also fail the golden rules of bunkers and, unlike LNG and methanol, will not provide the benefits of NOx Tier III compliance. The fuel is likely to require much more careful handling and storing on board to avoid mixing with other supplies of 0.50%S deliveries. It will also need to remain segregated to avoid instability and sludge drop-out in tanks or fuel systems.
It will be incumbent upon ship operators to plan their switch to 0.50%S fuel, if that it their strategy of choice, at least six months before the entry into force date. Early preparation is essential in order to avoid the risk of cross contamination with residues of HFO and to gain experience with the new and quite different characteristics of 0.50%S fuels. Just ten tonnes of a 2.7%S HFO in a 500 tonne bunker tank could put a 400 tonne batch of 0.50%S fuel out of spec. The only published long term study using low sulphur fuel actually used marine diesel oil and not a blended 0.50%S fuel. On the other hand, there is some experience using very low sulphur HFO. Planning and early trials will be a prerequisite of a successful transition on the entry into force date.
Alternative solutions to marine emissions reduction
It is understandable that in the face of high costs, significant change and uncertainty there is a resistance from the shipping industry to take the first steps until the last minute. Inclusion of a scheme of incentivisation in Regulation 14 might have helped to avoid this.
Although the global cap will be a significant step change in reducing emissions from shipping it seems it will merely be part of a continuum and possibly increasing focus on emissions to air. The body of knowledge about the health effects of manmade combustion is accelerating with new discoveries seeming to be made a monthly basis. Getting rid of sulphur has got rid of the big particles. But science is discovering much more harmful finer particles from which even the so-called ‘clean fuels’ are not immune. The long-term economically sustainable solution may therefore be to treat the exhaust gases prior to their entry into the atmosphere.
Over the last 18 years, the exhaust gas cleaning industry has developed marine scrubber systems that can be installed both on new ships or be retrofitted so shippers can continue regular operations with heavy fuel oil. They offer ship owners an easy, cost-effective way of meeting the 2020 requirements by removing particulates from exhaust gases. Exhaust gas cleaning systems are portable and can be manufactured pretty much anywhere in the world, then transported to the installation point. Shippers could carry out installation of scrubbers at the same time as ballast water treatment technology to save on off-hire and create synergies.
Donald Gregory is Director at the Exhaust Gas Cleaning Association (EGCSA), which was established in 2008 to help create a sustainable operating environment within the marine and energy industry sectors for exhaust gas cleaning system technologies, providing clarity and a rational voice for those companies interested in reducing marine exhaust gas emissions. EGCSA offers impartial technical information, advice and opinion on the many current and future issues and challenges related to emissions reduction and marine exhaust gas cleaning systems.