Big Changes to Regulations for Ocean Transport
The International Maritime Organization (IMO) will implement the new Sulfur regulation rule on 1/1/20. The regulation reduces the amount of Sulfur content allowed in a ships’ fuel oil to 0.50%. The current amount allowed is 3.50%.
Why change the Sulfur regulations?
The decision to globally reduce Sulfur in fuel was originally made in 2008 and confirmed in 2016. The change was made to benefit not only the environment but also people who live along coastlines. An excerpt from the IMO reads:
“As a result, reductions in stroke, asthma, lung cancer, cardiovascular and pulmonary diseases are expected. Cutting sulfur emissions from ships will also help prevent acid rain and ocean acidification, benefitting crops, forests and aquatic species.”
NEW REGULATIONS AND THE SHIPPING INDUSTRY
The shipping industry basically has three choices in order to become compliant with the new regulation.
- Use compliant fuels (Many refineries are blending fuels with a higher and lower Sulfur content in order to become compliant under the new rule).
- Ships may use different fuels such as natural gas or bio-fuels.
- Install scrubbers on ships in order to remove Sulfur oxides from the ship’s engine and exhaust—allowing them to continue to use heavy fuel oil.
NEW REGULATIONS AND END CONSUMERS
We can expect a price increase. The amount of increase will be almost completely dependent on fuel costs. Although we’ve known about the sweeping new regulations for years, some experts believe that the industry is not adequately prepared for the changes. As the demand for new low Sulfur fuel rises, the amount of the supply will ultimately be the biggest factor in increasing rates.