Shipping industry leaders, joined by Goldman Sachs, discussed IMO 2020 challenges and opportunities at the ABS panel discussion held at the start of SMM 2018.
Christian Lelong, Senior Commodities Analyst, Goldman Sachs; Aaron Bresnahan, Vice President Marine Solutions, Wartsila; Paddy Rodgers, Director and Chief Executive Officer, EURONAV; Wolfgang Hintzsche, Marine Director, German Shipowners’ Association; Lars Robert Pederson, Deputy Secretary General, Bimco and moderator Kirsi Tikka, ABS Executive Vice President and Senior Maritime Advisor; explored IMO 2020 from multiple perspectives.
The panelists offered keen insights on a wide range of issues including the cost and quality of fuel oil, the business case for investing in LNG or scrubbers; operational challenges, issues with enforcement; bunker fuel availability and the vital role of refineries.
Christian Lelong opened the session, detailing Goldman Sachs’ research on the impact of the sulfur cap, titled IMO 2020 Towards a New Equilibrium.
He said: “We are becoming more positive on scrubbers; production capacity is increasing and may surprise us. In a perfect world the industry would have made investments over a time longer period than two years. Any more regulatory uncertainty will mean we will not get the lowest cost solution for the economy but the market will eventually balance.”
Aaron Bresnahan said: “The technology will be available for whatever choices shipowners make. We support LNG even though its adoption has been slowed by the classic chicken and egg problem of supply and demand. Some of the recent choices by big shipowners have been a step forward because we will need LNG infrastructure to service bigger ships.”
Paddy Rodgers, said: “Scrubbers are not a license to burn fuel oil. You are compelled to monitor and report what you do. I think we are heading into territory similar to the oily water separator regulations where you could be penalized regardless of the fuel burnt. The idea that scrubbers are a ticket to ride is a misnomer.”
Wolfgang Hintzsche said: “This is one of the biggest challenges that shipowners have to contend with but I am fully convinced that industry will do its utmost to be compliant. How big the challenge is and what the costs will be we can only continue to speculate, before we talk about what fuel we will use in the future. “
Lars Robert Pederson, Deputy Secretary General, Bimco, said: “MARPOL contracting governments will need to do what they committed to and take action when the fuel supplied is not what is specified. I think the problem in 2020 is going to be the quality of blended fuel and we are bound to see more cases of fuel quality issues.”
Kirsi Tikka said: “This regulation will have the biggest impact on the industry since the phasing out of single hull tankers. This will be felt well beyond shipping, affecting the refining and power industries as well as ultimately consumers.
“We heard today how the industry is still some way off understanding the full impact the 2020 regulation will have and how to make the choices that will work best for them.”
Sea News, September 5