Changes in Shipping Industry Stemming from IMO 2020 Cap

Sea News File Photo

The shipping industry is a lifeline of global trade. However, shipping is a major pollutant contributing to climate change. In 2016, IMO introduced a new global regulation to limit sulphur content in fuels from 3.5% to 0.5%, coming into effect on 1 January 2020. This 80% reduction in sulphur content will affect an estimated 70,000 ships worldwide. A limit of 0.5% sulphur in fuel represents about 75% of global demand for marine fuels which would mean a huge undertaking for the bunkering/shipping industry and a significant impact on refineries. This is a huge challenge for the Shipping sector which relies on combustion engines.

Options for ship owners to reduce sulphur emissions have been limited. One is to switch to fuel with a lower sulphur content, but this is expensive. According to Goldman Sachs, the increase in fuel cost for the global fleet will be around $250 billion a year, and it’s expected that prices for compliant fuel will rise as demand increases. Availability of fuel is also likely to be an issue, and it’s possible some ship owners will initially find themselves unable to comply if they cannot source suitable fuel.


Some firms have turned to open-loop scrubber systems as a solution. This involves installing exhaust gas cleaning systems to remove sulphur oxides from the engine and boiler exhaust gases, meaning ships can continue to use heavy fuel oil. But this has attracted criticism as the process results in waste water containing pollutants being discharged directly into the ocean where a lack of UV light means these pollutants are unable to break down, leading many ports to ban the practice in their waters.

The installation of “scrubbers” is expensive. And for the global use of alternative propulsion systems in the short term, probably only LPG (Liquified Petroleum Gas) is really an alternative since there are already some ships using it. But the necessary infrastructure, that is refuelling stations, is not yet up to match global demand. In addition, both “scrubbers” and LPG engines require conversions that reduce the loading space of ships.

Therefore, the industry expects that the majority of ship owners will simply use low-sulphur fuels. That should lead to additional costs of 60 billion dollars, as Edmund Hughes, head of Air Pollution and Energy Efficiency at IMO‘s Marine Environment Division, suggests.


Many companies have decided to transition from HSFO to very low sulfur fuel oil (VLSFO). However, a new study funded by Germany and Finland, in cooperation with DNV GL and marine engine manufacturer MAN, indicates that the switch from sulphur-rich HFO to VLSFO may have unintended negative consequences as it can increase black carbon emission by up to 85%.

Black carbon, a form of aerosol, forms as a result of incomplete fuel combustion and after CO2, it is considered the most impactful emission in terms of climate change. It is usually short-lived staying in the atmosphere for up to two weeks. However, especially in the Arctic region it has a significant impact as it settles on the ice.

The study states that black carbon emissions from low sulphur fuels are especially strong when marine engines are operated at less than full power. This is of particular concern for the Arctic, as ships navigating across the Arctic Ocean rarely travel at full speeds when passing through sea ice or in escort behind icebreakers.


Some stakeholders say that considering the aforementioned limitations and consequences of using scrubbers and VLSFO, only LPG seems feasible. But LPG’s potential is in question due to its methane content. Methane has a much greater negative impact on the atmosphere than carbon dioxide, albeit degrading faster. And in use it can cause “methane slipping”, when non-burnt LPG escapes through a ship‘s exhaust into the atmosphere, wiping out any emission reduction advances.

Technology and Green Energy

Shipping industry has always been efficient but relatively reluctant to adopt new technologies. Trends and habits are changing to adapt to the emerging scenarios/regulations.

As we speak, many companies are looking at more eco-friendly ways to transport goods overseas. Recent research has looked at developing ships powered using sustainable energy.

Tests with battery-powered electric and hybrid engines and with hydrogen-based fuel cells are well advanced. Variants that use methanol or ammonia are also being tested. And also wind power, the oldest of all types of propulsion at sea, is experiencing a renaissance. Ship prototypes using towing kites or Flettner rotors are developed. Japanese researchers have even developed a sailing ship that not only uses the power of the wind to propel it but also produces hydrogen while driving.

A coalition of shipping companies announced the development of a Carbon Capture & Storage alternative that filters and stores carbon dioxide on board. The retained carbon dioxide is turned into dry ice in a cryogenic process. It is then brought ashore and later sunk into the seabed, where it is said to be stored safely and permanently.

The Way Ahead

About 90 percent of world trade is delivered via shipping. Not surprisingly, the ecological footprint of maritime shipping is big. But as the industry is changing, one question mark remains behind the effects of sulphur limitation on climate. Sulphur in the atmosphere, unlike carbon dioxide, methane and other greenhouse gases, has a cooling effect, wrapping earth like a thin veil, thereby reducing solar radiation.

It remains to be seen, what methods shipping companies adopt to comply with Sulphur Cap, and what impact does the IMO 2020 regulation has on environment in the long run.



Sea News Feature, April 8

Baibhav Mishra
Author: Baibhav Mishra

Associate Editor, Sea News