FGE’s latest annual study takes an in-depth look at the future of bunkering, exploring both the aftermath of the IMO 2020 bunker specification changes as well as longer-term issues arising from the IMO’s CO2 targets, including the prospects for fuel substitution and the adoption of new propulsion technologies.
At the start of 2020, the IMO (International Maritime Organization) implemented a cap on the amount of sulphur in fuel oil used on board ships (without exhaust gas cleaning systems—or scrubbers). This bunker specification change was the biggest upheaval the refining and shipping industries had ever faced.
However, both industries have coped remarkably well. The shipping sector has either adopted scrubber technology in order to continue burning high sulphur fuel oil (HSFO) or has switched to very low sulphur fuels (VLSFO). The refining industry has largely responded to the jump in VLSFO demand by adjusting its existing refinery and blending operations.
HSFO and VLSFO use in the bunker sector will continue to be driven by the differential in price between the two fuels which will impact scrubber adoption. However, the bunker sector now needs to look beyond the subject of sulphur emissions and consider the potential impact on the industry of tighter CO2 emission targets that will encourage the adoption of low-carbon fuels.
Grappling with shifting regulations, changing fuels, and new technologies, it is imperative that ship-owners, refiners, and other key stakeholders along the marine fuel supply chain stay at the forefront of market analysis and understanding. The capital budgeting decisions made today need to be seen in the context of adapting not only to short-term issues relating to the aftermath of IMO 2020 but also new legislative and economic pressures that will emerge over next 15-20 years.
In a world where there is no “one-size-fits-all” solution, our analytical approach looks to move the debate forward to examine future risks and opportunities arising from fuel choices and technologies that will need to be adopted to meet stricter environmental standards and economic realities. In this study, market-leading oil market expertise and an understanding of the refining sector and fuel specifications are married to an in-depth analysis of the implications for the shipping industry.