The future for

bunkering
post
2020/2025
Unni Einemo,
IMO Representative, Media &
Communications Manager, IBIA

Platts 7th European Bunker Fuel Conference, May 25,

Rotterdam

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 AGENDA:
 A bit about IBIA
 Impacts of EU/IMO introduction
of 0.50% fuel sulphur limit
 Compliance issues for 0.50%
sulphur regime
 Shipping and CO2 after the Paris
Agreement

 The MARPOL Annex VI paradox

 IBIA’S AIMS & MEMBERSHIP
 Provide an international forum for bunker industry
issues
 Represent the industry in discussions and negotiations
with national and international policy makers,
legislators and other groups and bodies
 Influence and shape industry practices and standards
 To increase the professional understanding and
competence of all who work in the industry
 790 Organisations and members across 80 countries
spanning from the wellhead to the engine
 ANNEX VI ‘STEP CHANGES’
Sulphur limit changes  ECA transition complete
Step 1 Step 2 Step 3
4.5  IMO supposed to decide on
3.5
timing of global at MEPC 70

 Full compliance with global

1.5
cap in 2020 -> demand for
1 distillates equivalent to 9
0.5 years of average increases*
0.1
*Robin Meech, Marine & Energy Consulting
Global ECA
WHAT IF…
 …the availability study is
inconclusive

 …the global cap is

delayed until 2025

 …fuel prices surge

 …enforcement is lax
 IMPACT OF 2025 GLOBAL CAP
 Lead time to prepare  EU still going ahead with
more manageable 0.50% limit (outside
ECAs) in 2020
 Big fuel cost saving for
international shipping,  Ships facing three
maybe 30-50 bn/year different sulphur limits
requirements for 5 years
 Delayed uptake of
scrubbers and other  Interesting situation in
technology solutions the Mediterranean
 2020 EU 0.50% SULPHUR ZONE

Image courtesy of Niels Bjørn Mortensen,

Director, Regulatory Affairs, Maersk Maritime Technology
 EU 2020 REGIME - CHALLENGE IN
THE STRAIT OF GIBRALTAR

Image courtesy of Niels Bjørn Mortensen,

Director, Regulatory Affairs, Maersk Maritime Technology
 GLOBAL 0.50% SULPHUR CAP -
IMPACTS
 Transition from 3.50% to  Many new types of fuel
0.50% cannot happen blends likely to meet
overnight 0.50%, costing less than
 Increase in fuel cost may 0.1% product
put pressure on credit  Increasingly difficult to
lines match fuels to current
 Will LNG bunkers ISO 8217 fuel specs
become available on  Uncertainty about
credit? effective enforcement
 Resurgence in NOPs
 IS ECA COMPLIANCE A GOOD
INDICATOR OF GLOBAL COMPLIANCE?
 Figures from Europe  PSC can only enforce
suggest less than 5% against foreign flag
non-compliance based vessels for breaches
on fuel tests undertaken occurring within their
by PSC waters
 Some indications that  Question as to whether
compliance is slipping all Flag States will
after vessels leave port enforce when informed
by PSC of violations
POSSIBLE APPROACH TO MOVE GLOBAL
ENFORCEMENT TO PSC
 Make it an offence to carry fuel
above 0.50%S unless it has
approved emission abatement
tech on board
 Would give PSC powers to take
direct action (detention, insist
compliant fuel is bunkered)
 IBIA is looking into how this
can be achieved in cooperation
with others
RESURGENCE IN SULPHUR CLAIMS?
 Supplier saw 90-95%  Analysis of NOPs suggest
drop in sulphur claims in less than 20% would
2015, NOPs down by qualify as ‘off-spec’ in a
about 80% commercial case
 Majority of NOPs relate applying ISO 4259
to ECA (MGO 0.08%
average S% in 2015)  IMO and EU regulations
 0.50% limit likely to apply sulphur
increase blending and verification procedure in
hence risk of sulphur Appendix VI
to
‘off-specs’ MARPOL Annex VI
 ISO 4259 vs ANNEX VI
 ISO 4259 provides a calculation to describe, with 95%
confidence, when a fuel can be considered to meet a
specific limit value
 IMO sulphur verification procedure is more stringent.
Moving the goal post?
 IBIA ISO 4259 CAMPAIGN AT IMO
 IBIA has proposed to align
MARPOL Annex VI
sulphur verification
process with ISO 4259 and
recognise the result of a
single test as compliant as
long as it falls within 95%
confidence limits
 Rejected by MEPC 68 in
May 2015
 Is it worth fighting for?
 SHIPPING & CO2 AFTER PARIS
 International transport
sectors not covered in
UNFCCC Paris Climate
Change Agreement
 Calls for IMO to define ‘fair
share’ of global efforts to
cut CO2
 ICS proposal to develop
‘Intended IMO
Determined Contribution’
mirroring INDCs – to be
updated every 5 years
 MEPC 69 agreed on
mandatory global fuel
consumption data
collection system
 Part of agreed 3-step IMO
plan: data collection >>
data analysis >> policy
decision
 Unlikely to ward off EU
MRV even if taking effect
at the same time (2018)
IMPACT ON SHIPPING AND BUNKER
MARKET FROM GHG POLICIES
 IMO/EU data collection  Mandatory efficiency
requirements means regulations (EEDI,
bigger admin burden for SEEMP) stemming
ships growth in bunker
 Increased scrutiny on demand
accuracy of BDN w.r.t.  3rd IMO GHG study
delivered volumes projecting 50% to 250%
increase in CO2 to 5050
 Could favour suppliers under ‘BAU’ – only one
using MFMs of 16 scenarios projecting
decline
LONGER TERM POST PARIS IMPACTS
 Efficiency measures
alone will not be enough
to meet longer term aims
of decarbonisation
 Pressure will grow for
IMO to determine ‘fair
share’ CO2 reduction
target
 Increases likelihood of
MBMs
 THE MARPOL ANNEX VI PARADOX
 Cleaning up the air by
reducing SOx and NOx
from ships increases GHG
emissions, either directly
or indirectly
 IMO can only deal with
ship emissions, holistic
policies taking into
account GWP of ‘well to
stack’ fuel lifecycle out of
reach
 Long term we need to
decarbonise the fuel
 CAN WE DECARBONSE SHIPPING?
Incentivise the use of non- INNOVATION NEEDED!
fossil fuels through:

- removing obstacles (IMO

could play a role)

- make them financially

attractive

- carbon rate fuels/power

sources to differentiate
carbon taxing
 IBIA
Working with its
members to keep the
global marine fuels
industry on course

www.ibia.net
Thank you for your
attention!
Contact me: unni@ibia.net

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