IMO 2020

Getting the Right Fit for the Cap: Assessing the Options

North P&I writes about the various compliance options available to shipowners for IMO 2020.

Published

8 years ago

July 17, 2018

Admin

The following article is written by Alvin Forster, Deputy Director (Loss Prevention) at North P&I:

The reduction of the IMO MARPOL Annex VI global fuel sulphur cap to 0.5% will come into force on 1 January 2020. Shipowners have some very difficult and important decisions to make on how to comply with these stringent requirements.

Changes have long been driven by a combination of economics and environmental compliance. This is likely to remain true when considering the 2020 global sulphur cap. There are several options open to shipowners, with the majority currently opting for distillates, perhaps keeping one eye on the development of cheaper hybrid fuels, blends or compliant residual fuels. The choice will be driven by what is right for the vessel and what is economically viable.

Options
There are several options available to a shipowner that will allow compliance with the 2020 global sulphur cap. There are pros and cons with each, mostly concerning fuel availability, on-board fuel management, capital and operational expenditure as well as maintenance requirements. It is not a simple choice and the decision on what method of compliance is best depends on a number of factors, such as vessel type, trading area and remaining service life. The proportion of time spent within emission control areas (ECA) should be considered as well as the impact of changing over fuels when entering/leaving these areas. The 0.1% sulphur cap currently in operation within the ECAs will remain in force and it is possible that new ECAs may emerge in coming years. For some vessels, the best solution might be multi-fuel, such as having the ability to burn LNG or distillates, depending on the availability of each. Another method may be to install an EGCS but also use hydrogen fuel cells where appropriate.

Compliance option 1: Burn distillates
Marine fuels are categorised as being either a distillate or a residual. Distillates are the lighter grade fuels from the refining process, the most common being marine gas oil (MGO/DMA) and marine diesel oil (MDO/DMB).

Pros

No major modifications or capex (capital expenditure) needed – usually limited to minor system modification and tank cleaning
Relatively simple changeover process between 0.5% and 0.1% fuels when transiting ECAs
Reduced engine maintenance demands and reduced risk of engine failure

Cons

Forecasted high cost – the difference in price between high sulphur residuals and compliant MGO is expected to increase significantly post-2020
Concerns about refineries’ abilities to meet demand in 2020
Potential problems with low temperature flow characteristics of some distillates
Over-rating of vessel steam generation capacity as there will be no longer any need to heat fuel – possibly leading to vessels having to dump steam due to no heat sink

Compliance option 2: Burn hybrids or blends
A number of producers have developed or are developing compliant products which are heavier than MGO and MDO but lighter than the residual fuel oils that are currently used. Some are specially-produced products and are commonly referred to as ‘hybrid’ fuels. Other products are the result of blending, producing a heavy distillate or light residual blend.

It may be possible that a 0.5%S residual fuel (e.g. 380cst) could be produced from either refining sweet crudes or from sour crudes undergoing a desulphurisation process. But there are currently no plans to make this widely available as a marine fuel.

Pros

No major modifications or capex needed – usually limited to minor system modification and tank cleaning
Expected to be cheaper than distillate fuels

Cons

Concerns about refineries’ abilities to meet demand in 2020
Uncertain supply can lead to price volatility
Heavier fuels may contain cat fines
Some fuels may require onboard treatment, such as centrifugal separation, viscosity control and heating
Some products fall outside the specified grades in ISO 8217
Higher risk of incompatibility if using different blends or hybrids

Compliance option 3: Install EGCS
Exhaust Gas Cleaning Systems (EGCS) are commonly referred to as scrubbers. These systems effectively wash the exhaust gas to remove sulphur dioxides and particulate matter. Post-2020, vessels operating an EGCS can continue to legally burn fuels with a sulphur content of greater than 0.5%.

Systems are categorised as open loop, closed loop or hybrid.

Open loop systems: Water is taken from the sea and pumped into the scrubber wash tower. The natural alkalinity of seawater neutralises the acids in the wastewater effluent.

Closed loop systems: Recirculated seawater or freshwater is treated with an alkaline chemical before entering the wash tower to scrub the exhaust gases. A small amount of the wash water is bled-off to a treatment plant before discharge to sea, or they can be run in ‘zero discharge’ mode where the effluent is held in a tank.

Hybrid systems: Hybrid systems can operate in either open or closed loop mode. Depending on design, they may operate with either freshwater or seawater when in closed loop mode.

Pros

Capex typically US$3-5m with payback period expected to be reasonably short
Expected low fuel costs – some market analysts have forecasted high sulphur fuels to plummet in 2020
The lower fuel costs may make the vessel more attractive to time charterers

Cons

Systems and equipment require lot of space
High power demands resulting in around a 3-5% increase in fuel consumption
Concerns about maintenance demands and reliability which could result in periods of non-compliance
The long term viability of EGCS could be impacted by any future legislation on wastewater effluent discharge standards
The availability of high sulphur fuels post-2020 is unknown and some refineries could divert streams elsewhere if not profitable
The time required to retrofit EGCS on an existing vessel could take several weeks and require the vessel to be out of service

Compliance option 4: Burn LNG
One of the main drivers for shipowners to turn to LNG as a marine fuel is that it emits zero SOx and virtually zero particulate matter.

LNG is natural gas – predominantly methane (CH4) – in liquid form. Exact composition depends on source and generally contains a mix of heavier hydrocarbons (such as butane and ethane) with some contaminants such as CO2, water and nitrogen.

To make storage and handling manageable, it is condensed into a liquid at close to atmospheric pressure by cooling it to approx. -162°C.

Pros

Generally regarded as a very clean fuel and may be more resilient to any future changes in environmental legislation than the alternatives.
Lower fuel costs
Green credentials

Cons

Relatively high capex (upgrade to gas or dual-fuel engines and storage and handling system) with expected long payback period
Limited infrastructure of LNG supply therefore restricting worldwide trading
Bunkering challenges – higher risk operation and strictly controlled
High delivery costs push up the real cost of fuel
Lower energy density compared with traditional marine fuels – therefore more volume needed
The global warming potential (GWP) of methane is significantly higher than CO2
Large tanks and restrictions on their position can result in loss of cargo carrying capacity
Crew will require additional training in bunkering, storing and managing LNG

Compliance option 5: Use other alternative energy sources
There are a number of alternative fuels or energy sources that are either available or currently in development. It is understood the take-up of these options is low and where they have been adopted, they are one of several modes used on board – pieces of the multi-fuel jigsaw.

These include:
Methanol (CH3OH): Easy to manage and store but main challenges are its low flash point and relatively poor energy density.

Hydrogen fuel cells: Fuel cell systems use an electro-chemical reaction to generate electricity. Strong green credentials but there are concerns on their high cost, size and weight and expected life.

Liquefied Petroleum Gas (LPG): Composition can vary but consists mainly of propane, butane and propylene. Similar positives and challenges to that of LNG as a marine fuel.

Batteries: A low-maintenance (and arguably low-carbon) solution is battery power but the current technology does not meet the needs of an oceangoing vessel. When the technological breakthrough on batteries happens, could this be the game-changer?

Published: 17 July, 2018

Ammonia

AM Green plans to build green ammonia plant at Indian port

Initiative also includes development of green ammonia handling, storage and bunkering infrastructure, pilot bunkering operations, safety procedures and training programmes, says VOC Port Authority.

Published

2 months ago

June 3, 2026

Admin

VO Chidambaranar (VOC) Port Authority on Friday (29 May) said it has signed a Memorandum of Understanding (MoU) with India’s ammonia producer AM Green Ammonia to collaborate in the development of a green ammonia production plant.

The plant will have a capacity of one million tonnes per annum (MTPA) at Tuticorin.

The initiative also includes development of green ammonia handling, storage and bunkering infrastructure, pilot bunkering operations, safety procedures and training programmes.

The project is expected to support the development of green fuel corridors connecting VOC Port with major ports in Europe and Asia, thereby strengthening India’s position in the global green fuels value chain.

VOC Port also signed a Memorandum of Understanding (MoU) with Bureau Veritas (India) Pvt. Ltd., to collaborate on Green Port certification, emissions accounting, ESG reporting, safety validation, development of green bunkering practices, and establishment of a Centre of Excellence for green fuels and sustainability.

The port also plans for an upcoming 750 m³ green methanol bunkering facility.

Photo credit: Naveed Ahmed on Unsplash
Published: 3 June, 2026

Port & Regulatory

Study: Major drop in ship sulphur emissions confirmed following IMO regulations

National Centre for Atmospheric Science study found that the average sulphur content in ship fuel dropped nearly tenfold in open ocean areas following IMO’s 2020 regulation.

Published

8 months ago

December 8, 2025

Admin

Recent global regulations have significantly reduced sulphur emissions from ships, helping to improve air quality in coastal regions – confirmed by a recent international study led by researchers at the National Centre for Atmospheric Science.

The research, published in Environmental Science: Atmospheres, used aircraft and ground-based instruments to measure sulphur dioxide and nitrogen oxides emitted by ships in the North-East Atlantic and European coastal waters between 2019 and 2023.

The team found that the average sulphur content in ship fuel dropped nearly tenfold in open ocean areas following the International Maritime Organization’s 2020 regulation, which capped sulphur content in marine fuel at 0.5%.

Before the change, many ships exceeded the previous 3.5% limit. After 2020, only a small number of ships were found to breach the new standard.

In European sulphur Emission Control Areas (SECAs), such as the English Channel and the Port of Tyne, sulphur levels were even lower – well below the stricter 0.1% limit. Interestingly, ports outside these zones, like Valencia in Spain, also showed low sulphur levels, likely due to EU rules requiring cleaner fuel when ships are docked for extended periods.

This is the first study to use aircraft-based measurements and predictions from the Ship Traffic Emission Assessment Model (STEAM3) to assess ship emissions outside of sulphur control zones since the 2020 regulation came into effect. The findings support the widely held view that ships now emit around seven times less sulphur than before the rule change – an important step toward cleaner air and healthier coastal environments.

Note: The research, titled ‘SO2 and NOx emissions from ships in North-East Atlantic waters: in situ measurements and comparison with an emission model’ can be found here.

Photo credit: shraga kopstein on Unsplash
Published: 8 December, 2025

Interview

IBIA Annual Convention 2025: ‘Exciting times’ for post IMO 2020 bunker suppliers, states Equatorial

Choong Sheen Mao, Chief Operating Officer, Equatorial, describes to Manifold Times the pre/post IMO 2020 challenges and evolution of bunker suppliers.

Published

9 months ago

October 31, 2025

Admin

The International Bunkering Industry Association (IBIA) will be hosting its flagship Annual Convention in Hong Kong at the Hong Kong Convention Exhibition & Convention Centre between 18 to 20 November 2025, as part of Hong Kong Maritime Week.

Choong Sheen Mao, Chief Operating Officer, Equatorial Marine Fuel Management Services (Equatorial), speaks to bunkering publication Manifold Times about the challenges of a post IMO 2020 bunker supplier.

MT: How does Equatorial continue to offer customer assurance and maintenance of marine fuel quality to ISO8217 standards despite increasing complexity of bunker fuel blends?

We maintain our focus to provide compliant, quality and competitively priced products to our customers. There is no shortcut. We source our products from a wide range of cargo producers and suppliers. We continue to be strict and vigilant with our testing programme for our products before delivering them to our customers. Equatorial has deepened our engagement with the wider industry to have a better and up-to-date understanding of the existing and new marine fuels.

MT: Can you share the evolution of commercial marine fuel procurement, blending and trading strategies on the back of increasing fuel types (pre/post IMO 2020)?

Pre IMO 2020, the main types of marine fuel procured and consumed by vessels were high-sulphur fuel oil, marine diesel oil and marine gas oil. Trading strategies were therefore closely linked to that within the oil industry.

However, many of the new fuel types are from other industries. For example, biofuels, methanol and ammonia are mainly products from the chemical and agriculture industries. There are marked differences between these industries and the energy industry (in particular, the marine fuels industry). LNG is from the gas industry which is distinct from the oil industry.

Without an existing liquid paper market for many of these commodities (especially as a marine fuel), the price risk management is less straightforward. Furthermore, commodity prices are no longer the sole consideration for price itself. The price of compliance must be considered. This could range from guaranteeing the origin of the marine fuel, its sulphur properties as well as its carbon intensity. The list goes on.

MT: Operational wise, what are the changing role and responsibilities of a bunker supplier to date, compared to before IMO 2020?

The role and responsibility of a bunker supplier have evolved. Fundamentally, it has been about providing quality marine fuels at competitive prices. Quantity assurance has been a critical concern which led to the mandatory implementation of the mass flow meter system for bunkering in the Port of Singapore. Interestingly, due to the nature of credit terms in the bunker industry, bunker suppliers also performed the role of “bankers” by extending favourable credit terms to shipowners and charterers.

These days, post IMO 2020, things have become even more complicated. Today, a bunker supplier retains the abovementioned roles and responsibilities, and much more – it has to ensure compliance with a plethora of rules and regulations. Compliance not only with sulphur cap requirements, but with international and regional sanctions and restrictions unrelated to the quality of the marine fuel itself. In fact, especially with alternative low- and zero-carbon marine fuels, this means compliance with standards, rules and regulations on sustainability such as the European Renewable Energy Directive and/or International Sustainability and Carbon Certification. There is also the need to comply with increasingly stringent safety regulations on both conventional and alternative marine fuels.

In addition to the above, a post IMO 2020 bunker supplier is still expected to supply compliant and quality fuel at competitive prices.

MT: Equatorial is Singapore’s largest local-born supplier; what is the next big thing for the company?

Equatorial continues to adapt and improve with the times, while maintaining its core values – Integrity, Teamwork, Commitment, Proficiency and Quality, and Safety and Environment. The bunker industry is a highly competitive one, and it is our intention to keep our competitive edge and remain relevant. This means that we have had to step out of our comfort zone and embrace the two mega trends of our time – digitalisation and decarbonisation.

We have been early adopters and developers of the electronic bunkering note as part of our own digital bunkering efforts. We have diversified our product offering to include low carbon marine fuels and are proud to be one of the pioneers for bunkering B100 biofuels earlier this year. This was made possible by the arrival of our IMO Type II chemical and oil bunker tankers. These same bunker tankers are also capable for carrying and delivering methanol. Equatorial has invested in an LNG bunkering vessel (LBV) newbuilding that is set to be delivered in Q3 2027. We are also involved in a study to develop low- or zero-carbon ammonia bunkering in Singapore.

These are exciting times.

Note: Choong Sheen Mao is amongst panellists featured in ‘Session Three: Bunker Sellers Panel’ at the IBIA Annual Convention 2025.

Join the Conversation

With over 300 delegates expected, the IBIA Annual Convention 2025 is set to be a defining moment for the marine fuels industry. Registration is now open via the IBIA Annual Convention website.