Moves in the U.S. launching unilateral legislation which would limit the sulphur content of fuel for ships in U.S. ports to 0.1% by 2010 has focused minds in the international shipping industry and at the IMO on the necessity of coming up on time with a comprehensive, practical, efficient, strategy to reduce air pollution from ships in the medium term as well as in the long-term.

The U.S. Marine Vessels Emissions Reduction Act 2007 limits the sulphur content of fuel for ships calling in U.S. ports to 0.1% by end 2010, and possibly to 0.2% by an earlier date, and will apply to new and existing, ocean-going ships of all flags. These limits may be compared to the current international worldwide sulphur limit of 4.5% and the current SECA (Sulphur Emission Control Area) limit of 1.5%. This U.S. limit would be well below and well ahead of industry plans, but would be pretty much in line with the EU’ own unilateral Sulphur Directive. Europe has already adopted a 0.1% sulphur content rule at berth from 2010, through the latest amendments to the EU Sulphur Directive. Such low sulphur content will not be achievable by use of residual type fuel oils, thereby enforcing the use of a distillate marine fuel.

This unilateral U.S. regulatory move will put the pressure on the IMO to keep its revision of Annex VI on track for 2010 implementation. The world is looking to the IMO to introduce one single global standard, or as near to that as it can get, to counter the threat of regional legislation. The IMO Secretary General’s recently-announced Marine Environment Protection Committee (MEPC) study group is aimed at helping to clear up uncertainties and points of confusion thereby assisting the process of introducing an effective international regulation.

The environmental footprint of ships, which carry 90% of world trade covering over 30,000 billion tonne-miles a year, is extremely light compared to other forms of transport. And yet despite the industry’s tonne-mile efficiency, it has been left behind by other sectors which are already regulated and compelled to use clean, environmentally friendly fuels. This means that the shipping industry has become an easy-to-pick fruit, recently targeted by politicians eager to show that they are still doing something on the environmental front.

A switch from residual fuel to marine diesel oil (MDO) means a comprehensive and practical strategy for an efficient and long-term reduction of air pollution from ships. Should one expect ships to reduce air pollution while still burning residual fuels? These fuels have a significant content of sulphur, nitrogen (that contributes to the NOx emissions and thereby ozone or a greenhouse gas), hazardous components including heavy metals and polycyclic aromatic hydrocarbons (PAH) that combine to create a cocktail of particulate emissions and generated sludge.

The proposal that the shipping industry switches to distillate bunker fuel (MDO) according to a timescale that takes into account fuel availability, delivers immediate, real and global reductions in atmospheric pollution (SOx, NOx and PM). It deals with the cause of this pollution rather than the effect – i.e. rather than limiting the rulemaking development to cleaning up the pollution itself. These are among the reasons that this proposal has been gaining support from a growing number of IMO states.

Switching to MDO aligns the shipping industry with other means of transportation and facilitates innovation to allow the industry to go further and faster in the future as emission regulations tighten still more. Looking at road transportation (trucks and trains) and air transportation, their SOx, NOx and PM emissions have already been reduced significantly because these industries were forced by law to use cleaner fuels. This has facilitated the optimisation of engines and indeed the whole combustion process. In contrast, ships are today allowed to burn a mixture of heavy distillates and a refinery waste product (i.e. refining resides) which is called residual fuel. This flies in the face of the general trend towards cleaner fuels. If society expects cleaner emissions from ships, then governments should apply the same clean fuel measures which have successfully been mandated on other means of transportation - as well as on many land-based industries.

However these clean air measures come at a price.

Who will pay for cleaner air emissions from ships?

In addition to applying in-engine modifications, air pollution from ships can be reduced either by using cleaner fuels or through the use of exhaust gas treatment technology. The cost of all measures will be borne almost totally by ship owners. Either they will pay a higher price for cleaner fuel (a cost often recoverable – in part or in whole - through freight rate adjustments). Or they will pay for the fitting, running, maintenance of fuel purification and emission abatement systems (cost not recoverable), as well as for the physical disposal of the liquid and solid wastes generated by these systems – and, not least, they will assume the liabilities linked to those disposals.

Who should do the cleaning?

Supplying cleaner fuels to ships places the burden of cleaning on the oil refiners - who inevitably pass the extra costs through to the ship owners in the cost of the fuel. The process of producing clean fuel is a current operation for the roughly 700 refineries around the world. The refiners would dispose of the waste at the end of the process – the ultimate bottom of the barrel is asphalt or coke. By doing this, economies of scale could be achieved rather than dispersing the problem to the individual ships. 

Retaining residual fuels, and purifying the fuel and cleaning the emissions onboard ships, places on the ship owner the full burden of, and responsibility for, this cleaning process. Ships, numbering nearly 60,000 around the world, are not the most efficient vehicles to carry out such a task. These ships would be obliged to dispose of the waste – sludge from the purifying process and liquid (sulphuric/sulphurous acid) and solid (heavy metals etc) waste from the emissions cleaning process – in a responsible manner at sea or ashore. It will be for governments, not shipowners, to decide if this waste should be disposed of at sea. But if such waste should be returned to shore, we might ask ourselves why such waste needs to be delivered to ships in residual fuels in the first place?

Will net CO2 emissions overall end up with a significant penalty?

Any measure which brings about a significant reduction in air pollution from ships will require additional energy consumption either on shore or on the ship or both, and thus will carry a CO2 penalty. Whether ships use MDO or use scrubbers or other cleaning technologies, the fuel needs to be refined and the cleaning technology needs to be manufactured and operated, which means additional energy consumption.

On the environmental ‘expense’ side, there would be an additional level of CO2 emissions from either the de-sulphurisation of residual fuels to produce low sulphur bunkers, or the production of additional low-sulphur MDO to replace residual fuels on ships, or the manufacture and operation of fuel cleaning equipment and 3-4 exhaust gas cleaning/scrubbing systems per ship on up to 60,000 ships.

On the environmental ‘income’ side, the use of MDO gives a CO2 emission saving because it:

- reduces total fuel consumption for each ship;

- makes onboard fuel processing, including heating and treatment, redundant;

- reduces to a minimum energy consumed for onboard waste treatment

SOx deposits in to the ocean from ships’ bunkers are also responsible for significant CO2 production, due to the buffering effect. Similarly any scrubbing process would not only still require onboard fuel processing, but would further increase CO2 emissions due to the reaction of the effluent waste water from the scrubber as it enters the sea water.  

A switch to MDO from HFO would therefore at worst be CO2 neutral and, dependent upon assumptions, would in principle result in measurable net CO2 reduction benefits.

But will the supply of MDO be sufficient?

The total production of the global oil refining industry is around 4,500 million tonnes a year (tpa). According to IEA figures, new refineries coming on stream by end 2011 will add 14% to refining capacity over end 2005, or some 660 million tpa. Out of this new capacity, one-third could produce yields of medium/heavy distillates (such as MDO) – or in this case 220m tpa. In addition current refineries are being upgraded and they will have spare capacity for increased production. These two developments will create capacity that comes close to providing the additional 250 million tonnes of MDO required for all ships today.

Residual fuel is a blend between heavy distillates and residues from the refining process. The blending ratio is roughly 1:3, although the residual component from refining is getting heavier and heavier as more distillate is squeezed form the same barrel of crude oil, meaning more distillate blending component is required to attain ISO standard spec. Thus additional MDO is needed to replace the roughly 250m tonnes of refinery residues which are currently blended into the residual fuels delivered to ships. In to the future, the availability of sufficient HFO will itself become questionable as will the quality of this fuel.

If distillate fuels were mandated, it is likely that the oil industry would accelerate investments in new production capacity and that there would be no significant problem in supplying the required amount of MDO within a reasonable timeframe.

All new refining units and all new refineries are set not to produce any residues. Consequently, the natural evolution of refining technology will result in fewer and fewer residues as waste from the refining process. Even with existing older refineries, like some of those in the U.S., the residues represent not more than 4% to 5% of the crude processed, and most of these residues are needed for firing the refineries’ boilers. It is therefore a matter of time until the oil industry will have insufficient residual fuel to supply the world commercial fleet.

Conclusion

INTERTANKO believes that Governments wish to see a significant reduction in overall air pollution from ships as required under MARPOL Annex VI. Therefore, they should not ignore that out of all the options on the table, a total switch to MDO/MGO would provide net environmental benefits (reducing SOx, NOx and PM) as well as having a favourable CO2 impact.. This way, all ships would reduce their total air pollution on a global basis, while at the same time allowing new engines to become even more efficient, less polluting and with lower CO2 emissions.

The added bonus to ship operators is that running a ship on distillates makes the technical operation of that ship cheaper, more efficient and straightforward. It cuts out the heating and purification of residual fuels and the disposal of sludge; the wear on the engine from impurities (such as catalytic fines) in residual fuel oil; the cost of installation, maintenance and day-to-day operation of emissions cleaning equipment; the cost and responsibility of (and liability for) the disposal of liquid and solid waste from the emissions cleaning process; the responsibility for ensuring the availability of suitable residual fuel and the proper functioning of emissions abatement equipment in order to comply with regulations.

If you have any questions or queries, please address them to INTERTANKO’s Technical Director Dragos Rauta or its Managing Director Peter Swift or its Communications and Public Relations Manager Bill Box.