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Monday, 14 July 14
THE END OF THE ERA OF HEAVY FUEL OIL IN MARITIME SHIPPING - ICCT
 KNOWLEDGE TO ELEVATE
Since the 1960s, heavy fuel oil (HFO) has been the king of marine fuels. Viscous, dirty, yet inexpensive and widely available, HFO propelled a long period of robust growth in international shipping, which carries over 90% of intercontinental trade by volume each year. For many, it is the lifeblood of the maritime shipping industry.
But HFO’s low price does not reflect its impacts on the environment and human health. The sulfur content of HFO can be up to 35,000 parts per million. It is the reason that maritime shipping accounts for 8% of global emissions of sulfur dioxide (SO2), making the industry an important source for acid rain as well as respiratory diseases. In some populous port cities, such as Hong Kong, shipping is the largest single source of SO2 emissions as well as emissions of particulate matter (PM), which are directly tied to the sulfur content of fuel. By one estimate, PM emissions from maritime shipping led to 87,000 premature deaths worldwide in 2012.
The International Maritime Organization (IMO), the governing body of international shipping, has made a decisive effort to diversify the industry away from HFO into cleaner fuels with less harmful effects on the environment and human health. Effective in 2015, ships operated within the Emission Control Areas (ECAs) covering the Economic Exclusive Zone of North America, the Baltic Sea, the North Sea, and the English Channel will begin to use Marine Gas Oil (MGO) with allowable sulfur content up to 1,000 ppm. Starting from 2020, ships sailing outside ECAs will switch to Marine Diesel Oil (MDO) with permitted sulfur content up to 5,000 ppm.*
That tectonic shift also creates openings for a variety of new fuels. Liquefied nature gas (LNG), newly abundant and relatively affordable, is attracting the attention of many shipping companies. Although the lack of infrastructure and the uncertainty of future prices have slowed the “dash to gas,” many expect LNG to establish itself as one of major alternatives to HFO in the future. Lloyds Registry, a shipping classification society, expects LNG to take 11% of the market share in 2030.
Meanwhile, Stena Teknik, a Swedish company, is testing methanol, another natural gas product, but one that requires less storage space in a ship and is relatively easier to handle. While natural gas-based fuels may sometimes offer questionable climate benefits, due to methane leakage concerns, the IMO’s low-sulfur regulation may create needed openings for other zero-sulfur, low-carbon marine fuels. Tests using fuel cells on the Viking Lady, an offshore supply ship, demonstrated promising results.
Wind kites and solar panels have already been installed on numerous ships to supplement marine diesel engines. Even HFO will not completely disappear from the menu of marine fuels. Combined with scrubbers that capture more than 99% of the sulfur from the exhaust gas, HFO will continue to play an important role. Lloyds Registry reckons that HFO will represent about 40% of fuel use by 2030.
The shift to cleaner but pricier low-sulfur fuels is likely to heighten interest in the “fifth fuel”: energy efficiency. Historically, the maritime shipping industry, where energy often accounts for over half of operating costs, has responded to escalating fuel prices with innovative energy-saving strategies. To cite a recent example: in 2008, as fuel prices went through the roof, shipping lines cut their operating speeds by as much as 50%, helping many companies stay afloat amid one of the worst downturns in history. In an analysis of satellite data on ship operations, we’ve estimated that the industry can further slash 100 million ton of fuel use by 2030 through wider implementation of energy-saving measures that were adopted by industry leaders in 2011.
This is in addition to savings of 90 million tons of fuel because of the Energy Efficiency Design Index (EEDI), a mandatory program that will require new ships to achieve certain efficiency targets beginning in 2015.
The continued diversification of marine fuels and improvements in energy efficiency have important implications. First and foremost, they may alleviate concerns about the availability of low-sulfur fuels. Figure 1 illustrates one possible scenario, using our forecast on future marine fuel consumption and energy efficiency improvements as well as Lloyds Registry’s estimate of market shares for HFO and LNG. The efficiency improvement of the legacy fleet is the greatest force driving down the need for low-sulfur fuels, equivalent to adding about 110 “negatons” of fuel, or almost 24% of projected demand. HFO combined with scrubbers, EEDI, and distillates (MGO plus MDO) are almost neck and neck, each representing about 20% of fuel use in the chart. LNG is coming of age, with its share doubling between 2020 and 2030. Other fuels, such as renewables, fuel cells, and biofuels, are expected to hold only small market shares in 2030.
Second, the new fuels are on a collision course with IMO safety regulations concerning flashpoint, the temperature at which a fuel can vaporize to form an ignitable mixture in air.
The IMO currently requires marine fuels to have a minimum flashpoint of 60°C. But low-sulfur fuels have a lower flashpoint (50° to 55°C), meaning that they are “off-spec” and cannot be used under the IMO rule. The flashpoint requirement, which went into effect in 1976, was meant to provide a large margin of error to ensure the temperature of the engine room (normally below 45°C) does not exceed the flashpoint in any circumstance. But according to industry heavyweights such as Maersk and BIMCO, modern technologies such as advanced ventilation systems provide an adequate safety margin, and they argue that keeping the flashpoint requirement will cause the industry to miss the opportunity represented by the increased availability of low-sulfur, low-flashpoint fuels. Industry and member states such as the U.S. are urging the IMO to accelerate its consideration of an amendment to the flashpoint requirement.
By: Haifeng Wang / The International Council of Clean Transportation
*Implementation of the requirement is subject to a review of fuel availability to be completed by 2016.
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Friday, 23 February 24
STRONG OUTLOOK FOR THE TANKER MARKET IN 2024 AND BEYOND - DNV
Several factors have aligned over the past two years to create a robust and profitable market for tanker owners, which is expected to drive newbuil ...
Friday, 23 February 24
AUSTRALIAN COAL FLOWS TO ASIA HOVER ABOVE LAST YEAR’S VOLUME TONNES - SIGNAL GROUP
In the final days of February, the dry bulk freight market appeared to maintain a relatively stable momentum, particularly evident in the large ves ...
Friday, 23 February 24
RUSSIAN COAL SHIPMENTS FALL 14% AS SANCTIONS BITE - BIMCO
During the first seven weeks of 2024, Russian coal shipments have fallen 14% y/y. Volumes have gradually declined since October 2023 when logistica ...
Thursday, 22 February 24
BIMCO PUBLISHES SHIP FINANCING FORMS TO ENSURE UNINTERRUPTED USE OF SHIPS
BIMCO has published two standard Quiet Enjoyment Letters (QELs), the first standard form QELs available to the industry, to offer a tool that can e ...
Monday, 19 February 24
METALS INVESTMENT: THE DARKEST HOUR IS JUST BEFORE THE DAWN - WOOD MACKENZIE
Things often seem at their worst just before they get better. In terms of meeting our net zero 2050 scenario, we’ve reached a watershed momen ...
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- Goldman Sachs - Singapore
- Petrochimia International Co. Ltd.- Taiwan
- GN Power Mariveles Coal Plant, Philippines
- Vijayanagar Sugar Pvt Ltd - India
- Ambuja Cements Ltd - India
- Singapore Mercantile Exchange
- Holcim Trading Pte Ltd - Singapore
- Iligan Light & Power Inc, Philippines
- Kepco SPC Power Corporation, Philippines
- Krishnapatnam Port Company Ltd. - India
- Electricity Generating Authority of Thailand
- Thai Mozambique Logistica
- San Jose City I Power Corp, Philippines
- Kobexindo Tractors - Indoneisa
- Meenaskhi Energy Private Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Riau Bara Harum - Indonesia
- Trasteel International SA, Italy
- Kumho Petrochemical, South Korea
- Coastal Gujarat Power Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Edison Trading Spa - Italy
- Global Business Power Corporation, Philippines
- Tata Chemicals Ltd - India
- PTC India Limited - India
- Power Finance Corporation Ltd., India
- Pendopo Energi Batubara - Indonesia
- Chettinad Cement Corporation Ltd - India
- Kideco Jaya Agung - Indonesia
- Eastern Energy - Thailand
- PowerSource Philippines DevCo
- GAC Shipping (India) Pvt Ltd
- Intertek Mineral Services - Indonesia
- International Coal Ventures Pvt Ltd - India
- Siam City Cement PLC, Thailand
- Mintek Dendrill Indonesia
- Malabar Cements Ltd - India
- Renaissance Capital - South Africa
- European Bulk Services B.V. - Netherlands
- Sindya Power Generating Company Private Ltd
- SMG Consultants - Indonesia
- Cement Manufacturers Association - India
- Makarim & Taira - Indonesia
- Ministry of Transport, Egypt
- Orica Australia Pty. Ltd.
- Eastern Coal Council - USA
- Petron Corporation, Philippines
- SN Aboitiz Power Inc, Philippines
- AsiaOL BioFuels Corp., Philippines
- South Luzon Thermal Energy Corporation
- Bhushan Steel Limited - India
- Carbofer General Trading SA - India
- Central Java Power - Indonesia
- Aditya Birla Group - India
- Romanian Commodities Exchange
- Aboitiz Power Corporation - Philippines
- GMR Energy Limited - India
- Indian Energy Exchange, India
- Samtan Co., Ltd - South Korea
- Uttam Galva Steels Limited - India
- Merrill Lynch Commodities Europe
- Pipit Mutiara Jaya. PT, Indonesia
- Planning Commission, India
- Meralco Power Generation, Philippines
- Australian Coal Association
- Jaiprakash Power Ventures ltd
- Interocean Group of Companies - India
- Kapuas Tunggal Persada - Indonesia
- Economic Council, Georgia
- IEA Clean Coal Centre - UK
- PNOC Exploration Corporation - Philippines
- Essar Steel Hazira Ltd - India
- Banpu Public Company Limited - Thailand
- Bangladesh Power Developement Board
- White Energy Company Limited
- Alfred C Toepfer International GmbH - Germany
- Standard Chartered Bank - UAE
- Directorate Of Revenue Intelligence - India
- Sical Logistics Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Energy Link Ltd, New Zealand
- Altura Mining Limited, Indonesia
- Xindia Steels Limited - India
- Australian Commodity Traders Exchange
- Wood Mackenzie - Singapore
- New Zealand Coal & Carbon
- Leighton Contractors Pty Ltd - Australia
- Gujarat Sidhee Cement - India
- Sarangani Energy Corporation, Philippines
- Timah Investasi Mineral - Indoneisa
- Asmin Koalindo Tuhup - Indonesia
- Energy Development Corp, Philippines
- Indonesian Coal Mining Association
- ICICI Bank Limited - India
- Minerals Council of Australia
- Gujarat Electricity Regulatory Commission - India
- OPG Power Generation Pvt Ltd - India
- Salva Resources Pvt Ltd - India
- TNB Fuel Sdn Bhd - Malaysia
- IHS Mccloskey Coal Group - USA
- Latin American Coal - Colombia
- Videocon Industries ltd - India
- Africa Commodities Group - South Africa
- Parliament of New Zealand
- Binh Thuan Hamico - Vietnam
- Orica Mining Services - Indonesia
- Posco Energy - South Korea
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Agrawal Coal Company - India
- Georgia Ports Authority, United States
- Sakthi Sugars Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Globalindo Alam Lestari - Indonesia
- Mercator Lines Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Chamber of Mines of South Africa
- ASAPP Information Group - India
- Indian Oil Corporation Limited
- Indika Energy - Indonesia
- Toyota Tsusho Corporation, Japan
- Coal and Oil Company - UAE
- Straits Asia Resources Limited - Singapore
- Marubeni Corporation - India
- Bukit Makmur.PT - Indonesia
- Tamil Nadu electricity Board
- Barasentosa Lestari - Indonesia
- The State Trading Corporation of India Ltd
- Directorate General of MIneral and Coal - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- GVK Power & Infra Limited - India
- Semirara Mining Corp, Philippines
- Price Waterhouse Coopers - Russia
- Savvy Resources Ltd - HongKong
- CIMB Investment Bank - Malaysia
- Bhatia International Limited - India
- Maheswari Brothers Coal Limited - India
- Ind-Barath Power Infra Limited - India
- McConnell Dowell - Australia
- CNBM International Corporation - China
- Ceylon Electricity Board - Sri Lanka
- Larsen & Toubro Limited - India
- India Bulls Power Limited - India
- Dalmia Cement Bharat India
- Indo Tambangraya Megah - Indonesia
- Deloitte Consulting - India
- Kartika Selabumi Mining - Indonesia
- Bharathi Cement Corporation - India
- VISA Power Limited - India
- Simpson Spence & Young - Indonesia
- The University of Queensland
- LBH Netherlands Bv - Netherlands
- Electricity Authority, New Zealand
- TeaM Sual Corporation - Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- MS Steel International - UAE
- Siam City Cement - Thailand
- Karbindo Abesyapradhi - Indoneisa
- Bahari Cakrawala Sebuku - Indonesia
- Madhucon Powers Ltd - India
- Bukit Asam (Persero) Tbk - Indonesia
- Jindal Steel & Power Ltd - India
- Attock Cement Pakistan Limited
- Baramulti Group, Indonesia
- Therma Luzon, Inc, Philippines
- Star Paper Mills Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Mercuria Energy - Indonesia
- Anglo American - United Kingdom
- Global Green Power PLC Corporation, Philippines
- Metalloyd Limited - United Kingdom
- Bayan Resources Tbk. - Indonesia
- Commonwealth Bank - Australia
- The Treasury - Australian Government
- Billiton Holdings Pty Ltd - Australia
- Central Electricity Authority - India
- Bukit Baiduri Energy - Indonesia
- Lanco Infratech Ltd - India
- Manunggal Multi Energi - Indonesia
- Grasim Industreis Ltd - India
- Ministry of Mines - Canada
- Cigading International Bulk Terminal - Indonesia
- Thiess Contractors Indonesia
- Antam Resourcindo - Indonesia
- Parry Sugars Refinery, India
- Vedanta Resources Plc - India
- Kaltim Prima Coal - Indonesia
- London Commodity Brokers - England
- Vizag Seaport Private Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Rashtriya Ispat Nigam Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Formosa Plastics Group - Taiwan
- Coalindo Energy - Indonesia
- Medco Energi Mining Internasional
- Port Waratah Coal Services - Australia
- Rio Tinto Coal - Australia
- Heidelberg Cement - Germany
- Sree Jayajothi Cements Limited - India
- Karaikal Port Pvt Ltd - India
- Bulk Trading Sa - Switzerland
- Global Coal Blending Company Limited - Australia
- Semirara Mining and Power Corporation, Philippines
- Oldendorff Carriers - Singapore
- Wilmar Investment Holdings
- Indogreen Group - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Sinarmas Energy and Mining - Indonesia
- Ministry of Finance - Indonesia
- SMC Global Power, Philippines
- Sojitz Corporation - Japan
- Kalimantan Lumbung Energi - Indonesia
- Borneo Indobara - Indonesia
- Mjunction Services Limited - India
- Bhoruka Overseas - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Independent Power Producers Association of India
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