We are now a little under a year away before the latest round of regulation on emissions from the IMO comes into force. The well-oiled regulatory machine will introduce the 0.1% maximum in sulphur emissions for all marine shipping in the North Sea, Baltic, US and Canada Emission Control Areas (ECAs) on 1st January 2015.
The differing ways in which owners can comply has been talked about widely through various industry participants with most in agreement that no matter what option is selected it will come at substantial cost to the industry. The Specialised Products market is no different and in a world where time and cost is of the essence owners are increasingly being asked, how will you comply? And what will be the cost of it? It seems that to many the only real option for now is to opt for scrubbing technology which allows vessels to burn low sulphur fuel oil without having to change much of their day to day operations. However, these have their own problems such as dry dock costs, a loss of revenue, lack of proven systems and the major bug bear – the cost and practicality of retrofitting. That being said there are number of vessels in the North West European chemical fleet that can already burn MGO (0.1% compliant) and would not have to go through this expensive process. However, there are other alternative options. LNG is often touted as the obvious choice although this has its own problems associated with it, including the fact there has been no application of it to date in the chemical tanker market. Perhaps the dark horse in this debate is using methanol as an alternative fuel. Indeed there are already a number of vessels in other trades capable of burning methanol. So what are the benefits of opting for this type of fuel?
Firstly, the distribution cost of methanol is lower than that of LNG; secondly, it is biodegradable if produced from biological methods and thirdly has a lower flash point than conventional fuel and is therefore safer. However, like with LNG there are a considerable number of technical, operational and capital investment hurdles to jump if an owner opts for this.
Perhaps most importantly is a lack of infrastructure in key hubs which presents a whole host of problems even before converting to methanol or committing to a bespoke contracting option. There is also the issue of retrofitting which continues to be a problem for tonnage already on the water, particularly when space in chemical tankers is at a premium. The option of newbuildings might overcome this last point but then there is the problem of raising the finance to commission new designs and all the associated vetting and certification costs. This brings us to the last point: it could be argued that burning methanol as a marine fuel will only really work if it is already present within the supply chain. For instance it is now common knowledge that Methanex have ordered 6 ‘eco’-MR’s with dual-fuel engines capable of burning methanol and HFO. Obviously for Methanex, as the world’s largest methanol producer, this makes perfect sense but for others until market develops this propulsion option is a long way from becoming a norm in the industry. How owners will handle the new regulations is not entirely clear at the moment but one thing is for sure: whatever option they go for it will come with associated costs and benefits!