The International Maritime Organization’s (IMO) Marine Environment Protection Committee (MEPC) will meet July 3-7, 2017, in London, where the January 1, 2020 implementation of the .50 percent m/m (mass by mass) global sulfur content limit for shipboard fuel oil will be discussed. At this time, it appears that delays past the 2020 implementation date will not be entertained.
In anticipation of 2020, many of the large scale ship owners and operators have announced plans to build ships that can be powered by natural gas. Most of the ships being delivered are of the dual fuel type meaning they can operate on low sulfur diesel or natural gas.
How did we get here?
The IMOs regulations are not U.S. laws that were drafted by Congress and signed by the President. The IMO is a United Nations agency that develops international regulations pertaining to worldwide shipping. The U.S. has been a member of the IMO since 1950, and there are currently 173 member states.
Specific treaties under the IMO include the International Convention for the Safety of Life at Sea (SOLAS), the International Convention on Standards of Training, Certification and Watchkeeping for Seafarers (STCW) and the International Convention for the Prevention of Pollution from Ships (MARPOL).
In 1997, Annex VI to the International Convention for the Prevention of Pollution from Ships (MARPOL Convention) was adopted to address air pollution from ships.
Annex VI regulations are designed to control airborne emissions from ships including sulfur oxides (SOx), nitrogen oxides (NOx), ozone depleting substances (ODS) and volatile organic compounds (VOC).
The global sulfur content level for shipboard fuel oil was set at 4.5 percent in 1997. In 2008, the sulfur content was reduced to 3.5 percent with an implementation date of January 1, 2012. The date of January 1, 2020 for the global .50 percent was set in regulations that were also adopted in 2008. However, the 2020 implementation date was not actually set-in-stone because at the time, it was unclear whether the world could produce (refine) enough marine gas oil to meet the demands of the global shipping industry. Indeed, in 2008, natural gas or LNG as a marine fuel was not really envisioned as a commercial solution for oceangoing vessels. Therefore, the IMO adopted a look-back provision to review the availability of low sulfur fuel oil. A review that would have to be completed by 2018. As drafted, the IMO would look at the availability of low sulfur fuel and either allow the implementation of .50 percent m/m in 2020 or delay the implementation until 2025.
That review was completed in October 2016, and the 2020 implementation date was preserved. In its announcement the IMO sated in part:
“The review concluded that sufficient compliant fuel oil would be available to meet the fuel oil requirements. The Ships can meet the requirement by using low-sulfur compliant fuel oil. An increasing number of ships are also using gas as a fuel as when ignited it leads to negligible sulfur oxide emissions. This has been recognized in the development by IMO of the International Code for Ships using Gases and other Low Flashpoint Fuels (the IGF Code), which was adopted in 2015.”
In 2008 MARPOL designated Emission Control Areas (ECAs). ECAs established under MARPOL Annex VI for SOx are: the Baltic Sea area; the North Sea area; the North American area (covering designated coastal areas off the U.S. and Canada); and the U.S. Caribbean Sea area (around Puerto Rico and the U.S. Virgin Islands).
Under the rules (as amended), ships trading in the ECAs (specifically, North American Emission Control Area) would be required to use fuel oil with a sulfur content of 1.00 percent with an effective date of August 1, 2012. Further, the sulfur content in the ECAs would again be lowered to .10 percent on January 1, 2015. Thus, since January 1, 2015 the sulfur content limit for fuel oil used by ships in ECAS established by IMO has been 0.10 percent m/m.
Note: The North American ECA encompasses most of the United States and Canada’s coastal waters out to 200 nautical miles from the coastline. It does not include the Pacific U.S. territories, smaller Hawaiian Islands, the Commonwealth of Puerto Rico and the U.S. Virgin Islands, the Aleutian Islands and Western Alaska, and the U.S. and Canadian Arctic. In 2011, the U.S. Caribbean ECA was established and includes the waters adjacent to the Commonwealth of Puerto Rico and the U.S. Virgin Islands out to approximately 50 nautical miles from the coastline. The U.S. Caribbean ECA requirements became effective in 2014.
- Natural Gas as a Transportation Fuel
The United States has led the way for commercial use of LNG as a marine fuel. The concept of LNG as a marine fuel is not new. LNG tankers were designed to use their boil-off gas as the fuel to create the steam to roll the turbines. In fact, LNG has been used as a fuel on LNG takers since 1959 – on the world’s first LNG tanker, the Methane Pioneer. The Pioneer, originally built in 1945 in Duluth, Minn. was a general cargo ship. It was converted to an LNG carrier in Mobile, Ala. in 1958.
Aside from LNG tankers, the U.S. has taken a leadership role in building modern oceangoing ships that are LNG fueled and/or LNG ready. To date, U.S. shipyards have delivered or have on order 22 LNG ready vessels. The first two LNG ready vessels were delivered in 2015 and the order book continues out to 2019. This is not including the smaller vessels that have led the LNG marine fuel way, i.e., Harvey Gulf Marine’s fleet of offshore supply vessels. General Dynamics NASSCO in San Diego delivered the world’s first LNG powered containership, the Isla Bella, to TOTE Maritime in October, 2015.
Clean Energy Fuels Company provided the bunkering services and fuel from its Boron, Calif. liquefaction plant for the the Isa Bella and Tote's second NASSCO-bulit LNG powered vessel the Perla Del Caribe. As of now all of the LNG bunkering is taking place in Florida through trucking in LNG from Georgia. However, Crowley Maritime is constructing a new shore side-side LNG facility at Jaxport's Talleyrand Terminal. Crowley has partnered with Eagle LNG Partners on the project. Chart Industries recently delivered two 260 ton cryogenic storage tanks to the site.
- New Developments: Oceangoing Vessels
The oceangoing cruise ship industry is getting involved. Carnival Group, MSC Cruises and Royal Caribbean Cruise Lines have placed orders for LNG fueled ships. Carnival Group, has seven LNG-powered vessels on order. Royal Caribbean Cruises placed orders for two LNG and fuel cell powered vessels to be built on a prototype platform. On June 5, 2017, MSC Cruises announced its order of four 200,000-ton LNG-fueled cruise ships. The cruise ship orders are expected to be delivered between 2022-2026.
Importantly, bunkering and sourcing of LNG for the ships is being addressed. Shell Global announced in September 2016, it had signed a supply agreement with Carnival to supply LNG to fuel two of the world’s largest passenger cruise ships. One cruise ship would refuel from a special purpose Shell LNG bunker vessel. The gas would be loaded onto the bunker vessel at the Gas Access to Europe terminal in Rotterdam, the Netherlands. The second ship is expected to refuel at one of the ports in the Western Mediterranean.
Shell Global has been busy. Shell Western LNG B.V. announced in April that it executed an agreement with Sovcomflot to supply LNG to fuel the first Aframax crude oil tankers in the world to be powered by LNG.
The four Aframax tankers will operate in the Baltic Sea and Northern Europe. The ice-classed, dual-fueled tankers are scheduled for delivery in 2018. In its announcement Shell stated:
“More ship owners and operators are choosing LNG fuel over traditional marine fuels to respond to sulfur and nitrogen oxide emissions regulations, including the IMO’s recent decision to implement a global 0.5 percent sulfur cap in 2020.”
On May 12, 2017, Pasha Hawaii announced that it had selected Keppel AmFELS in Brownsville, Texas, for the construction of two new LNG fueled containerships. Delivery of the first vessel is expected in the first quarter of 2020, with the delivery of the second vessel in the third quarter of 2020. According to Pasha, the ships will operate fully on LNG from the start of the service.
Containerships, a Finnish logistics and container shipping service, recently announced it intends to transition the company completely to LNG throughout its logistics supply chain. It is expected that four LNG cargo ships will be built. In addition to the new ships, Containerships is investing in LNG trucks. Its plan is to increase the fleet of LNG trucks and invest in an LNG refueling station located in the U.K.
Japanese container shipping company Mitsui O.S.K. Lines (MOL) this year took delivery of the MOL Triumph, for now the ‘world’s biggest containership’ and the first ‘megaship’ to pass the 20,000 TEU threshold.
MOL built the Triumph as LNG ready, with a retrofit option to convert to LNG fueled ship in the future as the ‘International Maritime Organization’s new regulation to limit SOx emission in marine fuels comes into effect in 2020.’ MOL is building six 20,000 TEU-class LNG ready containerships.
United Arab Shipping Company (UASC) is continuing with its LNG fueled newbuilding program of 17 LNG-ready ships, comprising six 18,800 TEU vessels and 11 of 15,000 TEU. UASC was recently acquired by Germany’s Hapag-Lloyd.
According to UASC, upgrading the LNG-ready capability of the UASC ships to run on gas will happen when the necessary bunkering infrastructure is in place. UASC, in co-operation with Qatargas and Shell, is exploring LNG bunker supply options at a Middle East location, perhaps in and around the Suez Canal region.
RoRos are moving forward with the full LNG fuel and bunker program. United European Car Carriers (UECC), an NYK/Wallenius Lines joint venture will receive the world’s first LNG-powered pure car and truck carriers (PCTCs). The vessels will be bunkered through ship-to-ship transfers by the Engie Zeebrugge, the world's first purpose-built LNG bunkering vessel.
- Natural Gas – MARPOL Connection
Shipowners have taken notice. LNG is an option that can help them meet the international standards required for emissions. The ship part seems to be taking care of itself with the advancements in technology – meaning the ships engines can be built to run on diesel or natural gas. What needs to happen next is the supply of bunking facilities and bunker vessels must increase worldwide.
We’ll see what comes out of the IMO meeting London in July!
William P. Doyle is a Commissioner with the U.S. Federal Maritime Commission. The FMC, among other things, regulates liner companies, ocean transportation intermediaries and marine terminal operators. The thoughts and comments he expresses here are his own and should not be construed to represent the position of the Commission or his fellow Commissioners.