DCN May Edition 2019

INDUSTRY OPINION
Meeting the low
sulphur fuel challenge
Angela Gillham examines the trend towards cleaner fuels
and what it is likely to mean in practice
WHILE MOST TIGHTENING OF
ship emissions standards has occurred
in the northern hemisphere, as urban
encroachment in Australia continues, so
will community pressure on authorities to
act here.
It is worth comparing Australian fuel
sulphur standards from other emissions
compliance options will have an impact
on demand for low sulphur fuel and will
influence supply and price. It is important
to note the IMO fuel availability study,
commissioned in the lead up to the decision
on the sulphur cap implementation date,
found the global refining industry has
capacity to meet projected global demand.
sources. While there has been a tightening
of global fuel standards and emissions
regulations for international shipping, the
current Australian requirement for sulphur
content in automotive diesel remains
considerably more stringent (Table 1).
This is likely to attract further community
attention in the future.
LOW SULPHUR FUEL
Fuel low enough in sulphur to be
compliant, in reality, can mean different
things. Lower sulphur content can be
achieved by blending low sulphur fuels and
heavy fuel oil or further refining HFO, to
produce gasoil (diesel). Sulphur content is
just one of many specifications and there
IMPACT ON INDUSTRY
Total annual marine fuel demand is around
400m tonnes and climbing. The global
sulphur cap will have a significant impact
and as suppliers attempt to meet this new
mix of marine fuel demand there will be a
price increase, possibly a significant one.
A recent survey of vessel operators by
MIAL found average expectation of the cost
differential between HSFO and compliant
fuel was $250, and estimates ranged from
$75 to $740 per tonne.
There are several compliance options
available to shipowners, including using
low sulphur fuel, alternative fuels such as
liquefied natural gas and ‘drop in’ biofuels
and renewable diesel, and exhaust gas
cleaning systems – each having technical
challenges, limitations and accessibility
issues. The degree of uptake of each of these
are some safety concerns around the use of
blended fuels to achieve the 0.5% limit, the
properties of these fuels and compatibility
with existing marine diesel engines.
Work is underway to update guidelines
relating to the relevant ISO specifications
to address the safety concerns using new
fuel blends.
In Australia, low sulphur diesel options
are limited as is refining capacity. Along
with some high sulphur heavy fuel oil and
petrol, the major Australian fuel suppliers
import one grade of diesel at 0.001%
sulphur – this is automotive diesel – a
costly option. Fuel suppliers have indicated
they are planning to have low sulphur fuel
oil available at selected Australian ports,
but ship operators wanting access to this
product need to communicate this early to
ensure capacity.
TABLE 1: FUEL SULPHUR LIMITS IN AUSTRALIA
REGULATED LIMIT
DIESEL USE % PPM
Automotive diesel 0.001 10
Current international shipping 3.5 35000
2020 international shipping 0.5 5000
2020 international shipping ECA 0.1 1000
Angela Gillham, deputy CEO, Maritime Industry
Australia
LNG
LNG contains virtually no sulphur and, in
recognition of the opportunities that LNG
represents particularly for Australia, the
number of newbuilds planned or operating
within the Australian market is growing.
Perceived limitations are loss of cargo
space due to the larger fuel storage area and
current lack of distribution networks and
bunkering infrastructure.
LNG has the added benefit of burning
with about two thirds of the greenhouse
gas emissions of diesel. LNG is a powerful
greenhouse gas, however, and methane
slippage has been flagged as an issue.
BIOFUELS AND RENEWABLE DIESEL
The use of biofuels and renewable diesel
presents a significant opportunity with
little to no sulphur content. There are a
variety of drop-in biofuels and renewable
diesel products available that can be used
in existing marine diesel engines. The main
challenge for wide-scale adoption of these
fuels is the scalability of production to
meet the large volumes required.
MIAL
18 May 2019
thedcn.com.au