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Ocean Carriers Set to Switch to New Eco-Friendly Fuels in 2020

The global shipping industry has been busy this year getting ready to comply with International Maritime Organization (IMO) regulation to reduce the maximum sulfur content of marine fuel to 0.5 percent from 3.5 percent on Jan. 1.

The activity is part of a movement to lower or eliminate carbon fuels from the ocean shipping industry though re-engineering fuels or adopting alternatives. Major cargo carrier CMA CGM Group said the mandate “should have major health and environmental benefits globally, including improving air quality and reducing risks of acidification of the oceans.”

“The new IMO 2020 Low Sulphur Regulation impacts the global shipping industry, and shipping costs are set to increase worldwide,” CMA CGM said. “As the cost of the [very-low sulfur fuel oil] (VLSFO) is expected to be significantly higher than the present…fuel oil, CMA CGM will implement a new price reference for its short-term and long-term contracts.”

Isabelle Durant, deputy secretary general United Nations Conference on Trade and Development (UNCTAD), reporting on the Global Maritime Forum Annual Summit that took place in late October, said “decarbonization was at the center of the discussions.”

“Environmental awareness in the industry is true and sound,” Durant wrote in her report. “The ‘Getting to Zero’ coalition is one of the results of this awareness. It’s committed to getting commercially viable deep-sea, zero-emission vessels powered by zero-emission fuels into operation by 2030.”

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A global network of maritime technology cooperation centers has completed an array of pilot projects over the past three years, helping to drive forward the changes required to reduce greenhouse gas (GHG) emissions from shipping. Five regional Maritime Technology Cooperation Centers (MTCCS) were established under the Global Maritime Technology Cooperation Centers Project funded by the European Union and implemented by the IMO, which is the United Nations’ specialized agency with a remit to develop and adopt standards for safer, greener and more sustainable shipping.

Between them, the MTCCs count 97 participating countries and have been working with 1,179 participating vessels to deliver data sets that can help to inform and support energy efficiency improvement. Some stakeholders are already undertaking port energy audits and retrofitting domestic vessels to improve energy efficiency.

“There is no silver bullet to decarbonize shipping,” Petra Doubkova, policy officer of the Department for Mobility and Transport (DG MOVE) at the European Commission, said at a recent conference. “A basket of measures is needed ranging from framework conditions, standards and innovation to funding and economic incentives.”

IMO has adopted its own initial strategy on reduction of GHG emissions from ships, which envisions a reduction of CO2 emissions per unit of transport work, known as carbon intensity, as an average across international shipping, of at least 40 percent by 2030, while pursuing efforts toward a 70 percent reduction by 2050 compared to 2008.

Major container cargo carriers have taken action to tackle the low-carbon fuel challenges.

In September, Maersk Oil Trading and Koole Terminals struck an agreement to produce IMO 2020-compliant bunker fuel. Production is set to take place at the Petrochemical Industrial Distillation unit at Koole’s Botlek site in the heart of the Port of Rotterdam. The toll distillation deal allows Maersk to produce VLSFO bunker fuel.

“The fuel manufacturing process allows Maersk to produce compatible low sulfur fuels that comply with the IMO 2020 sulfur cap implementation, reducing the need to rely on 0.1 percent price-based gas oil and fuel oil,” Niels Henrik Lindegaard, head of Maersk Oil Trading at A.P. Moller-Maersk, said. “Our activities with Koole will be an important driver in ensuring stable, reliable services for Maersk’s customers during a potentially volatile period for global shipping.”

Carrier CMA CGM introduced a low sulfur surcharge effective Dec. 1 to cover the increase in fuel-related costs associated with the implementation of the IMO 2020 regulation. The surcharge was calculated using the price difference between high sulfur fuel and low sulfur fuel average prices from October.

CMA CGM will be compliant with a mix of three solutions: using liquid natural gas-powered vessels, using advanced air quality systems onboard vessels, and as the main solution, using compliant fuels.

At the same time, Maersk and Wallenius Wilhelmsen have teamed up with Copenhagen University and major customers BMW Group, H&M Group, Levi Strauss & Co. and Marks & Spencer to form the LEO Coalition to explore the environmental and commercial viability of LEO fuel for shipping.

LEO, a blend of lignin and ethanol, is seen as a future solution for sustainable shipping. The coalition and its mission follow a recently released study from Maersk and Lloyd’s Register that said the best-positioned fuels for research and development into net zero fuels for shipping are alcohol, including ethanol, biomethane and ammonia.