Fuel oil availability review for international shipping EGCSA AGM & Workshop Thursday 25th February 2016 Brunel University, Uxbridge
International Maritime Organization (IMO) A specialized agency of the UN The IMO Convention adopted in 1948 and IMO first met in 1959 171 Member States Develop and maintain a comprehensive regulatory framework for shipping Safety, environment, legal matters, technical co-operation, security and the efficiency of shipping Safe, secure and efficient shipping on cleaner oceans 2
Regulatory framework MARPOL Annex VI MARPOL Annex VI: 1997 Protocol adopted in 1997 Entered into force on 19 May 2005 Revisions of Annex VI: Adopted in October 2008 Entered into force on 1 July 2010 Chapter 4 on Energy Efficiency Adopted in July 2011 Entered into force on 1 January 2013 Number of Contracting States: 86 (as of 20 Jan. 2016) The combined merchant fleets of which constitute approximately 95.34% of the gross tonnage of the world s merchant fleet 3
Regulation 14 Sulphur oxides and particulate matter (SOx & PM) Fuel oil % sulphur Review completion 4.50 1.1.2012 by 2018 3.50 1.1.2020 1.1.2025 1.50 1.7.2010 1.00 1.1.2015 0.10 0.50 Time Non-ECA ECA
IMO Designated Emission Control Areas (ECAs) North Sea and Baltic Sea ECAs - SOx North American ECA SOx, PM and NOx U.S. Caribbean Sea ECA - SOx, PM and NOx 5
Global 0.50% Fuel Oil Availability Review Regulation 14.8 requires a review of the standard set forth in regulation 14.1.3 (0.50% sulphur limit) shall be completed by 2018 to determine the availability of fuel oil to comply with the fuel oil standard set forth in that regulation and shall take into account the following elements:.1 the global market supply and demand for fuel oil...2 an analysis of the trends in fuel oil markets; and.3 any other relevant issue. MEPC 68 (May 2015) approved Terms of Reference for the assessment of fuel oil availability review MEPC 68 established a Steering Committee to oversee the review and agreed is the de facto group of experts to develop the appropriate information to inform the decision of the Parties CE Delft* undertaking study to be submitted to MEPC 70 (Autumn 2016) Parties to MARPOL Annex VI to consider report and information therein and decide effective date of 1 January 2020 or 1 January 2025 * CE Delft led consortium with Stratas Advisors (Hart Energy) and UMAS (UCL & MATRANS) 6
Global 0.50% Fuel Oil Availability Review demand modelling demand from all ships over 100 GT marine demand less than 10% of global demand so non-marine demand is a critical consideration - how will 0.50% sulphur fuel oil be produced? volume of products available for blending and non-marine demand for those? 2012 base case year (Third IMO GHG Study 2014) market penetration of Exhaust Gas Cleaning Systems by 2020 is a critical input to the demand modelling projected price differential between HFO/MGO is key driver for adoption only additional regulatory consideration is the Chinese national ECAs need to consider the availability and cost of hydrogen production as this may constrain production 7
Global 0.50% Fuel Oil Availability Review supply modelling 2012 used as base case year for supply modelling as this was latest year for which all relevant data are available and is the same base case year as for demand modelling separate regional refinery models being used and then combined for global model calibration and inter-regional trades important considerations details of planned capacity changes by 2020 identified but uncertainty over when new capacity will come on stream refinery shutdowns expected in Europe only by 2020 use of specific sulphur content of feedstock preferred (not weighted average) global structured balance of all products is required (TOR 6.2.1) closed material balance on refining operations, making sure no products are assumed to be made for which there would be no corresponding demand to ensure availability on the market by 1 January 2020 supply projections for mid-2019 used 8
Thank you for your attention For more information : www.imo.org 9