Assessment of Fuel Oil Availability (stakeholder consultation) EGCSA Annual Meeting,
World leading research of the UCL Energy Institute Shipping Team combined with the advisory and management system expertise of MATRANS. Research grants (RCUK, EU, ECF, ETI) Consultancy clients (IMO, Shell, INTERTANKO, EBRD, RBSA, IEA) Independent contracting
Outline Context of the study Aim of the study Methodology and sources Projections of scrubber use Project planning 3
Context of the Study MEPC 58 amended MARPOL Annex VI, Regulation 14. The sulphur content of any fuel oil used on board ships outside ECAs shall not exceed the following limits (14.1): 3.50 % m/m from 2012 0.50 % m/m from 2020 Regulation 4 specifies that these limits can also be achieved by alternative compliance methods that are at least as effective in terms of emissions reductions Regulation 14.8 specifies that the 0.50 % limit shall be subject to a review to be completed in 2018, taking into account the global market supply and demand for compliant fuel; trends in fuel oil markets; and any other relevant issue. 4
Context of the Study MEPC 68 agreed on Terms of Reference for the Review of the Availability of Compliant Fuel Based on MEPC 68/3/3 and MEPC 68/INF.11 The study should provide appropriate information contracting State Parties to MARPOL Annex VI 5
Aim of the study Overall objective: to conduct an assessment of the availability of fuel oil with a sulphur content of 0.50% m/m or less by 2020. Specific objectives: Develop quantitative estimates of the demand for fuel oil meeting the global 0.50% m/m sulphur limit, both globally and for different world regions Assess the ability of the refinery industry to supply the projected demand Compare the demand and supply scenarios to assess their implications with respect to the availability of compliant fuels. Report the findings of the analysis to the Steering Committee. 6
Aim of the Study Overview of marine fuel demand IFO 0.5% S Fuel LNG 0.1% S Fuel IFO Non-marine fuel Non-ECA Total marine fuel demand ECA / EU Non-marine fuel demand LNG EGCS EGCS 7
Methodology and sources 2012 maritime fuel demand (3rd IMO GHG Study) 2012 production maritime fuels (refineries, inter-refinery transports, crude oil) 2012 production other fuels (refineries, inter-refinery transports, crude oil) Completed / In progress Next steps Activity Exhaust gas cleaning systems Regulations Alternative fuels 2020 maritime fuel demand (base, high, low) 2012 refinery configuration (refineries, inter-refinery transports, crude oil) Production methods 2020 maritime fuel supply (base, high, low) Refining capacity Crude oil slate Assessment (supply of fuels, alternative compliance options) 8
Methodology and sources 2012 supply and demand Third IMO Greenhouse Gas Study IMO reports on sulphur content Stratas data on non-marine fuel use (IEA, EIA, OPEC, OGJ) 2020 marine demand Third IMO Greenhouse Gas Study Updated analysis on scrubber installations Updated analysis on use of non-petroleum fuels 2020 fuel supply Stratas on the basis of (IEA, EIA, OPEC, OGJ) 9
Projections of scrubber use Projections of scrubber use based on Literature review (completed) Stakeholder in-depth interviews (completed) Stakeholder internet survey (almost completed) 12 January 2016 10
Projections of scrubber use CAPEX OPEX Hybrid, new USD 2.3 mln + 44*P ME (kw) USD 1.3k + 0.6*P ME (kw) + 0.5% fuel Hybrid, retrofit USD 2.9 mln + 58*P ME (kw) USD 1.3k + 0.6*P ME (kw) + 0.5% fuel Open, new USD 1.8 mln + 37*P ME (kw) USD 1.3k + 0.4*P ME (kw) + 1% fuel Open, retrofit USD 2.3 mln + 55*P ME (kw) USD 1.3k + 0.4*P ME (kw) + 1% fuel 12 January 2016 11
Projections of scrubber use At a fuel price difference of USD 100, scrubbers are generally costeffective for ships with more than 20 MW installed power (figure 3) 12 January 2016 12
Help request 13
Projections of scrubber use Regulatory constraints Uncertainty about washwater discharges in ports and estuaries Technical and operational constraints Available space on some existing ships and some container ships Availability Scrubbers are widely available and can be installed during regular drydockings Other constraints Split incentives Financial constraints 12 January 2016 14
Projections of scrubber use Preliminary analysis shows that the most important constraints are: Availability of repair yards Regulatory uncertainty Scrubbers that can operate partly in no-discharge mode will become more attractive Preliminary estimates: at a fuel price difference of USD 100 per metric tonne, 2000 5000 ships may be equipped with scrubbers annually from 2018 onwards (providing a decision is made to maintain 2020 date) 12 January 2016 15
Project planning Project started October 2015 2012 fuel demand and supply completed December 2015 2020 demand projections completed March 2016 (input after 1 st April cannot be used) Delivery final report May 2016 16
Thank you for your attention! Jasper Faber and Tristan Smith faber@ce.nl, tristan.smith@ucl.ac.uk 17