BP has said that it expects more than 90% of the world’s shipping fleet to comply with the 2020 International Maritime Organization rules reducing the maximum amount of sulphur emissions from 3.5% to 0.5%.
Jason Breslaw, who leads BP’s distillate trading origination across the Americas, said at an industry conference in New Orleans that “potential non-compliance is a significant issue that the market has been contending with”.
Breslaw said that BP expected about 9% of the industry to be non-compliant as the rule takes effect. Some analyst estimates have put the non-compliance rate in 2020 at as much as 30%.
Most major companies appear to have decided not to retrofit vessels with scrubbers, which would reduce sulphur emissions and allow ships to continue to burn higher-emission fuel. But the cost of installing a scrubber is between $3m and $10m. Anil Rajguru, vice president of process safety at Fluor Corp, claimed that fewer than 500 ships so far had fitted scrubbers. The current attitude appears to be more one of hoping that the low-emission fuel becomes available and that it will not be too expensive, but that, as analysts have noted, transfers the responsibility to refineries, and there are doubts that enough low-emission fuel will be readily available. The immediate consequence of this would be higher (low-emission) fuel prices and lower (high-emission) fuel prices, causing, at least temporarily, an advantage for those ships that take the scrubber route.