GREEN4SEA Conference & Awards

7 Mar 2018
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GREEN4SEA Conference & Awards

7 Mar 2018
Learn More

HMM CEO: Industry should double efforts ahead of 2020 sulphur cap

industry

Focusing on the impacts of environmental regulations on the maritime industry, President & CEO of Hyundai Merchant Marine, Mr. C. K. Yoo, noted that the shipping and shipbuilding sector shall thoroughly prepare for various regulations to come, starting with Low Sulfur limitation which will take effect from January 1st, 2020.

In a keynote address at Trans-Pacific Maritime Asia Conference, in Shenzhen, China, Mr. C. K. Yoo pointed out that the Low Sulfur compliance seems to be the most serious upcoming regulation and complexity in this issue comes from the fact that there are many options available on the table and the uncertainties related to these options.

There are three options available to comply with the requirement:

  • to use Low Sulfur fuel oil with less than 0.5% sulfur emission

“…We are now well aware how burdensome financially it will be to expand the use of Low Sulfur Fuel Oil from the limited ECA areas to all over the world at all times. As of today, the prices of LSFO or LSGO are more than 50% higher than that of HFO. Furthermore, it is very difficult to forecast the price of Low sulfur fuel oil in 2020, not to mention its suppliability region wise,” he explained.

  • to install scrubbers to old or new ships.

This option enables ships operators to keep using HFO because scrubbers help to reduce Sulfur emission to meet the requirement. But there are many drawbacks regarding scrubbers, according to Mr. C. K. Yoo.

  1. Installation cost of scrubbers is expensive
  2. It takes more than 10 months for installation for new ships and for old ships, it requires additional dry docking period
  3. The sludge handling cost may incur in case of dry or hybrid type of scrubbers
  4. Retrofitting on the existing ships will result in the sacrifice of cargo space – ‘the smaller ships you may operate, the more sacrifice in loadability you will suffer’.
  • to build LNG-fueled ships

As noted, LNG has been known the best fuel to comply with the upcoming regulations and it has become very popular for passenger ships and cruise ships for now. However, Mr. C. K. Yoo also cited drawbacks of LNG fueled ships:

  1. They are expensive for ship building, requiring additional investment more than scrubbers
  2. The limitation in LNG bunkering locations throughout the world is also a problematic point
  3. The problem of cargo space losses due to bigger LNG storage.

“Again, the future price of LNG is something as difficult to predict as those of other types of fuel,” he said.

“As you may notice from my explanation, many options and related uncertainties make it difficult for shipping lines to make decisions to deal with this low sulfur issue. Whatever option shipping lines may choose, it is inevitable that the sizable cost and investment are likely to incur for the compliance of the requirements.”

Further, he underlined, a recent report claims that new regulations will cost annually about $60 billion and some predict even more, when the IMO’s 0.5 % sulphur cap for bunker fuels kicks in.

“With all these complexities, I want to suggest that we need to make every effort to address these uncertainties by continuously seeking solutions from maritime technology in cooperation with relevant authorities and maritime technology institutions, with an aim to reduce the cost burden or avoid wastage in investments related to compliance. In consideration of relatively short period time of 2 years and 3 months left for preparation, we need to double our efforts,” he concluded.

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