A study on the impacts of IMO 2020 on the industry - feasibility of LNG bunkering as a solution

Growing concerns on environmental pollution have called for ships’ emission to be monitored and controlled. As such, a 0.5% global sulphur limit (IMO 2020) on emission was initiated by the Marine Environment Protection Committee through MARPOL Annex VI of International Maritime Organisation Conventions. For member states of IMO who ratify the convention, sulphur emissions will be capped at 0.5% mass by mass with effect from 1 January 2020. Due to various uncertainties in the industry, shipowners have to make a tough decision between the solutions to compliance - turning to 0.5% VLSFO and Distillates bunkering, installation of scrubbers or LNG bunkering. IMO 2020 will be a massive change to the industry and its impacts are expected to be felt throughout the maritime cluster. This report studied the feasibility of LNG bunkering as a solution to IMO 2020 through an analysis of the impacts as collected through online research, surveys and interviews with industry players including representatives from International Bunker Industry Association, TOTAL Marine, Pavilion Gas, and Det Norske Veritas Germanischer Lloyd (DNV GL). However, because of the strengths and weaknesses of LNG, both positive and negative impacts can be anticipated following the implementation of IMO 2020. Apart from increased costs throughout the industry, a cleaner and greener environment from a change in energy mix can also be anticipated. On the technical aspects, although stability of vessels will be affected, using LNG as bunker is likely to extend the lifespan of engines onboard by having it kept cleaner, with less pollutants in the smoke. Enforcement is the key to providing a level playing field for players in the industry. Hence, additional resources and efforts will be required to instill proper and stringent regulations that serve as a control for not just compliance, but the quality and safety of services provided as well. While availability remains as the main concern, trading regions, sustainability, age of vessels, costs and payback period are also factors that will influence shipowners’ decision. Discussions, followed by recommendation, for the most suitable solution across different time period were also based on these factors. It was observed that LNG will be a practical solution for the industry, but would be more practicable in the future, when facilities are more well-developed.Bachelor of Science (Maritime Studies