IMO 2020: What Role Will LNG Play?

New emission standards for maritime shipping may help create a new LNG market.

imo

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The International Maritime Organization’s 2020 standards (IMO 2020) call for a reduction in sulfur emissions by allowing ships to use fuels with a maximum sulfur content of 0.5%. This reduction is 3% below 2019 levels. The regulation calls for ships to either use scrubbers to lower sulfur emissions or they can switch to a lower emission fuel to meet this target.

Compliance with these regulations is expected to be high, with Wood Mackenzie forecasting 85% compliance in 2020 and full compliance by 2025. The bulk of these compliance levels will be on the back of increased use of scrubbers, according to the firm’s report, “IMO 2020: All Scrubbed Up and Ready to Go?”

“The pace of investment in onboard scrubbing is rising, and just over 10% of marine fuel is expected to be scrubbed in 2020,” the report said. In addition, very low-sulfur fuel oil supply is estimated to increase by about 300,000 barrels per day (bbl/d) between 2020 and 2024 and it could further increase if residue upgrading capacity is freed up by a lightening of the global crude slate, according to Wood Mackenzie.

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Frank Nieto

Frank Nieto has covered the energy industry for more than a decade. He previously served as senior editor for Hart Energy's Midstream Business.