Marine bunkers product demand by fuel 2018-2024

In 2020, the International Maritime Organization (IMO) set a limit to the sulfur content of marine fuels. As a consequence, the demand for high sulfur fuel oil (HSFO) is expected to drop dramatically in 2020, while marine gas oil (MGO) is projected to see a demand of 1.98 million barrels daily in 2020 and to remain the dominant fuel in the years to come.

IMO 2020

Although sea transportation is less environmentally damaging compared to air and land transportation, it emits considerable amounts of sulfur and nitrogen oxides in addition to other air pollutants from engines. In an effort to reduce such emissions, the International Maritime Organization (IMO), an agency of the United Nations in charge of developing guiding rules for the global shipping industry, introduced a new sulfur cap on January 1, 2020. This implies that ships in the world oceans will only be allowed to use fuels with a sulfur content of under 0.5 percent. Some regions, such as the European Union countries, are subject to more stringent standards. The new standards allow for higher sulfur contents if scrubbers are installed. Vessel scrubbers are employed to remove nitrogen oxides (NO_x), sulfur oxides (SO_x), and other air pollutants from exhaust gases generated by engines. As of 2019, roughly five percent of total container ships globally were equipped with scrubbing systems. Due to the new sulfur cap, the penetration rate of scrubbing systems is expected to increase in the upcoming years.

Transition to alternative fuels

Being one of the most cost-effective transport methods for international trade, the volume of goods transported by sea freight has been steadily increasing over the past few decades. Tankers typically transport commodities such as crude oil, refined petroleum products, gas, and chemicals. Between 1970 and 2018, the quantity of tanker freight in international maritime trade more than doubled, reaching about 3.2 billion metric tons in 2018. However, the shipping industry is now under pressure to switch to cleaner fuels and equip their vessels with sulfur abatement systems or transition to alternative fuels, such as liquefied natural gas. The number of liquefied natural gas-propelled vessels worldwide is expected to reach 125 by 2020, up from 76 in 2015.