Dirty shipping: Low sulfur standards in marine fuels

The most energy efficient way to move things around the world is stick something in a 40 by 8 foot foot shipping container that is hauled to port by an 18 wheel truck and loaded on a gigantic container ship. These ships piled high with goods from all over the world can be as large as 400 by 59 meters and can carry up to 9000 of these 40 foot shipping containers at a time.

These ships are often designed to burn the dirtiest type of fuel, which is the residual sludge left over after oil distillation that is called heavy fuel oil. This sludge is so viscous that it has to be heated just to pump it into the ship engines to be burned. Most large ships operating today use a type of fuel known as intermediate fuel oil, which is a mixture of heavy fuel oil which has a viscosity up to 700 mm2 per second and marine gas oil, which is No. 2 distillate with a viscosity between 1.5 and 6 mm2/sec. This intermediate fuel oil is generally sold as IFO180 or IFO360, meaning it has a viscosity of 180 mm2/sec or 360 mm2/sec.

Out in the ocean, there is no one to complain about the billowing clouds of noxious fumes that follow in the wake of these floating behemoths, so shippers got away with spewing enormous quantities of black carbon, sulfur oxides, nitrogen oxides, organic matter and particulate matter into the atmosphere. In 2009, it was calculated that one large container ship emits as much cancer and asthma-causing chemicals as 50 million cars in a year. The National Oceanic and Atmospheric Administration (NOAA) also calculated in 2009 that the emissions from the 90,000 cargo ships in the world causes 60,000 premature deaths per year, and costs up to $330 billion per year in health costs from lung and heart diseases.

Due to concerns about the emissions from ships, rules began to be put in place to limit the dirtiest types of fuels. The UN’s International Maritime Organization governs pollution from ships through its “International Convention on the Prevention of Pollution from Ships,” which is known as MARPOL. This standard was passed in 1973 in the wake of the Earth Day protests and the rise of environmental activism in the early 70s, but it didn’t receive much attention for the next 3 decades.

In September 1997, MARPOL was amended to limit the emissions of sulfur oxides (SOx) and nitrogen oxides (NOx) from ships. Annex IV of the 1997 Protocol specified that the fuel used by ships could contain no more than 4.5% or 45,000 parts per million (ppm) of sulfur, whereas at the time some ships were burning heavy fuel oil with as high as 5% sulfur. This was ten times higher than the sulfur content in standard diesel and gasoline for cars and trucks which could be as high as 0.5% or 5000 ppm of sulfur, if there were no pollution controls. Even with the new sulfur limits in the 1997 Protocol, marine fuel had an average of 2.7% sulfur by weight, so it was still incredibly dirty.

The 1997 Protocol also established Emission Control Areas (ECAs) 200 nautical miles from the shoreline in the North Sea, Baltic Sea, and off the coasts of Canada and the United States, including Puerto Rico and US Virgin Islands. In the ECAs, the sulfur content of marine fuels was limited to 1.5% or 15,000 ppm.

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The 1997 Protocol was clearly not a high priority for most of the world, because it didn’t get passed by the requisite number of countries which represent half of nautical shipping until May 2004, so it didn’t enter into force until May 2005. As the evidence started piling up about the emissions problem of global shipping, there was a greater push to significantly reign in the pollution. In October 2008, MARPOL was amended again to lower the limit to 3.5% sulfur in marine fuels starting in 2012 and reduce it to 1.0% sulfur in the ECAs starting in August 2010. Further amendments in 2010 and 2011, specified that the sulfur content would be limited to 0.1% or 1000 ppm of sulfur, starting in 2015 in the ECAs.

The US EPA estimated in 2009 that limiting the sulfur content of marine fuels in the North American ECA to 1000 ppm will prevent between 13,000 and 32,000 premature deaths from particulate matter, between 220 and 980 premature deaths from ozone, 1,500,000 work days lost, and 10,000,000 minor restricted-activity days in the year 2030 in the United States. The estimated annual savings in 2030 would be between $110 and $280 billion (assuming a 3% discount rate), while the annual costs would be approximately $3.1 billion.

The US EPA also estimates that the restrictions on sulfur content in marine fuels and nitrogen oxide emissions from marine engines will reduce particulate matter emissions by 74%, sulfur oxide emissions by 86% and nitrogen oxide emissions by 23%.

While these amendments to MARPOL represent significant reductions in the sulfur content of marine fuels, they are still far higher than the ultra-low sulfur diesel (ULSD) found in many parts of the world. Diesel and gasoline sold in the European Union, Australia and New Zealand have a limit of 0.001% or 10 ppm of sulfur since 2009. China has mandated diesel and gasoline with 10 ppm sulfur for road vehicles in 2017 and for all uses in 2018. Diesel with 10 ppm sulfur has also been used in the majority of Brazil since 2013, and it has been an optional grade of diesel fuel in Argentina since June 2016. The sulfur content is even lower in some European countries, such as Germany which implemented a tax incentive for “sulfur free” fuels starting in 2003. Diesel and gasoline sold in the US and Canada have a limit of 0.0015% or 15 ppm sulfur, starting in 2010 for all highway vehicles and in 2014 for all non-road uses, including train locomotives and marine engines.

Fuels with a limit of 10 ppm of sulfur are 3500 times cleaner than the global standard for marine fuel and 100 times cleaner than the marine fuel in ECAs. The black carbon produced by diesel engines only stays in the air for roughly a week, but one gram of this black carbon absorbs a million times more heat during that week than a gram of carbon dioxide, which is the principal greenhouse gas. In addition, black carbon which lands on snow and ice will darken its surface, which causes it to absorb more light as heat, rather than reflecting it, which causes the snow and ice to melt more quickly and raises local temperatures.

Bond et al. (2013) estimate that 24% of all black carbon in the world comes from diesel engines and the black carbon from burning fossil fuels has produced 0.29 watts per square meter of direct radiative forcing since 1750. In addition, the black carbon from all sources, which lands on snow and sea ice produces an additional 0.13 W/m2 of radiative forcing. In comparison, the IPCC estimates that carbon dioxide produces 1.82 W/m2 of radiative forcing.

According to Tedesco et al. (2016), the albedo (reflectivity) of the Greenland ice sheet increased 0.2% per decade between 1981 and 1996, but it reduced 1.9% per decade between 1996 and 2012. During this time period, biomass burning did not significantly increase, whereas fossil fuel burning and the use of diesel motors in the Northern Hemisphere significantly increased, which is why albedo loss, temperature increase and ice loss are all accelerating in Greenland.

tedesco2016greenlandice

Changes in Greenland in albedo (a), temperature (b), precipitation (c) and ice volume (d). Tedesco et al (2016).

Greenland is loosing 380 cubic kilometers of ice per decade, but that pales in comparison to the loss of Arctic sea ice. According to PIOMAS, the annual minimum in Arctic ice volume has reduced 74%, from 16,855 km3 in 1979 to 4,402 km3 in 2016, which means that it is losing 9 times more ice per decade than Greenland.

The loss of Arctic sea ice has significantly impacted the planet’s climate. Sea ice reflects roughly 50% of incoming radiation back to space, whereas open water reflects only 10%, so the planet is now absorbing significantly more heat than it used to. The Arctic region is warming twice as fast as the rest of the planet and some areas in the Arctic are reporting temperature increases as high as 7 degrees C above their long-term averages. Scripps Institute of Oceanography estimates that the loss of Arctic sea ice reduced the planetary albedo (reflectivity) over the Arctic from 52% to 48% between 1979 and 2011, which in turn caused 6.4 W/m2 of radiative forcing during the same time period in the Arctic region. Averaged over the entire planet, this radiative forcing from the loss of Arctic sea ice is equivalent to 25% of the forcing from carbon dioxide over the last 30 years.

As the Arctic ice melts, it has opened up new sea lanes in the Northern Hemisphere. The US Committee on the Marine Transportation System predicts that traffic in the US Arctic waters will increase five-fold by 2025, which means that even more dirty marine fuel will be burned close to Greenland and the Arctic sea ice. To avoid even more radiative forcing from black carbon landing on ice, the standards on sulfur content need to be strengthened. The current MARPOL regulations call for the global limit in marine fuels to be decreased from the current standard of 3.5% sulfur to 0.5% sulfur in 2020. Even with that new standard, marine fuel will still be 500 times dirtier than the diesel currently being sold in Europe and China.

Given the current planetary crisis being caused by the loss of ice in the Arctic and in Greenland, there is clearly a need to demand cleaner marine fuels. Shipping companies, however, maintain that the cost of these new fuel standards are too high. Fuel comprises roughly 55% of the total costs of a container ship, so shipping companies are anxious to keep fuel prices as low as possible. Nonetheless, no shipping company is at a competitive disadvantage, if the entire world implements new fuel standards at the same time. Furthermore, once a new standard is implemented, the price of the new, cleaner fuel falls as refineries ramp up production. There is currently much less production of the marine fuel which is limited to 0.1% sulfur in the ECAs compared to the dirtier marine fuel with the 3.5% sulfur limit which is used by the rest of the world. A year ago, ultra-low sulfur fuel oil (ULSFO) cost 72.5% more than the price of  intermediate fuel oil (IFO380) with the 3.5% sulfur limit.  Nonetheless, that difference in price is 50.1% today and it should keep falling as more refineries start producing the cleaner fuel.

Ship fuel prices in Rotterdam
Fuel type Max. sulfur content Price ($ / metric ton) Growth rate in price
2016-01-27 2017-01-27
Intermediate fuel oil 380 (IFO380) 3.5% $134.50 $303.50 125.7%
Intermediate fuel oil 180 (IFO180) 3.5% $159.50 $338.50 112.2%
Ultra-low sulfur fuel oil (ULSFO) 0.10% $232.00 $455.50 96.3%
Marine gas oil (MGO) 1.5% $260.00 $469.00 80.4%
Ultra-low sulfur marine gas oil (LSMGO) 0.10% $255.50 $464.50 81.8%
Difference IFO380 and ULSFO 72.5% 50.1%
Difference MGO and LSMGO -1.7% -1.0%
Source: Ship & Bunker, Rotterdam Bunker Prices, http://shipandbunker.com/prices/emea/nwe/nl-rtm-rotterdam#ULSFO

If the entire world had also switched to the cleaner marine fuel in 2015 like the ECAs, then the difference in fuel prices probably would have been negligible. The switch to ultra-low sulfur diesel in Europe and the United States did not cause large price premiums for cleaner fuel. The extra refining costs in the US for ultra-low sulfur fuel were 5 cents per gallon, and the final cost for the consumer was between 5 and 8 cents per gallon. The extra refining costs are significantly higher to remove sulfur from heavy fuel oil, but the environmental benefits of reducing from 3.5% to 0.1% sulfur are also much greater. Sadly, the world lost a chance to eliminate much of the acid rain, particulate matter and black carbon produced by global shipping by not adopting the ECA standard as a global standard.

The Greenland ice sheet holds enough ice to raise global sea levels by 7 meters. As the planetary crisis of global warming deepens, the world will inevitably demand that shippers stop producing the black carbon that is causing the ice to melt and threatening the stability of shorelines all around the planet. Paying extra refining costs to eliminate sulfur is a small price to pay compared to the cost of relocating every coastal city on the planet. Shipping companies are not doing themselves any favors by lobbying against pollution controls, because they are creating a situation where the unethical and fly-by-night shippers will skirt the regulations and use the dirtier fuel in the ECAs, whereas the shippers like Maersk which have a reputation to maintain will comply and be placed at a competitive disadvantage when shipping in the ECAs.

In the end, alarmed citizens all around the planet are going to rise up as the seas start to inundate their cities, and the demand for ultra-low sulfur standards will become unstoppable. The global shippers should avoid the potential backlash against their reputations and global trade in general by calling for better pollution standards today.

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3 thoughts on “Dirty shipping: Low sulfur standards in marine fuels

  1. amosbatto Post author

    The solution to most transport problems is to electrify it and then generate that electricity using renewable energy. At first glance, it would seem that electric cargo ships are unfeasible, because they need a place to recharge. However, they could be feasible if the world builds a network of floating charging stations, which are powered by floating wind turbines that store their energy in giant batteries. Maybe we will see ships that follow electric lines that are strung across the oceans, the same way that trolley cars follow the paths laid out by the electric lines.

    Maybe we will see a return to sails, which can be used when the wind is blowing the right direction, but those sails will only supplement the main engine. I’m certain we will see solar panels on cargo ships, but again that will only be supplemental power.

    Another possibility is giant airships (blimps) which use electric motors to turn the propellers. Some airships can reach 150 miles per hour and they can carry large enough batteries to cross the oceans or stop at a couple islands along the way.

    All of these ideas are far more viable in my opinion than nuclear reactors on ships. It will take massive government subsidies just to compete with diesel and no commercial entity will insure nuclear powered ships, so the government will also have to provide that. Electric ships powered by recharge stations or electric lines will be more economical. Likewise, airships running electric motors will probably be cheaper. The cost of nuclear energy continually rises, whereas the cost of floating wind turbines, electric motors and batteries will keep falling.

    In a world of carbon taxes and high energy prices, local production will become more competitive, so we will probably be able to significantly cut global shipping, so it will be less of an environmental problem.

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  2. daveburton

    Interesting post, Amos, but, I don’t think this can be correct: “Greenland is loosing 380 cubic kilometers of ice per decade…”

    380 km⊃3/decade = 34.8 Gt/year. It takes 362 Gt of meltwater to raise sea-level by 1 mm, so your estimate has Greenland meltwater contributing only 0.096 mm/yr to sea-level rise. I think that most estimates of Greenland’s contribution to global sea-level rise are at least 5x that.

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