Early action key to ensuring 2015 ECA compliance

May 01 2014


The impending enforcement of next year’s 0.1% Emissions Control Area (ECA) regulation is causing considerable challenges to owners and operators*.

Among others, concerns over increases in operational costs, product availability and the most appropriate compliance option will create challenges.

However, while it will create added complexity to the supply and use of marine fuels, those who plan in advance and work closely with a trusted fuel partner to develop a compliance strategy that is right for their business, are more likely to better adapt and increase their competitive advantage. Not just from keeping fuel costs as low as possible, but also ensuring compliance and avoiding fines, as well as managing the technical complexities of switching to distillates, which, if done incorrectly can cause significant damage to vessels.

In managing the shipping industry’s adoption of the stricter 2015 ECA regulation, while we are now seeing more of a consensus of opinion taking shape, more planning needs to be done.

Presently there are three options that have dominated most recent debates:

Scrubbers - We have seen some uptake of scrubber technologies, but as a key component to retrofitting scrubbers is finding significant upfront capital, they will not be the immediate ‘silver bullet’ solution.

LNG – This can deliver from an emissions reduction perspective, but it is still a very immature market with limited global, port and shore-based infrastructure.

Distillates – There is current consensus that this is going to be the most viable compliance solution for the vast majority of shipowners and operators, at least in the medium term, both in terms of meeting emissions requirements and operational feasibility.

It is acknowledged that distillates command a significant premium above heavy fuel oil and there are cost considerations that must be addressed. For distillates, we are currently looking at a minimum of $300 premium above heavy fuel oil in Rotterdam, for example.

Therefore, creating the right fuel procurement strategy that maximises efficiencies, reduces costs and helps owners and operators to operate as profitably as possible is critical. There are also considerations with the availability of distillates, particularly in Europe, that must be addressed. Europe is a region of net-importers of middle distillates and it is unlikely that there will be a significant increase in MGO refining capabilities over the coming years given the costs involved for refiners.

This means that distillates need to be sourced from the Middle East and Asia/Pacific, where refinery capacity is increasing to meet global demand. To do this, it is important to know what our customers needs are in advance, in order to provide both reliability and flexibility across distribution infrastructure and to ensure that refuelling solutions are right for their business and operational requirements.

Implications

While other shipping sectors, such as ro-ro operators, which spend the majority of their time in ECA waters and will be most significantly affected by the 2015 regulations, for tanker operators, the emissions requirements will still add additional complexity to their operations.

As a physical fuel distributor and reseller that has control over the fuel supply chain, we recognise that reliable access to a wide range of high-quality fuels worldwide and flexibility in how we can supply fuel, is going to be even more imperative.

Whether it is in high, rough seas, or on the road close to shore, the pressure on operators to safely and efficiently switch fuels, without risking engine damage, or non-compliance, needs to be alleviated as much as possible by their fuel provider.

In practice, ensuring compliance with increasingly stringent emissions regulations is also about providing guarantees on product quality and specifications, as well as ensuring that these are delivered where customers need them, at the right time and in the right quantities.

OW Bunker has introduced a global quality standard where all of our customers are provided with a full specification analysis in advance of any physical delivery, prior to the usual test procedures conducted by an external fuel quality inspection company.

Flow meters

This provides added assurances and additional measures to detect off-spec, non-compliant fuel products. We have also been equipping our global distribution fleet with Coriolis flow meters to ensure accuracy in the quantity of fuel supplied, thereby avoiding increasingly expensive margins of error as fuel prices rise.

Managing the 2015 ECA regulation, therefore, requires marine fuel distributors to look beyond just the cost of fuel to providing real value throughout the entire fuel supply chain, investing in innovation and developing the highest quality in service standards that maximises operational efficiencies.

For tanker operators in particular, it is about having the fuel supply networks and infrastructure to provide optimum choice and flexibility across different routes and conditions. This includes working as partners to help streamline the fuel distribution process, increase operational efficiencies and reduce avoidable expenses by mitigating risks, as much as possible so that the 2015 regulations can be a force for positive change rather than a costly, complicated problem.



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