LONDON: The United Nations' shipping agency on Thursday set global regulations to limit the amount of sulphur emissions from vessels which will come into force from 2020.
A session of the International Maritime Organization's (IMO) Marine Environment Protection Committee in London set the new regulations, which will see sulphur emissions fall from the current maximum of 3.5 percent of fuel content to 0.5 percent.
The IMO had the option of delaying the regulations coming into force until 2025. But this had been opposed especially by environmental groups. Shipping officials say the 2020 start could result in a spike in fuel costs at a time when parts of the industry are going through the worst ever downturn. Refiners too will be impacted.
Around 3 million barrels per day of high-sulphur fuel oil go into bunker fuel for ships, and most of that will be replaced with lower-sulphur distillates.
Refineries that do not have the ability to convert the fuel oil into higher quality products will struggle to remain profitable as this big outlet for lower-quality fuel disappears.
"Refiners will not invest to de-sulphurise fuel oil and there is not enough low-sulphur fuel oil to meet demand from the shipping sector," Robert Campbell, head of oil products research with consultancy Energy Aspects, said.
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