News / Iceland set to join SECA regions, adding to pressure on carriers burning LSFO

Reykjavik, Iceland - August 10, 2019: Panoramic view of the commercial Port of Reykjavik, Iceland

IMO member states, legislating for the 0.5% sulphur cap within their territorial waters from 1 January, could go a step further and lower the maximum sulphur content in marine fuel to 0.1%.

This is potentially bad news for carriers opting for a strategy of burning maximum 0.5% LSFO (low-sulphur fuel oil) in all but the current SECAs (sulphur emission control areas) in compliance with IMO 2020.

But it’s good news for carriers that have invested in scrubbers – exhaust gas cleaning systems.

There are currently two main areas of the world designated as SECAs, where ships must consume ultra-low-sulphur fuel (ULSFO): Northern Europe (North Sea, Baltic Sea and the Channel); and North America, including Canada and parts of the Caribbean.

Presently, vessels entering SECAs are required to switch tanks, from the 3.5% maximum sulphur content HFO (heavy fuel oil) to 0.1% maximum ULSFO, before transiting.

However, ships equipped with scrubbers can continue to consume HFO within the SECAs, albeit that some 80 ports around the world now prohibit the operation of open loop scrubbers within their jurisdiction.

Open loop scrubbers discharge wash water used in the fuel cleaning process back into the sea, whereas closed loop and hybrid scrubbers keep the wash water onboard for discharge along with the sulphur residue at a nominated port.

Iceland announced on Friday that, in its territorial waters from 1 January, the maximum sulphur content of marine fuels would go down to 0.1%, thus creating a SECA region.

However, Iceland is permitting the use of open loop scrubbers.

And more nations are expected to follow Iceland’s example, including China, where the authorities are about to review their current 0.5% sulphur cap at core ports, reducing the maximum to 0.1% and extending the range of ports included.

But what the operators using LSFO fear most of all is as that the crucial Mediterranean Sea route will become a SECA, obliging carriers to carry much larger stocks of ULSFO than needed for just port entry.

And there is the cost element: ULSFO tends to be around $50 per ton more expensive than LSFO, which in turn, on current price at $510 per ton, is more than double the cost of HFO.

One industry analyst The Loadstar spoke to recently said that he thought it was “only a matter of time” before the Mediterranean became a SECA, although there have been numerous studies and reports submitted to the IMO, but little progress made.

“The trouble has been getting all 11 bordering European member states, and a further eight or so on the African coastline, to agree. But I think that with IMO 2020, this could gather momentum,” he said.

Danish ferry operator DFDS recently marked 10 years of scrubber operation on board the 37,939 gt ro-ro vessel Ficaria Seaway. The ferry is deployed on the company’s Gothenburg-Immingham route, which is within the scope of the Northern Europe SECA.