Regardless of your environmental political stripe, there is a broad acceptance that global economic growth and modernization has had a major environmental impact.

Consequently, global regulations are being rolled out to reduce pollution and curtail global warming. IMO 2020 fits into this environmental regulatory transformation since the reduction in sulfur dioxide pollution has a major environmental and health impact. According to KPMG, the reduction in SO₂from IMO 2020 should see a reduction in deaths by 150,000 annually. 

SO₂ causes pulmonary disease and contributes to deforestation. IMO 2020 will be a pillar in the transformation toward global energy sustainability and a cleaner planet, just as it was with fluorocarbons in the 1970 whose devastating impact on Earth’s ozone layer was curtailed through new global environmental regulation.

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International environmental regulations are driving refiners to upgrade their refineries to meet the increasingly stringent fuel specifications.

The 2015 United Nations Climate Change Conference in Paris (COP21).

• This set the stage for future energy consumption. Almost the entire international community agreed to “hold the increase in the global average temperature to well below 2°C above pre-industrial levels and to pursue efforts to limit the temperature increase to 1.5°C above pre-industrial levels”
• This is driving countries to adopt ever more stringent fuel specifications to reduce levels of harmful exhaust emissions. This includes nitrogen oxide (NOx), carbon monoxide (CO), hydrocarbons (THC and NMHC) and particulate matter (PM), meaning soot from diesel vehicles. The knock-on effect of reducing these pollutants can also mean improved fuel economy and lower CO2 emissions.

The International Maritime Organization (IMO) and its International Convention for the Prevention of Pollution from Ships (MARPOL) (MARPOL Annex VI)

• The IMO announced that the effective date for the reduction of marine fuel sulphur will be 2020. Under the new global cap, ships will have to use marine fuels with a sulphur content of no more than 0.5% sulfur compared with the current limit of 3.5%S in an effort to reduce greenhouse gas emissions. The Emission Control Areas (ECAs) will remain at the 2015 standard of 0.1%S content.
• The impact of the IMO’s MARPOL Annex VI environmental regulations on sulfur in global bunker fuels (HSFO) will cause a shift in global bunker demand away from HSFO to lower sulfur marine gas oil (MGO). The EIA put this new demand at 2millionb/d. Shippers have 2 options,
  • either fit exhaust clean up equipment to their vessels which is very expensive
  • or pay the higher price for the cleaner fuel.
• Most commentators believe shippers will take the latter option to save upfront cost.

These environmental pressures are creating a market for Optima to capture