New regulations will challenge the shipbuilding sector

Subject

Impact of new regulations on shipbuilding.

Significance

New rules on emissions issued by the International Maritime Organisation (IMO) will come into force in 2020, reducing the limit on sulphur emissions from marine fuels worldwide from 3.5% to 0.5% on a mass-by-mass basis. The regulations will be a major challenge for both ship owners and refiners because, although the shipping market is oversupplied, freight costs will increase.

Impacts

• Premiums for low-sulphur fuels will rise, increasing shipping costs.
• Non-compliance will cut into the environmental benefits of the regulations.
• Alternative shipping fuels and technologies will gain momentum.