A Global Sulfur Cap in 2020 Could Increase Shipping’s Annual Fuel Bill by $100 Billion

In 2020, it’s estimated that an additional $50-100 billion will be added to the shipping industry’s annual fuel bills. This is because a global sulfur cap is set for 2020. The updated global cap is expected to limit sulfur content in marine fuel down to 0.5 percent from 3.5 percent. 

The spread between Emission Control Area (ECA) compliant marine gas oil and heavy fuel oil is expected to remain in the range of $250 and $400 per ton, regardless of the different price fluctuations.

The estimated increase of an additional $50-100 billion in annual fuel costs could still change depending on future technologies and the future price of blended products like hybrid fuels and if scrubbers become more common.

There is a fuel availability study scheduled for 2018 that could push the sulfur limit back to 2025. But earlier this year, The International Chamber of Shipping said that it fully expects the new sulfur cap to happen in 2020, because of the political pressure from the European Union.