The issue with the 0.5% sulphur cap regulation is that it has turned into a textbook conundrum for refiners (the fuel suppliers) and shipowners (the fuel buyers), caught in a quandary whereby suppliers are unable to commit on how much to produce as buyers do not know how much is needed, vice versa.
The refiners, though they are not regulated by IMO, cannot pretend that nothing has happened as they have a commercial interest to cater to market needs through changes to production configuration so as to maximise margins.
The shipping industry, the one on the receiving end of the IMO regulation, will have to deal with not only the upcoming global 0.5% sulphur cap, but also the existing 0.1% sulphur cap in designated Emission Control Areas (ECAs).
There are three options set out in this paper that shipowners can consider in order to comply with the IMO regulations. First, shipowners can install exhaust gas cleaning systems on their ships. Second, owners can simply buy compliant fuels at higher costs. Third, ships can run on the clean gas LNG as fuel.