“Firstly, the lack of LNG distribution systems. Secondly, it’s not economical to retrofit,” said Denholm. "For the vast majority of ships, the only fuel they can consider is Marine Diesel Oil (MDO).
“Will Marine Diesel Oil be available in sufficient quantity?” Denholm asked, stating that the refining industry would have to increase its production by “15-20%” by 2020 in order to meet demand. “And what's going to happen to the high sulphur fuel at the bottom of the cracking tower? What are the refineries going to do with it?”
Comparing the implementation of the 2020 0.5% Sulphur content limit with the implementation of the Ballast Water Management Convention, Denholm asserted "the convention was put in place before the technology was available to meet its requirements, and without regard to the practicalities of retrofitting."
In an extended metaphor, Denholm’s speech likened the shipping market of today with "the aftermath of a very big party”, the party itself being represented by the pre-2008 boom years, “in which the alcohol flowed freely, and there are bodies [shipowners] all over the place.”
In Denholm’s analogy, new shipowners – those who could afford to order new, LNG-powered vessels, and those who were inflating tonnage supply and engineering the fall of charter rates – had arrived after the party had ended. "The people who are ordering ships are this latter group,” said Denholm, “who, unaffected by the collapse in ship values, see an opportunity to exploit new demand on world trade by ordering fuel efficient ships."
The older generation of shipowners were in no position to buy, or retrofit, new fuel saving technology: "Few shipowners are going to be in any position to bear any extra cost,” said Denholm “…for many shipowners, the only sustainability they're interested in is survival."
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