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IMO 2020: The Big Shipping Shake-Up

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IMO 2020 shipping Infographic

IMO 2020: The Big Shipping Shake-Up

Over 90% of all global trade takes place on our oceans.

Unfortunately, the network of 59,000 vessels powering international commerce runs on sulfur-laden bunker fuel, and resulting emissions are causing problems on dry land.

As today’s infographic by Breakwave Advisors demonstrates, new emissions regulations taking effect in 2020 will have a big impact on the world’s massive fleet of marine shipping vessels.

The Regulatory Impact

The International Maritime Organization (IMO) – the UN agency responsible for ensuring a clean, safe, and efficient global shipping industry – will be implementing new regulations that will have massive impact on maritime shipping.

The regulations, dubbed IMO 2020, will enforce a 0.5% sulfur emissions cap worldwide starting January 1, 2020 ─ a dramatic decrease from the current emissions cap of 3.5%.

Here are a few ways marine fuel will likely be affected by these regulations:

  • High-sulfur fuel oil will drop in price as the demand drops dramatically after January 1, 2020
  • Diesel, a low-sulfur fuel oil, will be in higher demand and should see a price increase
  • Refiners should also expect higher profits as refining runs increase to satisfy the new regulations

The Economic Impact

IMO 2020 will be one of the most dramatic fuel regulation changes ever implemented, with a significant impact on the global economy.

New regulations are certain to influence freight rates ─ the fees charged for delivering cargo from place to place. These rates can fluctuate depending on:

  • Time and distance between ports
  • Weight and density of the cargo
  • Freight classification
  • Mode of transport
  • Tariffs and taxes
  • Fuel costs

Rising fuel costs means rising freight rates, with much of these costs being passed to consumers.

In a full compliance scenario, we estimate the total impact to consumer wallets in 2020 could be around US$240 billion.

─ Goldman Sachs

The Environmental Impact

Not surprisingly, the world’s 59,000 transport ships, oil tankers, and cargo ships have a consequential impact on the environment.

Bunker fuel accounts for 7% of transportation oil consumption (~3.5 million barrels/day). Burning this fuel generates about 90% of all sulfur oxide and dioxide (SOx and SO2) emissions globally. In fact, the world’s 15 largest ships produce more SOx and SO2 emissions than every car combined.

These sulfur emissions can cause several harmful side effects on land ─ acid rain, smog, crop failures, and many respiratory illnesses such as lung cancer and asthma.

Changing Currents in the Shipping Sector

As IMO 2020’s implementation date nears, shippers have a few courses of action to become compliant and manage costs.

1) Switch to low-sulfur fuel

Bunker fuel use in the shipping industry was 3.5 million barrels per day in 2018, representing roughly 5% of global fuel demand.

Annual bunker fuel costs are predicted to rise by US$60 billion in 2020, a nearly 25% increase from 2019. Price increases this significant will directly impact freight rates ─ with no guarantee that fuel will always be available.

2) Slower Travel, Less Capacity

The costs of refining low-sulfur fuel will increase fuel prices. To offset this, shippers often travel at slower speeds.

For example, large ships might burn 280-300 metric tons of high-sulfur fuel oil (HSFO) a day at high speeds, but only 80-90 metric tons a day at slower speeds. Slower travel may cut costs and help reduce emissions, but it also decreases the capacity these vessels can transport due to longer travel times, which shrinks overall profit margins.

3) Refueling Detours

Adequate fuel supply will be a primary concern for shippers once IMO 2020 takes effect. Fuel shortages would cause inefficiencies and increase freight rates even more, as ships would be forced to detour to refuel more often.

4) Installing Scrubbers

A loophole of IMO 2020 is that emissions are regulated, not the actual sulfur content of fuel itself.

Rather than burning more expensive fuel, many shippers may decide to “capture” sulfur before it enters the environment by using scrubbers, devices that transfer sulfur emissions from exhaust to a disposal unit and discharges the emissions.

With IMO 2020 looming, only 1% of the global shipping fleet has been retrofitted with scrubbers. Forecasts for scrubber installations by mid-2020 run close to 5% of the current ships on the water.

There are a few reasons for such low numbers of installations. First, scrubbers are still somewhat unproven in maritime applications, so shippers are taking a “wait and see” approach. As well, even if a ship does qualify for a retrofit, cost savings won’t take effect until several years after installation. On the plus side, ships with scrubbers installed will still be able to use the existing, widely-available supply of bunker fuel.

Moving Forward

No matter which route shippers choose to take, the short-term impact is almost certainly going to mean higher freight rates for the marine shipping industry.

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Cities

World Cities Ranked by Average Annual Sunshine Hours

While we all see the same sky, some see it differently, depending on where they live. Today’s graphic ranks world cities by annual hours of sunshine.

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Visualizing the Most and Least Sunshine Hours per Continent

World Cities Ranked by Average Annual Sunshine Hours

View the high resolution of this infographic by clicking here

While we all see the same sky, we see it a bit differently depending on where we stand.

For those in the planet’s most extreme regions, the sun doesn’t follow the same pattern of seasons as it does in more temperate regions.

Today’s visualization comes from Sleepopolis and summarizes the top cities on each continent that receive the most and least annual sunshine hours.

Ranked: Cities with the Least and Most Sunshine Hours

While the graphic groups the top five cities from each continent, the tables below highlight the top 10 cities from around the world that boast the highest and lowest annual sunshine hours.

Top 10 Cities with the Most Annual Sunshine

CityCountryClimate# of Sunshine Hours
YumaUnited StatesArid4,015.3
Marsa AlamEgyptArid3,958.0
Dakhla OasisEgyptArid3,943.4
CalamaChileArid, Marine West Coast, Tundra3,926.2
PhoenixUnited StatesArid3,871.6
KeetmanshoopNamibiaArid3,870.0
Las VegasUnited StatesArid3,825.3
TucsonUnited StatesArid3,806.0
KhargaEgyptArid3,790.8
El PasoUnited StatesSemiarid3,762.5

The sunniest city on Earth is Yuma, Arizona in the U.S. As the driest city in the U.S., Yuma receives less than 200 millimeters (8 inches) of rainfall and endures roughly 100 days of 40°C (104°F) weather every year. Yuma lies between the Gila and Colorado rivers, in a lush region that produces almost 90% of leafy vegetables grown in the U.S.

Arizona boasts three of the top 10 sunniest cities in the world, including Phoenix in the fifth spot, which is the 5th most populous city in the U.S. and is known as “the Valley of the Sun”.

Perhaps unsurprisingly, Egypt also has three cities in the top 10 list, with Marsa Alam, Dakhla Oasis, and Kharga claiming the 2nd, 3rd, and 9th sunniest spots, respectively. Dakhla Oasis, or “inner oasis”, receives practically zero precipitation each year.

Top 10 Cities with the Least Annual Sunshine

CityCountryClimate# of Sunshine Hours
TotoróColombiaMarine West Coast637.0
TórshavnFaroe IslandsMarine West Coast840.0
ChongqingChinaHumid Subtropical954.8
DiksonRussiaTundra1,164.3
MalaboEquatorial GuineaTropical Wet and Dry1,176.7
BuenaventuraColombiaTropical Wet and Dry, Humid Subtropical1,178.0
LimaPeruArid1,230.0
UshuaiaArgentinaTundra1,281.2
ReykjavikIcelandTundra, Marine West Coast1,326.0
BogotáColombiaMarine West Coast1,328.0

Although perceived as a sunny location, Colombia borders both the Caribbean Sea and the Pacific Ocean, exposing it to higher variety in weather patterns and precipitation. Colombia alone is home to three of the top 10 cities with the lowest hours of annual sunshine.

Ranking second-to-last in the number of sunshine hours, Torshavn lies between the Scottish coast and Iceland and receives roughly 37 days of sunshine every year; the average temperatures on this island barely reach above 5°C (41°F).

Our sun doesn’t shine at the same level of brightness all the time. NASA has observed that the sun goes through “solar cycles” that last roughly 11 years─brightening and dimming at relatively regular intervals and impacting how intensely we receive sunlight at any given time.

Sunshine Near the Poles

Humans typically need exposure to the sun to maintain healthy sleep habits, as our brain has been hardwired to follow natural waking and sleeping rhythms.

However, several cities experience no sun at all for several months at a time in what’s known as the “Polar Night”.

  • Tromsø, Norway: winter darkness is enjoyed rather than endured, as it can last for over a month
  • Svalbard, Norway: even indirect sunlight is absent, with no change in sunlight to help indicate a 24-hour day
  • Dikson, Russia: receives no sunlight whatsoever in December

Wherever you live, people have been watching and tracking the movements of the sun with rapt attention for millennia, even when we couldn’t see it.

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Chart of the Week

Which Companies Are Responsible For the Most Carbon Emissions?

Since 1965, over ⅓ of the world’s cumulative carbon emissions can be traced back to just 20 fossil fuel companies. Who are the biggest contributors?

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20 Companies Responsible For the Most Carbon Emissions?

Since 1965, it’s estimated over 1.35 million metric tons (MtCO₂e) of greenhouse gases have been released into the atmosphere—and over a third can be traced back to just 20 companies.

This week’s chart draws on a dataset from the Climate Accountability Institute, and highlights the companies which have been responsible for the most carbon emissions in the past half-century.

The Sum of their Carbon Emissions

Between 1965-2017, the top 20 companies have contributed 480,169 MtCO₂e in total carbon emissions, or 35% of cumulative global emissions. This whopping amount is mostly from the combustion of their products—each company on this chart deals in fossil fuels.

The largest contributor? Saudi Aramco, the national petroleum and natural gas company of Saudi Arabia. Saudi Aramco actually comes in first on another list as well—it’s the most profitable company, making over $304 million daily.

However, this financial gain came at a significant cost: the state-owned giant’s operations have resulted in 59,262 MtCO₂e in carbon emissions since 1965. To put that into perspective, this total is more than six times China’s emissions in 2017 alone (9,838 MtCO₂e).

Explore the full list of companies by location, who owns them, and their total 1965–2017 emissions count below:

CompanyCountryOwnershipAll Emissions, MtCO₂e
Total Emissions480,169 MtCO₂e
Saudi Aramco🇸🇦 Saudi ArabiaState-owned59,262
Chevron🇺🇸 U.S.Investor-owned43,345
Gazprom🇷🇺 RussiaState-owned43,230
Exxon Mobil🇺🇸 U.S.Investor-owned41,904
National Iranian Oil Co.🇮🇷 IranState-owned35,658
BP🇬🇧 UKInvestor-owned34,015
Royal Dutch Shell🇳🇱 NetherlandsInvestor-owned31,948
Coal India🇮🇳 IndiaState-owned23,124
Pemex🇲🇽 MexicoState-owned22,645
Petroleus de Venezuela🇻🇪 VenezuelaState-owned15,745
PetroChina🇨🇳 ChinaState-owned15,632
Peabody Energy🇺🇸 U.S.Investor-owned15,385
ConocoPhillips🇺🇸 U.S.Investor-owned15,229
Abu Dhabi National Oil Co.🇦🇪 UAEState-owned13,840
Kuwait Petroleum Corp.🇰🇼 KuwaitState-owned13,479
Iraq National Oil Co.🇮🇶 IraqState-owned12,596
Total SA🇫🇷 FranceInvestor-owned12,352
Sonatrach🇩🇿 AlgeriaState-owned12,302
BHP Billiton🇦🇺 AustraliaInvestor-owned9,802
Petrobras🇧🇷 BrazilState-owned8,676

A Greener Business Model?

According to the researchers, all the companies that show up in today’s chart bear some responsibility for knowingly accelerating the climate crisis even after proven scientific evidence.

In fact, U.S.-based Exxon Mobil is currently on trial for misleading investors: the company downplayed the effect of climate change on its profitability, while internal calculations proved to be much larger. It also sowed public doubt on the immense impacts of rising greenhouse gas levels on the planet.

Growing sustainability and environmental concerns threaten the viability of old business models for these corporations, causing many to pivot away from the fossil fuel focus. Take BP for example—originally named British Petroleum, the company embraced “Beyond Petroleum” as its new rallying cry. More recently, it launched a carbon footprint calculator and is committed to keeping its carbon emissions flat into 2025.

However, the Climate Accountability Institute argues that more can still be done, with the researchers calling for these companies to reduce their fossil fuel production in the near future.

Continued pressure on these “Big Oil” companies to peak their carbon emissions, and urgently increase their renewable energy investment, may help curb the climate crisis before it’s too late.

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