What do the IMO 2020 regulations mean for the future of shipping? ECONNECT Energy reflects on one year of IMO implementation with insights into the policy's effect on the global LNG market.

How do IMO 2020 regulations impact the LNG market?

Magnus Eikens
Danielle Murphy-Cannella
Aug 20, 2021
minutes read time

Due to IMO 2020 regulations, shipping actors are looking into methods of reducing sulfur emissions, which will increase demand for lower carbon fuel sources, such as LNG. Here we investigate the impact of the IMO policy on the global LNG market.

Benefits of LNG as a Marine Fuel

LNG is seen as an alternative to fuel oil consumption in shipping with less environmental impact - not only does LNG emit less carbon compared to coal and oil, but it also emits next to zero sulfur oxide (SOx).The IMO's effect on the global LNG market is still unfolding, but early indications suggest that several factors including support from governments, the private sector's willingness to make the shift, and technological development are still needed to make the switch from HFO to alternative fuels.

What is the IMO?

The International Maritime Organization (IMO) is an agency of the United Nations (UN), whose main purpose is to regulate and improve safety and environmental performance of international shipping. Through a range of measures, IMO covers every aspect of international shipping, from ship design- and construction, to manning and operations. All to ensure a safe, environmentally friendly and energy efficient practice at seas. Given the scale and impact shipping has on international trade today, such a regulatory agency is crucial on the path towards a more sustainable and energy efficient international fleet. 

As an agency governed by the UN, IMO works actively to ensure that the UN's 17 Sustainable Development Goals (SDGs) are reached within the international shipping- and maritime sector. The decade of 2020-2030 is highly anticipated to be a decade of action, and with the World Maritime theme “Sustainable shipping for a sustainable planet” set for 2020, awareness towards IMOs work to achieve the SDGs are being raised. As a first step in this decade of action, the IMO 2020 regulations came into force on January 1st 2020, which could prove optimistic for the world of LNG.     

What are the IMO 2020 regulations?

The IMO regulations of January 1st 2020 (IMO 2020) target ship emissions on a global scale, specifically limiting sulfur (sulfur oxide, SOx) content in marine fuels to a 0.5 % cap, from a previous 3.5 %. In certain IMO-designated emission areas, a 0.1 % cap on SOx has been established. Reducing sulfur content in ship fuels enables improved emission control and is an important step towards reduced pollution and a green global fleet. Naturally, the IMO 2020 impacts not only the shipping industry, but also the global economy and complementary industries like fuel suppliers and shipyards. Having to redesign the fundamentals of global shipping, three main measures have been identified as solutions for actors to comply with the 0.5 % cap:

  • Shifting from high sulfur fuel oil (HSFO) to low or very low sulfur fuel oil (LSFO/VLSFO). This solution requires little initial investment, but analysts have deemed it unlikely that refineries have the capacity to produce required quantities to supply an overall fleet shift. 
  • Installing scrubbers on ships. Exhaust gas cleaning systems like scrubbers help limit air pollutants as the ship burns fuel. This solution enables continued use of traditional high sulfur oil fuels, but requires a substantial capex. The market has been hesitant to fully adapt this solution as scrubber technology is still under development, and future environmental restrictions might limit this technology.

  • Switching to a completely different fuel, such as ammonia, hydrogen, biofuels or LNG

How was the first year of transitions?

The results after one year of the new regulations indicate a smooth transition. In a fleet of over 60 000 ships there have only been 55 cases of compliance issues with the 0,5% fuel due to unavailability. Moreover, no safety issues have been reported as a result of the switch to VLSFO. Therefore, the comprehensive preparations done in advance by various stakeholders have paid off. 

Furthermore, it was assumed that the regulations would lead to higher oil prices. However, this was naturally offset by the fuel demand decrease as a consequence of COVID-19. Fuel demand for bunkering alone was estimated to decrease 7-17% in 2020.

IMO policy aims to reduce ship emissions on a global scale, specifically limiting sulfur content in marine fuels

How can LNG help meet IMO 2020 regulations?

In recent years, LNG as fuel has strengthened its position as a major alternative for fuel oil consumption, now competing on both environmental and economic terms. Not only does converting LNG and burning natural gas emit less carbon compared to coal and oil, but it also emits next to zero sulfur oxide, making it a great alternative to fuel oil to comply with the IMO 2020 regulations on sulfur. The emergence of LNG-fueled ships since IMO announced the 2020 regulations in 2016 has been visible on the global fleet, and the demand created for LNG by shipping through IMO 2020 will be an important future driver. 

Like LNG-powered ships, LNG bunkering hubs- and facilities are also emerging on a global basis, and innovative infrastructure and LNG-compliant solutions are being sought to help boost this industry. Should the recent tendency of low prices persist, LNG will prove itself as a cost-efficient alternative to oil fuels in several trading markets for years to come. Even though the IMO presents LNG powered ships as a way to meet new regulations, the supply market is still not fully prepared to take on future demand to make “the green switch” from fuel oil to LNG. In fact, most are not currently able to utilize LNG as a fuel. However, the market is maturing, and the IMO 2020 regulations will continue to impact the LNG market going forth.                

How will IMO 2020 regulations impact the LNG market?

LNG as a bunkering fuel is certainly on the agenda of shipping actors. Although not likely to entirely replace HSFO at first, future outlooks for LNG as a bunkering fuel are promising. Demand for LNG as a marine fuel is predicted to increase because of IMO 2020, but the extent remains unknown. How successful LNG will be as a big scale shipping fuel depends on several factors, including support from governments, actors’ willingness to cooperate to make the shift, and technological development.

The IMO regulations will also impact LNG prices. In the near term, a disconnection between spot- and contract prices for LNG is likely to increase. As demand for certain low sulfur oil products is likely to increase, so will their prices, and in the following, linked contract LNG prices. On the other hand, new, destination flexible supply which is not linked to oil contracts could cause a market flood if oil-linked contract prices are pulled too high. This combination could cause increased spot trading and is important for future growth of LNG. 

Part of the market seems to have adopted a “wait-and-see” position awaiting further development of LNG bunkering infrastructure, technological improvements and cost reductions. Technological uncertainty, the development of LNG spot prices, and upcoming scrapping of the current fleet leads many actors to await new orders until it is clear what the ships and technology of tomorrow are. Through the jettyless IQuay, ECONNECT Energy is already providing innovative technological solutions to make cleaner and cheaper energy accessible today.  

Last updated:
Apr 25, 2023










Magnus Eikens


Magnus Eikens

Chief Commercial Officer
As co-founder of ECOnnect, Magnus has developed and brought to life the world's first jettyless transfer system. He holds a decade of experience in business development, strategy and commercialization, and is also a member of the Board of Directors of Energy Network Norway (ENN): a network of industry professionals and global companies leading Norway’s commitment to Clean Energy.
Danielle Murphy-Cannella


Danielle Murphy-Cannella

Head of Sustainability and Compliance
After working for major energy operators on global projects with a focus on sustainable development, Danielle joins ECOnnect Energy as Head of Sustainability and Compliance. Danielle is committed to helping businesses be a force for good by using data and transparent communications to improve environmental and social performance. She holds a Master's Degree in Sustainable Development from Robert Gordon University, UK, and a Bachelor's Degree in Political Science and Language from Tulane University, USA.

More articles

A closer look at Methane

A closer look at Methane

Feb 22, 2024
minute read

A hydrocarbon with a potent global warming potential (GWP), it constitutes much of the natural gas we consume (anywhere from 50-90%) and it is getting a lot of attention these days in the conversation about climate change, and for good reason - over a 20 year period it has 80 times more global warming potential when compared to carbon dioxide.

ECOnnect Energy Announces Key Role in "Project Green" – Revolutionizing Clean E-fuel Production in Africa

ECOnnect Energy Announces Key Role in "Project Green" – Revolutionizing Clean E-fuel Production in Africa

Feb 15, 2024
minute read

ECOnnect Energy is a key partner in "Project Green," an ambitious initiative led by APPL (Alternative Petroleum & Power Limited) to establish itself as a leading supplier of clean E-fuels, including e-methanol and green ammonia, in Africa.

ECOnnect advances global LNG access with jettyless IQuay units for NFE’s Fast LNG Projects

ECOnnect advances global LNG access with jettyless IQuay units for NFE’s Fast LNG Projects

Jan 19, 2024
minute read

ECOnnect has successfully delivered two cutting-edge jettyless IQuay units to New Fortress Energy’s (NFE) Fast LNG project in Altamira, Mexico.


Share information with us about your project (confidential).


Our domain experts will evaluate your project parameters to ensure Jettyless is a viable and optimal solution.


Work with us to further mature the project definition and gain access to our marine and process experts.


Realise your infrastructure project by cutting costs and project plans.

Let's talk about your project

Our team will get in touch with you shortly.