A ship fuel scandal is being uncovered that looks likely to be larger than the Volkswagen Emissions Scandal. It involves some of the biggest names in the global oil and shipping industry, and goes to the very top of the UN shipping regulator, the International Maritime Organization (IMO).
As a result, thousands of ships around the world are at risk of catastrophic engine failures, putting the lives of millions of sailors, coastal communities and the ocean environment at risk around the world.
The four month wide-ranging special investigation published in Forbes today involved dozens of leading international organizations working around the world. For the first time, it reveals the scale of the scandal, danger and cover up. It all unraveled with the grounding and large oil spill caused by the Japanese Bulk Carrier, The Wakashio, on the coral reefs of the Indian Ocean island of Mauritius this summer. The bizarre response to the incident by what were supposed to be independent international oil spill responders, prompted several of the world’s leading pollution experts to describe this as ‘the strangest oil spill response we have ever seen,’ attracting even further scrutiny.
Is shipping’s VLSFO ‘Frankenstein Fuel’ safe?
At the center of the scandal is a new experimental fuel used in large ocean-bound ships. The fuel’s name is called Very Low Sulfur Fuel Oil or VLSFO, and it turns out to essentially be a made-up fuel. It was such a mix of hazardous chemicals that the oil has been referred to as a super-pollutant ‘Frankenstein Fuel’ by leading NGOs.
The mega-ships impacted by this experimental fuel carry 90% of the world’s trade, including large container ships for household goods, cargo ships for agricultural and industrial produce and supertankers for oil and gas. The ship fuel industry is a $150 billion a year industry that has largely been hidden from the media and international climate discussions.
Three out of every four gifts delivered this Christmas would have been transported at some stage by ships using this new form of contaminated fuel. It was hastily introduced on 1 January 2020 by the UN Shipping Agency, the IMO, without proper testing, and now presents a danger to ship safety and the environment. To make matters worse, this fuel is also increasing greenhouse gas emissions.
Detailed analysis of the science for why the VLSFO ‘Frankenstein Fuel’ is dangerous is published in a separate article today, entitled, “Shipping-Gate: Why Toxic VLSFO Fuel Is Such A Danger For Global Shipping.”
The History of how VLSFO came to be introduced is published in another article, entitled, “Shipping-Gate Timeline: How The Global Ship Fuel Scandal Came About.”
The question is what actions will now be taken by national regulators and customers of these large shipping firms, given the scale of the issue and cover up?
Key findings from the investigation reveals:
- In January 2020, an experimental type of ship fuel (called Very Low Sulphur Fuel Oil or VLSFO for short) was thrust upon the global shipping industry by the Secretary General of the IMO, Kitack Lim. The IMO is the UN agency responsible for regulating every aspect of global shipping, including fuels used on ships, ship safety standards, and greenhouse gas emissions.
- VLSFO was supposed to be the ‘silver bullet’ designed to deflect criticism of global shipping from the pollution being caused by the industry to the atmosphere and the ocean using Heavy Fuel Oil. Whereas the rest of the world had signed up to the Paris Climate Agreement in 2015 to reduce carbon dioxide emissions, the shipping industry controversially and unilaterally decided not to. They had not invested in research into alternative and cleaner modes of powering ships and were more interested in the industry’s bottom lines (including continuing the use of offshore ‘Flags of Convenience’ ship registrations to shield the industry’s true profits).
- By 2016, the UN Shipping Agency, the IMO, was facing heavy criticism and pressure about this decision from environmentalists and public figures. As part of a strategy to deflect the criticism and spotlight from the avoiding climate change, the IMO decided to adopt a ‘bait and switch’ tactic. This ‘bait and switch’ tactic was designed to shift the focus from carbon onto another chemical they felt was easier to control, still allowed fossil fuels to be burned, and would sufficiently obscure media interest.
- The chemical they chose to focus on was Sulfur. To be clear, Sulfur is a toxic pollutant. It is the leading cause of acid rain and causes harmful breathing diseases to millions of peoples around port cities around the world, often some of the poorest communities who do not have access to powerful advocacy groups. It is present in many fossil fuels, and is a serious pollutant that was removed from cars in the U.S. twenty years ago. Rather than taking on both harmful carbon dioxide emissions as well as sulfur dioxide emissions by moving away from fossil fuels altogether, the IMO took a piecemeal approach to try take each toxin on sequentially in a bureaucratic game to drag out how long shipping could continue to use fossil fuels.
- The IMO pushed forward an experimental fuel that sought to reduce Sulfur Dioxide emissions. But the strategy was designed to give the impression it was addressing all air pollution from ships, not one small part.
- This experimental fuel was then rushed into ships around the world following an artificially fast timeline (a policy known as ‘IMO 2020’), without the proper safety testing. In September 2019, fewer than 3% of all ships were using VLSFO. However, by January 2020, that had risen to 70% of global shipping. This became the quickest ever fuel adoption by a major transport sector, defying all expectations. It was an unprecedented speed and volume for the adoption of a new fuel.
- However, VLSFO had a serious flaw: it was a dangerous fuel.
Toxic chemistry experiments on the ocean
- Dozens of industry reports and meetings at the time of the introduction of the VLSFO were dominated by the serious flaws with VLSFO fuel. This had all sorts of technical, legal and commercial implications. Investigations found that this fuel was causing catastrophic ship failures around the world. These failures were caused by serious engine malfunctions in the middle of the ocean, higher risks of engine fire, critical machinery becoming clogged and breaking down, and a phenomenon that could lead to ‘runaway ship engines.’
- The issue is so widespread that at any moment, at least 3600 vessels could be travelling with contaminated batches of this unstable fuel, though many in the industry have said this is likely to be a gross underestimate, and the true scale of the issue is much larger. Even more egregious, is that these fuels have been found to cause more greenhouse gas emissions, not less.
- VLSFO also required new mixes of lubricating oil into the engine. Getting the combination wrong would create an even greater catastrophic risk. This meant that ship engineers were left having to conduct real-time chemistry experiments with the unstable VLSFO fuel and had to attempt to find a matching chemical mix in almost real time. Often, they had little guidance on how to do this, in a way that worked with the particular engine their ship was powered by. It also meant that regulators had no idea what chemical mix was now being put into ship engines, and whether or not they were complying with national and international emission and pollution standards.
Explainer: How VLSFO ‘Frankenstein Fuel’ caused engine failures around the world, wreaking havoc for global shipping
- The IMO had introduced new chemistry into shipping and the ocean without the ability to track what was going on, and creating a ‘free for all’ on the world’s oceans for shipping companies and their engineers to muddle their way through the right chemical formula for each voyage.
The Coronavirus Pandemic significantly aggravated the problem
The industry could have gotten away with this, if it wasn’t for COVID-19. The pandemic played its own havoc with the ship fuel scandal in two important ways.
- First, the pandemic prevented crews from being replaced on ships (the great Crew Change Crisis). This created one of the greatest humanitarian crises caused by a major industrial sector. Since the start of the year when the coronavirus outbreak first impacted China and Japan, crews were prevented from leaving their ships, and were forced to continue working despite being under-resourced, over-stretched and separated from loved ones for over a year in thousands of cases. The VLSFO ship fuel issues meant added pressure and workload from the mechanical and engine malfunction issues, all of which pushed crews to the limit, and in the case of the Wakashio in Mauritius, beyond the limit. Many crew were forced to stay on the vessels and sworn to secrecy, leading to a spike in mental health cases among seafarers around the world.
- Second, COVID-19 meant there was a surplus of aviation fuel in the world from when flying shut down. There was so much jet fuel, that this oil was being stored in large tankers offshore. In addition, a production war between Russia and Saudi Arabia at the start of the pandemic meant that there was an oversupply of oil in the market anyway, as demand plummeted. This created conditions for the price of crude oil to turn negative for the first time in history. In other words, oil producers were paying companies to take the oil from them. This presented a commercial opportunity. Many shipping companies started mixing this aviation fuel with VLSFO ship fuel, and ended up producing new ‘Frankenstein Fuels,’ which ended up becoming a deadly chemical cocktail mix of VLSFO fuels that was used to power ships around the world with all sorts of new chemicals. Not only did this turn out to be a dangerous strategy as it altered the chemical properties of ship fuel (such as the temperature at which it burns in the engine), shipping companies were using jet fuel that was rapidly degrading.
Whenever aircraft fuel is not used within three months of being produced, oil-eating microbes starts to grow in it. This results in the oil becoming contaminated and rapidly degrading. The oil industry was about to lose billions of dollars by just storing jet fuel in offshore tankers. This is where the shipping industry saw a commercial opportunity. With crude prices negative, the shipping industry was essentially paid to take this surplus oil, and mix it into the next round of VLSFO cocktails. This meant that not only was VLSFO already a problematic fuel, the addition of rapidly degrading aviation fuel created an even more toxic mix. Ship companies suddenly saw a much cheaper ship oil as VLSFO fuel prices halved, even though ship fuel demand remained constant.
The world’s largest ship fueling hub, Singapore, which also hosts one of the world’s busiest airports, Changi Airport, was particularly affected with reports of over 60 supertankers moored in its narrow waterways storing excess jet fuel that couldn’t be used by local aircraft.
The UN looked the other way
- The UN’s International Maritime Organization and the world’s shipping industry were aware of the risks, and took no action. They had rushed forward with the oil without the appropriate safety testing of the fuel. Until now, there has not been any comprehensive Government study of the risks posed by VLSFO on global shipping, human health and the environment. Certainly none that is truly independent of industry interests.
- The Wakashio oil spill in Mauritius was the shipping industry’s worst nightmare. It wrong-footed the oil and shipping industry, into hoping this secret would remain hidden. It was the first time VLSFO had leaked into the ocean.
- There were at least three reasons for the shipping and oil industry to be frightened: 1. The discovery that VSLFO was off-specification and more polluting than the regulations had permitted, 2. The discovery of just how dangerous VLSFO was to marine life and coastal populations would be exposed, 3. The realization that VLSFO had never been tested in the ocean prior to being introduced into ships around the world, and no agency fully understood how that oil would behave with the biodiversity-rich areas of the coast of Mauritius. It would expose the UN’s Shipping Agency for introducing regulations that increased the risk to the ocean, and lacking the proper supervisory capacity to have done this safely. It had taken a science-free strategy.
- The IMO and the oil industry (through London-based ITOPF) rushed forward hundreds of consultants paid for by the oil and shipping industry to head off any other international involvement, and cover up this evidence. In doing, so, they elbowed out scientists and oil spill experts from around the world, local Mauritian scientists, and took over the sample collection and cleanup operation, attempting to get rid of the evidence before proper samples could be collected.
- It was a bold and calculated move, that also served the large international reinsurers of the shipping industry by seeking to reduce their liability for the oil spill. Through collusion between the oil, shipping and insurance industry, they sought to hide the evidence by sinking the front 270 meters of the Wakashio (where the main oil storage tanks on the ship were) into Mauritian waters over 3000 meters depth. What they hadn’t counted on was the remaining oil escaping due to the pressure at that depth. The chemical mixture was released into the environment, and within 24 hours dead dolphins and whales started washing up on Mauritius’ beaches, requiring an even bigger cover up.
- These actions ended up politically destabilizing the island of Mauritius, which was in the midst of a Law Court review of disputed General Elections. It led to hundreds of thousands marching on the streets of the capital city, calling for the resignation of the Government, which then triggered an unprecedented clamp down on human rights within the country. This all took place with the full knowledge of hundreds of international consultants present in Mauritius and linked to the oil spill, witnessing the protests and reading the daily media coverage of events in the country.
- The strong and allied interests from the shipping, oil and insurance industry (ship insurance is a proxy for the world’s largest shipowners) then ended up erecting a wall of silence and attempted to co-ordinate an even larger cover up over the cleanup and salvage operation in Mauritius. As more contradictions were revealed with their story, the more desperate they became. Most egregiously, those who had been exposed to the oil and were experiencing health issues, and the clearly suffering marine environment were deprioritized in their response.
- In the meantime world leaders, were distracted by the ongoing saga of the U.S. Presidential Elections. Most remained silent about the VLSFO oil spill, despite making loud promises about climate change, ocean health and restoring biodiversity at international climate summits hosted by the UN in September, and by the U.K. in December.
VLSFO presents a danger to global shipping
- Today, hundreds of thousands of sailors remain stranded on ships around the world with unsafe fuel on board. This poses serious risks to the coastline of countries close to major shipping lanes, as well as the residents who are innocent bystanders and are at risk of a major oil spill due to the introduction of this toxic fuel in the world’s ships.
- Fixing this debacle will take strong and courageous leadership. For the past four years, the world has lacked this strong moral leadership. With a new U.S. administration taking office in January, will this be an area they are able to take on and demonstrate true moral leadership?
- It also raises even more profound questions about whether the UN’s International Maritime Organization is even fit for purpose, or whether it requires a radical restructure to take back control of our oceans for future generations.