Very Low Sulphur Fuel Oil: Why Shipping’s Clean Fuel Problem Is Bigger Than You Think

IMO 2020 changed the rules for global shipping. Demand for VLSFO is surging — and the supply chain hasn’t caught up. Here’s where TYRO fits in.

Ninety percent of everything you own arrived on a ship. 

The clothes you’re wearing. The phone you’re reading this on. The food in your refrigerator. Global shipping is the invisible backbone of the modern economy — moving approximately 11 billion tonnes of goods across the world’s oceans every year, connecting manufacturers to markets across every continent. 

It is also one of the world’s most significant sources of air pollution. 

For most of the twentieth century, the global shipping industry ran on what is politely called heavy fuel oil — and less politely called bunker fuel. It is the residual product left over after crude oil has been refined into more valuable products like petrol, diesel, and jet fuel. It is thick, viscous, cheap, and extraordinarily dirty. Its sulphur content can be as high as 3.5 percent by mass — thousands of times higher than the fuel that powers road vehicles in developed countries. 

When ships burn high-sulphur bunker fuel, they release sulphur dioxide into the atmosphere. Sulphur dioxide causes acid rain. It contributes to the formation of fine particulate matter — the kind that penetrates deep into human lungs and causes respiratory and cardiovascular disease. The International Maritime Organisation has estimated that without regulatory intervention, shipping emissions could have been responsible for over 570,000 premature deaths per year globally by 2020. 

In January 2020, the rules changed. 

IMO 2020: The Regulation That Rewrote Shipping 

The International Maritime Organisation — the United Nations body responsible for regulating global shipping — introduced what became known as IMO 2020: a global cap on the sulphur content of marine fuels, reducing the limit from 3.5 percent to 0.5 percent by mass. 

It was one of the most significant regulatory interventions in the history of the shipping industry. Overnight, the fuel that had powered the world’s merchant fleet for over a century became largely non-compliant. 

The shipping industry had known IMO 2020 was coming for years. The regulation had been in development since 2008 and was formally adopted in 2016. But knowing a regulation is coming and being ready for it are very different things — and the industry’s preparation was, to put it charitably, uneven. 

Ship operators faced three basic choices in response to IMO 2020: 

Switch to compliant fuel. Very Low Sulphur Fuel Oil — with a sulphur content of 0.5 percent or below — became the primary drop-in replacement for conventional high-sulphur bunker fuel. It could be used in existing engines without modification, making it the most straightforward compliance pathway for most operators. 

Install scrubbers. Exhaust gas cleaning systems — known as scrubbers — can be retrofitted to ships to remove sulphur dioxide from emissions before they reach the atmosphere. Scrubber-equipped ships can continue burning high-sulphur fuel while meeting emissions standards. However, scrubbers are expensive to install, require significant drydock time, and produce a sulphur-rich wash water that creates its own environmental concerns. 

Switch to alternative fuels. Liquefied natural gas, methanol, ammonia, and hydrogen have all been discussed as longer-term alternatives to conventional marine fuels. Some new vessels are being built to run on LNG. But alternative fuel infrastructure is limited, the technology is still maturing, and retrofitting existing vessels is complex and expensive. Alternative fuels are a long-term solution — not an immediate answer to IMO 2020 compliance. 

For the vast majority of the world’s fleet — over 60,000 commercial vessels — switching to Very Low Sulphur Fuel Oil was the practical answer. And that decision created a demand shock that the global fuel supply chain is still working to absorb. 

The VLSFO Supply Problem 

Here is the fundamental challenge that IMO 2020 created and that has not been adequately resolved: producing Very Low Sulphur Fuel Oil at the scale global shipping requires is genuinely difficult. 

VLSFO is not simply conventional bunker fuel with the sulphur removed. Producing it from crude oil requires either selecting low-sulphur crude feedstocks — which are more expensive and less abundant than high-sulphur alternatives — or investing in refinery upgrading capacity to desulphurise the fuel during processing. Both options add cost and complexity. 

Global refinery infrastructure was not built to produce VLSFO at the volumes that IMO 2020 requires. Significant investment in refinery upgrading has occurred since the regulation came into force, but supply has consistently struggled to keep pace with demand — particularly in regions where refinery infrastructure is older or less sophisticated. 

The result is a market characterised by price volatility, regional supply imbalances, and persistent uncertainty for ship operators trying to plan their fuel procurement. In some ports and regions, VLSFO availability remains inconsistent. Price premiums over high-sulphur fuel oil have been significant — adding materially to operating costs for shipping companies already facing margin pressure. 

And this is before accounting for what comes next. 

The Decarbonisation Imperative: IMO 2020 Was Just the Beginning 

If IMO 2020 was disruptive, what’s coming next is transformational. 

The International Maritime Organisation has set a target of achieving net-zero greenhouse gas emissions from international shipping by or around 2050. Intermediate targets require a 20 percent reduction in emissions by 2030 and a 70 percent reduction by 2040, compared to 2008 levels. 

These targets go far beyond sulphur content. They require a fundamental rethinking of how ships are powered — moving away from fossil-derived fuels entirely and toward genuinely low or zero-carbon alternatives. 

The shipping industry is grappling with this challenge right now. New vessel orders increasingly specify dual-fuel capability. Port infrastructure for alternative fuels is being planned and built. Regulatory frameworks for carbon pricing in shipping are under active development at the IMO and in the European Union, which has brought shipping into its Emissions Trading System. 

But here’s the reality that often gets lost in the excitement about hydrogen ships and ammonia-powered vessels: the vast majority of the world’s current fleet will still be operating in 2030, in 2035, and in some cases well beyond. These vessels were built to run on liquid fuels. They cannot be instantaneously converted to run on hydrogen or ammonia. The energy transition in shipping will be measured in decades — not years. 

In the interim, the demand for cleaner liquid fuels — fuels that are lower in sulphur, lower in carbon intensity, and compatible with existing engine technology — is structurally growing. VLSFO that meets IMO 2020 standards is the floor, not the ceiling. The market is increasingly interested in fuels that can demonstrate lower lifecycle carbon intensity — and willing to pay a premium for them. 

Where Conventional Supply Falls Short 

The challenge of meeting shipping’s clean fuel demand from conventional sources is not just a short-term supply crunch. It reflects structural limitations in the global refining system. 

Producing low-sulphur marine fuels from crude oil is resource-intensive and expensive. The crude oil feedstocks required are finite and increasingly contested. Refinery investment is being weighed against the long-term trajectory of fossil fuel demand — making large capital commitments to conventional fuel production increasingly difficult to justify. 

At the same time, the shipping industry’s demand for lower-carbon fuels is pushing beyond what conventional refining can deliver. Renewable diesel, sustainable aviation fuel, and bio-based marine fuels are all being explored — but production capacity is limited, feedstock competition is intense, and costs remain high. 

The market needs new sources of compliant, lower-carbon marine fuel. Sources that are scalable. Sources that don’t compete with food or agricultural land for feedstock. Sources that can be produced cost-effectively and at volume. Sources that can demonstrably reduce the lifecycle carbon intensity of marine fuel supply. 

Waste-derived VLSFO — produced through co-pyrolysis of waste tyres and plastics — meets every one of these criteria. 

TYRO’s VLSFO: Where Waste Becomes Fuel 

TYRO’s patented Co-Pyrolysis process transforms waste tyres and waste plastics into Very Low Sulphur Fuel Oil that meets IMO 2020 compliance standards — with a sulphur content at or below the 0.5 percent threshold required for global shipping. 

This is not a marginal or experimental product. It is a market-ready commodity produced through a validated, patented process developed in partnership with Monash University. The output quality is a direct result of the chemistry of co-pyrolysis — the interaction between the hydrogen-rich plastic compounds and the sulphur-heavy tyre compounds produces fuel oil that is inherently lower in sulphur than single-stream tyre pyrolysis can achieve. 

The implications for shipping are significant: 

Drop-in compatibility. TYRO’s VLSFO is compatible with existing marine engine technology. No vessel modifications are required. It slots directly into existing fuel procurement and bunkering systems — eliminating the adoption barriers that face alternative fuels like hydrogen and ammonia. 

Waste-derived feedstock. The feedstock for TYRO’s fuel oil is waste — material that would otherwise go to landfill, incineration, or illegal dumping. This gives the fuel a demonstrably different lifecycle profile to conventionally refined VLSFO. For shipping companies under increasing pressure to demonstrate their decarbonisation progress, waste-derived fuel with a verifiable chain of custody represents a genuine opportunity to reduce their reported lifecycle emissions. 

Scalable supply. TYRO’s modular plant design means production can be scaled to meet demand — from regional facilities supplying local bunkering markets through to large-scale plants integrated into major port supply chains. As more plants are deployed and licensed globally, the supply of waste-derived VLSFO can grow in line with shipping’s demand. 

No competition for virgin resources. Unlike biofuel feedstocks that compete with agricultural land and food production, TYRO’s feedstock is waste that has no other viable use. There is no food versus fuel dilemma. There is no land use conflict. The feedstock is abundant, growing, and genuinely without alternative value. 

The Broader Clean Fuel Market 

VLSFO for shipping is the most immediate and largest market opportunity for TYRO’s fuel oil output — but it is not the only one. 

The fuel oils produced by co-pyrolysis have applications across a range of industrial energy markets. Industrial heating, power generation, and refinery feedstock are all potential end markets for waste-derived fuel oil, depending on the specific sulphur content and quality specifications achieved by individual plants. 

As carbon pricing and clean fuel standards develop across different industries and jurisdictions, the premium commanded by lower-sulphur, lower-carbon-intensity fuel oils is likely to grow. TYRO’s process is positioned to benefit from this trend — producing fuel that meets increasingly stringent standards from feedstock that is not only free but that operators are actively paying to have processed. 

The economics of waste-derived fuel are structurally attractive in a way that conventionally refined alternatives cannot match — because the feedstock arrives with a gate fee rather than a purchase price. 

The Numbers That Matter 

To understand the scale of the opportunity, consider some key figures: 

330 million tonnes — the approximate annual consumption of marine fuel by global shipping. 

0.5% — the maximum sulphur content permitted under IMO 2020 for vessels operating outside designated Emission Control Areas, where the limit is 0.1%. 

$50-100+ per tonne — the typical price premium of VLSFO over high-sulphur fuel oil, representing the compliance cost that ship operators pay to meet IMO 2020 standards. 

2050 — the IMO’s target date for net-zero shipping emissions, driving long-term structural demand for lower-carbon fuels. 

56 million — the number of end-of-life tyres Australia generates annually, representing a significant domestic feedstock base for TYRO’s fuel production. 

1.5 billion — end-of-life tyres generated globally each year, representing the scale of the feedstock opportunity for TYRO’s licensed technology internationally. 

The feedstock is abundant. The market is large and growing. The regulatory environment is moving in one direction. And the technology to connect waste feedstock to shipping demand exists — and is operating. 

The Convergence That Changes Everything 

The story of VLSFO and IMO 2020 is ultimately a story about convergence. 

A global shipping industry facing structural pressure to decarbonise its fuel supply. A global waste crisis generating billions of waste tyres and plastics with nowhere viable to go. A regulatory environment that has closed the easy exits — exporting waste, burning high-sulphur fuel — and created urgency on both sides. 

And a technology — co-pyrolysis — that sits at the exact intersection of these forces. Processing the waste that has nowhere to go into the fuel that shipping urgently needs. At zero emissions. With no residue. From feedstock that is not only free but that the waste industry will pay to provide. 

This is not a niche opportunity. It is a structural alignment of some of the most significant environmental and commercial forces of the decade. 

TYRO was built for exactly this moment. 

Want to understand how TYRO’s waste-derived VLSFO fits into your fuel procurement or waste management strategy? 

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