VLSFO vs HSFO vs MGO: What Ships Burn After IMO 2020

Since 1 January 2020, a ship sailing outside an Emission Control Area may burn fuel containing no more than 0.50% sulphur by mass, down from 3.50%, and inside an ECA the limit is 0.10%. That rule, MARPOL Annex VI regulation 14, is why ships now burn very low sulphur fuel oil (VLSFO) on the open ocean, marine gas oil (MGO) or another 0.10% fuel in ECAs, or the old high sulphur fuel oil (HSFO) with a scrubber cleaning the exhaust.

The IMO says most ships chose the first route. The other two remain legal, and the choice between them is a piece of arithmetic about price spreads, sailing patterns and equipment cost that a bunker quote alone cannot settle. The acronyms also hide a second distinction, one that matters for the engine room: VLSFO describes a sulphur level, while MGO and HSFO describe kinds of fuel. A 0.50% fuel can be a distillate or a heavy residual blend. For the refinery side of the same molecules, see the crack spreads guide; for where the sulphur starts, the crude gravity and sulfur guide.

The sulphur caps, dated

The limits are written as a percentage of mass, % m/m, so 0.50% means 5 kilograms of sulphur in each tonne of fuel. They have tightened in steps under the revised Annex VI, adopted at MEPC 58 as resolution MEPC.176(58). Table 1 sets the steps side by side. The older rows come from the US Environmental Protection Agency’s 2010 summary of the Annex VI schedule, which states limits in parts per million; the 2020 and later rows come from current IMO pages.

Two details in the table are easy to miss. The 2020 date was not fixed when the 2008 text was written: the EPA’s 2010 sheet carries a footnote that the 0.50% step depended on a fuel availability review and might move to 2025. The IMO settled that at MEPC 70, by resolution MEPC.280(70), and kept 2020. The second detail is the carriage ban. From 1 March 2020 a ship without a scrubber may not carry fuel above 0.50% for its own use, which closed the gap between burning and merely having non-compliant fuel aboard. The IMO notes that the ban does not apply to fuel carried as cargo, so a tanker can still transport HSFO.

What the limits mean per tonne burned

The cap is on the fuel, but the pollutant is in the exhaust. Sulphur burns to sulphur dioxide, and because SO2 weighs about twice as much as the sulphur in it (molar mass 64 against 32), each kilogram of sulphur becomes about two kilograms of SO2. Table 2 runs that chemistry for one tonne of fuel at each cap.

A ship burning fuel right at the old cap released 35 times as much SO2 per tonne as one burning at the ECA limit. Fleet-wide, the IMO forecast a 77% fall in ship SOx emissions from the 2020 change, about 8.5 million tonnes, and its May 2025 notice on the Mediterranean credits the global limit with a 70% cut in total sulphur oxide emissions from shipping. The forecast and the outcome are different measures from different dates; the IMO publishes both.

Where 0.10% applies: the emission control areas

An ECA is a sea area designated under Annex VI where tighter limits apply. The SOx and particulate areas sit under regulation 14; some also control nitrogen oxides under regulation 13. As of the IMO pages checked for this article, Table 3 is the list. Note the difference between adoption, entry into force and effect: the IMO builds in a grace period, so a designated area may only start biting a year after its amendment enters into force.

The North American ECA is the one most US readers meet. The EPA’s 2010 fact sheet put its cost at about $3.2 billion in 2020 against annual benefits of up to 14,000 avoided premature deaths in the US and Canada, and gave a shipping example that still helps with scale: a route with about 1,700 nautical miles inside the ECA would see operating costs rise by roughly 3%, adding about $18 to the cost of moving one 20-foot container. Those are 2010 projections, made when the ECA fuel cost was a forecast rather than a price, and they should be read as an order of magnitude, not a current quote.

The ECA map also explains why a ship rarely runs on one fuel for a whole voyage. A container ship from Asia to Rotterdam burns 0.50% fuel across the Indian Ocean, may enter the Mediterranean and now needs 0.10% fuel there, then crosses the Bay of Biscay at 0.50% before entering the North Sea ECA. Each boundary is a fuel changeover, a procedure treated further down.

What the three names mean in the IMO’s categories

Market shorthand and regulation use different words. The IMO’s 2019 guidelines for the 0.50% limit, resolution MEPC.320(74), define the fuels they discuss by reference to the international marine fuel standard ISO 8217. The standard itself is a paid document and its numeric limits are not reproduced here; the categories below are as the IMO describes them.

• Distillate marine fuels (DM), for example DMA, DMB, DMX and DMZ. These are the gas oils and marine diesel oils: refined from the middle of the barrel, thin, and usable without heating. Marine gas oil in trade usage means a DM-grade distillate.
• Residual marine fuels (RM), for example RMD 80 and RMG 380. These are heavy fuels made from what remains after distillation and cracking, blended with lighter streams to meet a grade. The number in a grade name is part of its designation in the standard’s residual table, which sets the grade’s limits, including viscosity.
• Ultra-low sulphur fuel oil (ULSFO), at most 0.10% sulphur, which the guidelines say can be distillate (ULSFO-DM) or residual (ULSFO-RM). This is the ECA-compliant group.
• Very low sulphur fuel oil (VLSFO), at most 0.50% sulphur, again in a distillate (VLSFO-DM) or residual (VLSFO-RM) form.
• High sulphur heavy fuel oil (HSHFO), above 0.50%. The market usually calls it HSFO. After 2020 it is usable only behind a scrubber.

The practical consequence is that a VLSFO bunker can behave like a residual fuel in every way except its sulphur. The IMO’s guidelines say the viscosity of most blended 0.50% residual fuels means they cannot be burned in distillate-only systems, because they need heating for cleaning and combustion. Buying VLSFO does not turn a ship into a gas oil burner. Equally, an MGO stem bought for the ECA is a different product with its own problems. The road-fuel parallel is the difference between heating oil and diesel, which share a distillation cut but carry different rules; the heating oil versus diesel guide follows that comparison on land.

Why switching fuel was more than a sulphur number

The IMO’s guidelines open their technical section with a reassurance: experience with the 0.10% ECA limit showed that ship machinery could cope with the new 0.50% fuels. They then list what has to be managed. The list is the clearest public description of why chief engineers did not treat VLSFO as a drop-in fuel.

Two points in that table carry most of the operational weight. First, compatibility. Before 2020, residual fuels from different suppliers were broadly similar heavy blends. A 0.50% fuel can be made from many combinations of refinery streams, and two batches that each meet the specification can still form sludge when mixed. That is why the guidelines ask for a written commingling procedure and empty tanks for new stems. Second, temperature control runs in both directions. Residual fuel has always been heated; distillate normally is not, and the guidelines warn against overheating it to the point where viscosity falls below the 2 cSt floor. A ship carrying both families needs two sets of rules in one engine room.

Blending down, and fuels from outside the oil barrel

The IMO lists two further ways to comply besides buying a ready-made 0.50% fuel or fitting a scrubber: blending high-sulphur fuel oil with low-sulphur gas oil, and switching to alternative fuels such as LNG or biofuels. Blending is the one that can be checked with arithmetic. Sulphur content in % m/m mixes in proportion to mass, so the share of low-sulphur component needed to reach a target is (high-sulphur content − target) ÷ (high-sulphur content − low-sulphur content).

The first row shows why nobody turned a cap-grade 3.50% residue into VLSFO with gas oil alone: the result would be about 88 percent gas oil, an expensive distillate fuel in all but name. Blending gets cheaper as the residual component gets lower in sulphur, as the last rows show, which is why refiners with access to low-sulphur crude and residue streams became natural VLSFO suppliers. It is also the origin of the compatibility problem in Table 5: a VLSFO from one port may be a mostly residual blend, and one from another port a mostly distillate blend, both legal and both on specification.

LNG, the other alternative the IMO names, takes a ship out of the oil-fuel sulphur comparison altogether, at the price of its own tanks, engines and bunkering network. Biofuels in marine use appear mainly as blends; the IMO guidelines cap fatty acid methyl ester at 7.0% by volume in the DFA, DFZ and DFB distillate grades. For the land-based difference between biodiesel and renewable diesel, which is the same chemistry question in another market, see the renewable diesel versus biodiesel guide.

The scrubber route and the rules around it

Regulation 4 of Annex VI lets a flag State accept an alternative that reaches the same emission result as compliant fuel. For sulphur that means an exhaust gas cleaning system, a scrubber, which washes SO2 out of the exhaust with seawater or a treated freshwater loop. A ship with an approved scrubber may keep burning HSFO. By mid-July 2020, the IMO says, 2,359 systems had been reported to it as equivalent methods.

• Open loop uses seawater once and discharges it. The IMO notes that washwater must have a pH of at least 6.5 and meet limits on polycyclic aromatic hydrocarbons and nitrates.
• Closed loop recirculates treated water, and the IMO says the residues should go to port reception facilities, not overboard or into an incinerator.
• Hybrid systems can run either way, which matters because some ports have banned washwater discharge in their waters, a right the IMO notes they hold under UNCLOS.

The guidance itself has moved since 2020. The IMO adopted revised scrubber guidelines in 2021 as resolution MEPC.340(77), and in June 2022 MEPC 78 approved further guidance on risk assessment of discharge water and on delivering residues. For the buyer, the effect is that a scrubber’s value depends on where the ship trades. An open-loop unit on a ship that spends much of its time in ports with discharge bans earns less than the same unit on an ocean route.

Scrubber payback, worked with stated inputs

The scrubber decision reduces to one comparison: the annual fuel saving from buying HSFO instead of compliant fuel, less the cost of running the scrubber, set against its installed cost. Every number in Tables 7 to 9 is an illustration chosen by this page to make the arithmetic visible. None is a market price or a quote for any ship. Replace them with a fleet’s own figures before drawing a conclusion.

The annual net saving is: (non-ECA fuel × spread) + (ECA fuel × (spread + MGO premium)) minus the extra fuel cost minus operating cost. With the Table 7 inputs that is 12,000 × spread + 3,000 × (spread + 150) − $101,250 − $200,000. Simple payback is the installed cost divided by that saving. Table 8 runs the formula across five spreads.

The pattern is the point, not the exact years. With these inputs a zero spread still leaves a small saving from the ECA share, because MGO is dearer than HSFO even when VLSFO is not, but the payback is decades. At a $100 spread the unit pays for itself in about 3.0 years; at $250, in little over a year. Solving the formula backwards, the spread needed for a five-year payback is about $57 per tonne, and for a three-year payback about $101. A buyer deciding in a year of wide spreads is betting they stay wide for the payback period, and a buyer who waits is betting the other way.

The same unit on a smaller ship

Scale changes the answer more than any single price. Take a ship burning 20 tonnes a day for 200 days, 4,000 tonnes a year, with an assumed installed cost of $3,000,000 and operating cost of $120,000, and the same prices, ECA share and fuel penalty as before.

The small ship burns about a quarter of the large ship’s fuel, while its assumed installed cost is three-fifths as much, so its payback is far longer at every spread, and at a zero spread the scrubber loses money every year. That is the arithmetic behind a familiar pattern: scrubbers make the most sense on large ships with high fuel burn and long ocean legs, and least on small ships that spend time in port.

Inputs that move the result and are easy to misjudge

• ECA share. A ship trading inside the North American or Mediterranean ECAs most of the time gains more per tonne, because the comparison fuel is the 0.10% grade. Raise the ECA share in Table 7 from 20% to 50% and, at a $100 spread, the large ship’s net saving rises by $675,000 a year.
• Discharge bans. If an open-loop ship must switch to compliant fuel in certain ports, that fuel drops out of the saving column.
• The spread is not fixed. It depends on how refiners price high-sulphur residue against low-sulphur blends, a refinery margin question covered in the crack spreads guide. When high-sulphur crude is plentiful, HSFO tends to be cheaper; that link runs back to the sour-crude trade in the API gravity and sulfur guide.
• Who pays for fuel. On many charters the charterer buys bunkers, so the shipowner who pays for the scrubber needs a contract that shares the saving.

The 2019 to 2020 break in US bunker sales

Few public datasets show the switch as it happened. One that does is the US Energy Information Administration’s sales of fuel oil by end use, which split residual and distillate fuel sold for vessel bunkering. The series ends with 2020 and its next release is listed as suspended, so it shows the change year and nothing after. Table 10 sets out the six years it covers.

Residual fuel sold to ships in the US fell from 3,544 million gallons in 2019 to 2,626 million in 2020, a drop of 25.9%, and distillate sold to ships fell 21.2%. Read those numbers with three cautions. 2020 was also the year of the pandemic, when trade and cruise traffic collapsed, so the fall cannot all be credited to the sulphur rule. EIA’s residual category is defined by the product, not its sulphur, so blended 0.50% residual fuels sit inside the same line as HSFO and the switch from one to the other is invisible here. And the series stopped, so there is no official US figure from this survey for the years since. What the table does show is that ships remained by far the largest buyers of US residual fuel through the change, taking 82% of residual sales in 2020.

Changing fuel at an ECA boundary

A ship heading into an ECA has to be burning compliant fuel by the time it crosses the line, which means the 0.50% fuel in its service tank, settling tank and pipework must be flushed out first. The IMO guidelines list a fuel oil changeover calculator among the open-sea compliance monitoring tools, alongside the fuel consumption data collection system and continuous SOx monitoring, because the timing of a switch can be checked.

A simple model shows why the timing is measured in hours. Treat the fuel system as one well-mixed volume that the engine drains while fresh low-sulphur fuel refills it. The sulphur level then falls exponentially, and the time to reach the limit is (volume ÷ burn rate) × ln((starting sulphur − new fuel sulphur) ÷ (limit − new fuel sulphur)).

Two things follow. The new fuel has to be well below 0.10% for the mix to get there in reasonable time: if the distillate were exactly at 0.10%, the model would never quite reach the limit. And a ship switching from HSFO has further to go than one switching from VLSFO, about 16.3 hours more on these assumptions. Fuel switching also brings the distillate handling issues in Table 5 into play at the moment the ship is entering busy coastal waters, which is why the guidelines stress viscosity and temperature control.

Enforcement: delivery notes, samples and FONARs

Compliance rests on paper and on samples. Every bunker delivery comes with a bunker delivery note (BDN) and a representative sample of the fuel, under regulation 18.8.2 of Annex VI. Under the IMO’s guidelines, a port State that suspects non-compliance can analyse the MARPOL delivered sample, an in-use sample drawn from the ship’s fuel system, or an onboard sample from a tank, following the verification procedures in Annex VI. The guidelines also caution that sampling should not unduly delay or detain a ship.

When a ship cannot buy compliant fuel, it files a Fuel Oil Non-Availability Report. The IMO is explicit that a FONAR is not a waiver. The authority at the destination port scrutinises it, and repeated claims can trigger more inspections. Flag States and port States share enforcement, under port State control guidelines the IMO adopted in 2019. The rule also reaches small craft: the IMO notes that all ships, of any size, have had to use compliant fuel since 1 January 2020, while the International Air Pollution Prevention Certificate is required for ships of 400 gross tonnage and above on voyages to ports of other Parties.

Reading a bunker price headline after 2020

Bunker prices are quoted in US dollars per metric tonne at a named port, usually for a named grade: VLSFO, HSFO 380 (shorthand for an RMG 380 residual grade), or MGO. Four points help when comparing them.

1. Check the grade and sulphur class before comparing two prices. A VLSFO quote and an MGO quote are different products, and the gap between them is the ECA premium a ship pays without a scrubber.
2. Look at the spread, not just the level. The VLSFO-HSFO spread is what a scrubber earns; the MGO-VLSFO spread is what an ECA costs. Both can move while the headline price stands still.
3. Convert units only with the batch density. A per-gallon road diesel price and a per-tonne MGO price can be compared, but only using the density on the delivery note; the diesel prices guide covers the road-fuel side.
4. Remember the competition for distillate. Marine gas oil comes from the same part of the barrel as diesel, heating oil and jet fuel, so a tight distillate market raises the cost of ECA compliance; the jet fuel prices guide shows the same squeeze from the aviation side.

What these quotes will not tell a reader is which route a given fleet should take. That depends on the inputs in Table 7, on charter terms and on where the ships trade, which is why this page gives the formula rather than a verdict.

Data and sources: International Maritime Organization, IMO 2020: cutting sulphur oxide emissions, checked October 30, 2026 (0.50% and 0.10% limits, ECA list, Canadian Arctic and Norwegian Sea dates, carriage ban, compliance options, scrubber count, washwater rules, MEPC.340(77), FONAR, small ships, 77% forecast). IMO, Mediterranean Sea Emission Control Area news item, 1 May 2025, checked October 30, 2026 (Med SOx ECA in effect 1 May 2025, fifth ECA, North-East Atlantic approval at MEPC 83, 70% cut). IMO, Index of IMO Resolutions, MEPC 2026-27, checked October 30, 2026 (resolution MEPC.407(84), North-East Atlantic ECA designation, awaiting certification). IMO, Emission Control Areas designated under MARPOL Annex VI, checked October 30, 2026. IMO, Resolution MEPC.320(74), 2019 Guidelines for consistent implementation of the 0.50% sulphur limit, checked October 30, 2026 (fuel categories, handling issues, compatibility, sampling, changeover calculator). US EPA, Designation of the North American Emission Control Area for Marine Vessels and fact sheet EPA-420-F-10-015 (March 2010), checked October 30, 2026 (limit history in ppm, ECA extent, enforcement from August 2012, cost and benefit estimates). US EIA, Adjusted Sales of Residual Fuel Oil by End Use and Adjusted Sales of Distillate Fuel Oil by End Use, checked October 30, 2026 (vessel bunkering, 2015 to 2020). SO2 stoichiometry, unit conversions, the blending model, the scrubber model, the changeover model and every number in Tables 6, 7, 8, 9 and 11 are this page’s arithmetic on stated assumptions.