The shipping industry is already struggling due to poor global demand and overcapacity, which have pushed freight rates to unprofitable levels for many operators. European refineries are under pressure from high crude costs, cheap refined product imports and weak demand.
To comply with new European Union laws, shipping companies now face extra costs of €2.6 billion to €11 billion to switch fuels or to fit exhaust filters that would scrub out the sulphur in marine fuel oil.
The new rules require that the sulphur content in shipping fuels fall to 0.1% from 1% by 2015 in "sulphur emission control areas" in the Baltic, North Sea and English Channel. In other EU waters, they will be limited to 0.5% sulphur by 2020, in line with global International Maritime Organization rules.
EU rules have already forced ships to cut sulphur emissions in harbours.
Burning cleaner marine diesel would be a quick fix that would meet the requirements, but it currently trades at a €284 per tonnes premium to fuel oil, which has 1% to 3.5% sulphur content and which most ships use.
What's more, Europe is structurally short of diesel, and its older, less complex refineries cannot retool to produce more diesel without significant investment and lengthy shutdowns. Upgrading plants to produce more diesel could cost at least €400 million.
Switching back and forth between fuels as ships enter the low-sulphur zones could damage a ship's engines, said Sigurd Jenssen, director of Exhaust Gas Cleaning at engineering firm Wärtsila Environmental Solutions in Helsinki.
Another option is for ships to use exhaust filters or "scrubbers" to prevent the sulphur in fuel oil from entering the environment. It transforms the harmful gaseous oxides into neutral sulphates, which can be dumped in the sea.
Scrubbers resemble big car exhaust systems and range in price depending on the size of the engine. A scrubbing system for a 14 megawatt engine of a 150,000 tonnes suezmax oil tanker would weigh over 22 tonnes and for a 55 MW engine around 86 tonnes.
Lindsay Sword, a senior analyst at Wood Mackenzie in London, expects scrubbing to become fairly standard on ships.
"It's not a really proven and well used technology yet, but we cannot see how the refining industry globally would be able to cope otherwise," she said.
"What would they blend into their existing fuel oil pool to get the sulphur content down from 3.5%? It would need something very low sulphur. It just would not make any economic sense for them to do it."
The technology has passed regulatory hurdles and is starting to be used.
Scrubber-maker Hamworthy, a UK subsidiary of Finland's Wärtsila, sold its first systems for commercial use at the start of this year. Its main competitor, Sweden's Alfa Laval, has also recently sold its first systems.