With SOx emissions coming into focus as the 2020 global sulphur cap approaches, owners have a number of compliance options, including the fitting of scrubbers. While uptake of SOx scrubbers in the fleet has so far been limited mainly to vessel types that already spend a large proportion of time in Emissions Control Areas (ECAs), the proportion of new contracts for scrubber-fitted ships appears to be on the rise.
In Need Of A Bath
In recent years the regulation surrounding sulphur oxide gases (SOx) has been rapidly extended. Since 2015, 0.1% limits have been imposed on the sulphur content of fuel, closely linked to SOx emissions, within a number of Emissions Control Areas (ECAs). The first global sulphur cap was imposed in 2012, initially set at 3.5%, but in 2020 this will be sharply reduced to 0.5%, necessitating significant change in the operation of vessels.
Shipowners have three main options for complying with sulphur limits. The first is to use low sulphur petroleum-based fuels such as marine gasoil (MGO) or certain blends with fuel oil. Another is to use alternative fuels with a low sulphur content, with LNG the most high-profile of these. The third option is to use a scrubber system to ‘clean’ SOx particles from the ship’s exhaust gases, allowing owners to use conventional fuel oil.
Who’s In The Tub?
The number of vessels reported to be fitted with scrubbers has risen steadily, reaching 240 as of 1st December 2017. This included 57 Ro-Ros, as well as 62 cruise and ferry units. Meanwhile, 25 gas carriers and 23 tankers also featured in the total. Whether vessels are scrubber-fitted appears to be closely related to the time they spend in ECAs, with most vessels that less frequently enter these areas opting to switch temporarily to MGO. In 2016, an estimated 27% of ferries and 26% of Ro-Ros spent more than 50% of their time in ECAs, while almost a third of cruise ships spent more than 30% of their time in ECAs (see September Analysis).
Owners Taking The Plunge?
However, growth in the scrubber-fitted fleet looks set to accelerate, with the proportion of new contracts for scrubber-equipped vessels increasing from roughly 1% in the period 2012-15 to around 5% in 2017 so far. Despite the trend, this remains a small proportion of total ordering (which has itself been limited), with many owners appearing to adopt a ‘wait and see’ policy. Although scrubbers can eventually reduce costs by allowing vessels to burn cheaper fuel, high installation costs mean that owners installing equipment today face a long payback period. There also remains uncertainty over how the refining industry will meet the growing need for low sulphur fuels, and over the costs of competing technologies such as dual-fuel LNG engines, leading owners to remain cautious.
While growth in the scrubber-equipped fleet has begun to pick up, this has largely been confined to sectors in which vessels spend more time in ECAs. Although high costs and uncertainty mean that scrubber-fitted vessels still make up a low percentage of new contracts, this proportion is increasing. With the 2020 sulphur cap fast approaching, owners still face an important decision on whether scrubbers are the right option for their vessels.
Source: Clarkson Research Services Limited