20-04-2018

Future of scrubbers still shrouded by dark clouds ahead of IMO 2020 rule

The uptake of scrubbers ahead of the International Maritime Organization’s sulfur cap rule is expected to be limited and puts its viability as an immediate solution for compliance in question, industry sources said recently.

“Scrubbers will not save us in 2020,” Aron Sorensen, head of maritime technology and regulation at the world’s largest international shipping association, Baltic and International Maritime Council or BIMCO, said.

“The number of scrubbers will increase but [will] not [be] enough. Today we have about 240 ships equipped with scrubbers and going by the database of new buildings we estimate that less than about 1,100 ships will have scrubbers by 2020,” he added.

That equates to only about 2%-3% of the global shipping fleet, he said.

“In today’s market, it’s hard to justify investment for spending on scrubbers and so far bunker suppliers or charterers have not been able to co-finance the installation of scrubbers widely,” Sorensen added.

Tests of scrubbers and its operation have shown a number of challenges, according to Sorensen.

Some BIMCO members have also expressed concerns surrounding the problems in using scrubbers, such as the sensors breaking down and corrosion issues, he added.

A recent survey conducted by Drewry and released in April showed that in terms of ensuring compliance, about 66% of the respondents said that low sulfur fuel oil is the intended solution for the existing fleet, far ahead of other solutions such as heavy fuel oil with exhaust SOx scrubbers.

Owners are wary of the cost implications for retrofitting their vessels with exhaust gas cleaning systems, it said.

In terms of future-proofing, some shipowners expressed concern that the installation of scrubbers may only be a stop-gap solution as a high proportion believed further environmental legislation is likely to be introduced in the next decade that could limit or completely outlaw their use, it added.

In April, a key committee of IMO has agreed to an initial strategy to cut the shipping industry’s total greenhouse gas emissions by at least 50% from 2008 levels by 2050.

Scrubbers may not be the best solution to address upcoming GHG emissions rules as stringent rules loom to curb the carbon footprint, some industry sources said.

SHIPOWNERS IN DILEMMA

“Scrubbers as a solution [to meet compliance to IMO’s 2020 rule] is off the table for now,” said Mike Beviss, director special projects at Eastport Maritime.

A survey by Eastport Maritime earlier this month of the top MR size tanker owners in its database showed that only 30% of them were considering retrofitting scrubbers before 2020, said Beviss, adding that 70% of those who were considering fitting scrubbers were considering their use in new buildings and ruled out retrofits.

Some shipowners such as Maersk Line and Teekay Tankers have already rejected the use of scrubbers to comply with the IMO 2020 rule.

An executive from The China Navigation Company also resonated a similar sentiment recently.

“Right now, our fleet which we own and even that on time charter … None of them are scrubbers fitted,” Neeraj Joshi, global bulk operations manager at the shipping company said at the Platts Bunkering & Storage Asia Conference in Singapore earlier this month.

Currently, the company has no plans for installing scrubbers on its owned fleet, he said at the time.

For the company’s time chartered fleet however, he said he was not aware of what the owners were planning to do.

Still, some sources said that scrubbers cannot be shunned away completely.

South Korea’s Hyundai Merchant Marine, for example, said this month it was considering using LNG bunkers or installing scrubbers for its newbuildings of 20 mega containerships to comply with the IMO’s global sulfur cap rule.

In March, trading house Trafigura said its order of up to 32 new crude and refined product tankers will all be fitted with emissions-cleaning scrubbers that will allow the company to continue using fuel oil as its main bunker fuel.

A shipowner, who previously dismissed scrubbers as an option for its fleet, said he was willing to re-consider that route if the price of installing scrubbers fall and its economics became more justifiable.

Some sources also said after the IMO rule is implemented, there will be so much high sulfur fuel oil that it may be cheap to justify scrubbers on pure economics, making them a more attractive option for compliance and hastening its uptake.

“Most shipowners are wondering what to do now and work out the best solution,” Eastport’s Beviss said.

Source: Platts

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