Are scrubbers the right way to combat the incoming 2020 sulphur cap, or would another option be a better choice?
The 2018 TradeWinds Shipowners Forum, held at Posidonia in Athens in early June, asked shipowners to look to the future — one that comes with substantial emissions regulation. While the International Maritime Organisation (IMO) has recently adopted a strategy that envisages decreasing total annual greenhouse gas emissions by at least half by 2050 (compared with 2008), shipowners are facing a much more imminent prospect in the form of the body’s decision to limit sulphur in fuel oil that is used on ships to 0.50% mass by mass. The restriction, which comes into force on January 1, 2020, has been described by the marine branch of gas and oil corporation ExxonMobil as “arguably one of the industry’s most defining moments since the shift away from coal”. The IMO claims that the move “will significantly reduce the amount of sulphur oxide emanating from ships and should have major health and environmental benefits for the world, particularly for populations living close to ports and coasts”.
When it comes to compliance with the regulation, shipowners have different options at their disposal. They can opt to burn compliant fuels — marine gas oil (MGO) or ultra-low-sulphur fuel oil — or choose to burn liquefied natural gas, or alternatively, they can decide to use abatement technology — exhaust gas cleaning systems, or scrubbers. The latter option was a hotly-discussed topic at the TradeWinds Shipowners Forum this year, with mixed opinions on the suitability of scrubbers with regards to ensuring adherence to the incoming sulphur cap. In a panel at the event, Alexander Saverys, chief executive at Hunter Maritime and Compagnie Maritime Belge, was of the opinion that scrubbers were not a good thing for the shipping sector.
“I don’t think the public will appreciate that we’re taking the sulphur from the air and just putting it into the ocean,” he commented on the technology, later saying that although a business case for scrubbers exists, he feared that again, by not being proactive, this industry will be blamed for poor choices regarding the environment.
Ismini Panayiotides, founder and chief executive of Pavimar Shipping, agreed that what the industry is doing with scrubbers will not help the oceans. Ballast water treatments are being used to clear the water coming out of vessels to preserve the environment — yet, she explained, “with scrubbers, we’re doing the exact opposite thing”. Ms Panayiotides claimed that slow steaming — running cargo vessels at substantially lower than their maximum speed — might be the sulphur cap compliance solution, arguing that “it will definitely benefit our industry, increasing tonne-mile demand”.
I don’t think the public opinion will appreciate that we’re taking the sulphur from the air and just putting it into the ocean
Responding, Milena Pappas, Star Bulk commercial director, cited a study measuring sulphur volumes. “If you put all the sulphur in the sea on top of the sea, it would be about a metre and a half,” she explained. “If you add what the ships will add into the sea, it’s not even paper-thin. That’s one thing. The second thing is that sulphur in the sea is not harmful, whereas in the air, it kills about 600,000 people per year — that’s the estimate. So putting it in the sea is not damaging it — it already exists.”
However, Mr Saverys felt that the general public would view scrubbers as “polluting”.
“We are already perceived as being a polluting industry, and now what are we doing?” he asked. “We’re just taking the sulphur from the air and putting it in the ocean, and that’s the way people are going to pitch it.”
SwissMarine Bermuda director Peter Weernink believed that right now, a lot more scrubbers are being fitted than are being publicly reported.
“Today, all the major trading houses will pay premiums for vessels with scrubbers and they’re all looking to find scrubber-fitted vessels full-period,” he said. “That’s where the industry is going.”
In a separate BIMCO Power Panel debate at Posidonia, opinion on scrubbers was similarly divided. According to Peninsula Petroleum market analyst Valentina Vignoli, at the time the 2020 sulphur cap legislation was passed, there was an expectation that exhaust cleaning systems would be the main solution, but this hasn’t happened. Yet, N.S. Lemos analyst James Leake believed that creative methods exist for financing scrubbers and noted that in certain cases, there are very apparent reasons to invest in them, with payback in eight to 12 months.
“I think it’s a no-brainer, but it is a very narrow opportunity,” he said. “I expect that half of the very large crude carrier fleet will have scrubbers fitted. But unless you jump on the bandwagon now, that opportunity will disappear.”
Mr Leake also noted disadvantages of exhaust gas cleaning systems, however.
“When it comes to 2021–2022, it’s in a refiner’s interest to produce more low sulphur,” he said. “Yes, a scrubber makes sense in the short term, but unless you have paid that back within two years, you have wasted your time.”
On the Tradewinds’ panel, American Bureau of Shipping chairman, president and chief executive Christopher Wiernicki argued that one size does not fit all and that a lot of factors go into creating “the right effective fuel strategy”.
“You’ve got vessel age, you’ve got vessel operating profile, you’ve got whether it’s new construction or existing vessel, you’ve got fuel availability, you have charter requirements,” he explained, noting that a period of instability, with much concern about fuel quality, safety and availability, will come with 2020 and the period immediately afterwards.
Mr Weernink predicted that the average bunker price for the marginal ship will be greater in 2020 and that the fleet will slow down, while Ms Pappas raised the estimate that “even if everyone tried to install the scrubbers by 2020, only 20% of the fleet would be able because of the availability and the yard capacity”.
“So, by definition, MGO, marine diesel oil, will be more expensive because that will be more compatible, so by definition that will bring speeds down because every one knot is about 5% to 7% of the supply of tonnage,” she said. “So, we will have to speed down and that’s good, anyway, for us.”
With speakers on both panels arguing that shipping is being made to think greener and that the shipowning industry must be prepared for the transition away from fossil fuels, environmental debates such as these will continue long past the 2020 deadline.