The IMO’s 0.5 per cent sulphur cap is expected to enter into force on 1 March 2020. One option for compliance is the use of marine scrubbers with heavy sulphur fuel oil (HSFO). However, there is a lot of uncertainty among the shippers about the new regulations and its impact on the industry.
The new sulphur cap rules will have a direct impact on the ship-owners and refiners. One option with ship-owners is to install scrubbers in existing ships—retrofitting. There are however a few factors that will limit its success by the time the regulation gets into action.
According to an estimate, retrofitting of a scrubbers costs anywhere between USD 2 and 5 million depending on the ship size. On some older vessels, fitting a scrubber might not even be possible or might not make economic sense.
The return on investment of a scrubber depends on the discount of high sulphur fuel oil to low sulphur fuel oil. If the discount narrows, the investment in scrubber can delay the pay off period and might even render the investment unviable.
Dock availability for the global fleet of around 92,000 ships is also a constraint. From the supply side, there are only a handful of suppliers of scrubbers. Given the constraints on the production capacity, a scrubber ordered today will only be delivered over the next 8-10 months.
This lag time further restricts the ability of the ships to be ready before January 2020. Experts point to the fact that merely 1,500-2,000 ships can be retrofitted with scrubbers by the time the new rules come into play.
Lack of a globally accepted standard for scrubbers further puts the ship-owners in an uncertain sphere. As the new rules come into force, major bunkering posts across the globe are likely to stock and provide the low sulphur compliant fuel.
In such a scenario, there might be decreased availability of high sulphur fuel oil, rendering scrubbers useless. Some of the new vessels are being built with scrubbers already pre-fitted.
One benefit of scrubbers is that operators and crew can use a fuel they know and are used to operating with and engines will be using a fuel they are used to. However, many believe scrubbers are not a long-term solution because they are costly, there are uncertainties regarding the regulation of open-loop discharge water, and the availability of HSFO.
Besides, there are some unreliable companies on market today offering scrubbers and these issues combined are making some shippers sceptical of scrubbers.
According to the Exhaust Gas Cleaning System Association (EGCSA), there are 983 scrubbers installed or on order. Despite some criticism that scrubbers are not a long-term solution and the fact they do not reduce the production of emissions, only ‘scrub’ the fuel of its sulphur content, the market is still growing.
(References: Financial Express, Vessel Performance Optimisation)
Sea News Feature, January 28