Looming 2020 regulations capping marine fuel sulfur at 0.5% have so far benefited manufacturers marketing scrubbers – or exhaust gas cleaning systems, as they are more formally known – but this solution is now being viewed with a more critical eye.
At the 12th annual MARE Forum on November 27 in Houston, one of the biggest topics debated by the maritime and shipping market delegates in attendance was the role of scrubbers, which have enjoyed increasing popularity with shipowners in 2018, in meeting the tightening environmental rules.
Scrubber manufacturers marketed their systems with the promise of 'business as usual', as the exhaust gas cleaning systems essentially scrub the sulfur from currently used 3.5% sulfur bunker fuel to the mandated 0.5% sulfur ceiling.
But this version of 'business as usual' also includes the not-so-usual neutralization and disposal of the sulfuric acid washwater, as well as the maintenance of the scrubber. Because the systems have not yet been tested widely on long-haul voyages, their reliability gives cause for concern.
Scrubber uptake quadrupled in 2018
Derek Novak, Senior Vice President of Engineering and Technology and the American Bureau of Shipping, explained at the forum that the total adoption of scrubbers as of October 2018 amounted to 1,509 units, with 665 to be installed on newbuild vessels and 844 to be retrofitted.
He expects that a total of 2,000 to 3,000 vessels will be outfitted with scrubbers to comply with the new regulations. Assuming the total merchant marine fleet amounts to close to 60,000 vessels, those 2,000-3,000 scrubbers make up only 3%-5% of the entire fleet.
According to S&P Global Platts Analytics, the number of scrubbers installed and ordered at the end of November amounts to 1,948 units, while the total number of systems installed and ordered by January 2020 is forecast at 2,278, consuming around 500,000 b/d of high sulfur fuel oil.
Many speakers on the MARE panel expressed concerns about the use of scrubber systems as to power availability, vessel maneuverability in ports, and increased emissions through scrubber use. Novak suggested that scrubbers would present space challenges on retrofitted vessels due to funnel enlargement and potential issues of power availability, as vessels would require more power to run the scrubber while steaming.
Keynote Speaker Rear Admiral Paul Thomas expressed concern that the scrubber systems would not meet the goal of reducing the environmental footprint of the maritime industry as envisioned by the IMO's 2020 sulfur level reduction regulation, but rather provide a short-cut road to compliance. "You choose to take sulfur out of the air and put it into the ocean or onto land," Thomas said. He explained that open-loop scrubber systems were short-term at best and would likely be regulated, as they do nothing to reduce a vessel's environmental footprint. Captain Anuj Chopra, Vice President of Rightship, a provider of maritime and environmental risk management systems, pointed out that the use of scrubbers would increase environmental emissions of up to 5% through additional energy used to power the cleaning systems.
These concerns have not escaped local regulators. The Singapore Port Authority announced on November 30 that it will ban the discharge of wash water from open-loop scrubber systems as of January 1, 2020, requiring the use of compliant fuel in the port.
Availability and bottlenecks
Additional concerns circled around the availability of 3.5% sulfur bunkers, which scrubber-installed tankers would continue to use after January 1, 2020. With most bunkering locations preparing to offer the new regulation 0.5% sulfur material, many of the forum's speakers believed high-sulfur bunker availability would be difficult to come by in the less-trafficked regions frequented by the tanker tramp trade, in particular in South America, Africa and Southeast Asia.
Should 3.5% sulfur fuel be unavailable at a port, vessels with scrubber systems would have to use fuel with differing sulfur contents, including lower-sulfur fuels, dampening the economic benefit from the low/high-sulfur spread and thus extending the payoff period of the scrubber system, said Kathy Metcalf, president and CEO of the Chamber of Shipping of America. Pay-off is generally indicated at between 0.5-3 years, depending on the size of the scrubber, distances travelled, bunker consumption, and the price gap between high-sulfur bunker fuel and marine gas oil, which is currently forecast anywhere between $250-$400/mt.
Infrastructure can also substantially bottleneck high-sulfur fuel supply, as bunker suppliers have yet to determine how many fuel barges they should clean up and which to keep for higher sulfur fuels. Buffalo Marine Services' General Counsel Thomas Marian mentioned that fuel barges take two to three weeks per wash, which, should the decision to clean the vessels continue to be delayed, could become another infrastructure bottleneck.
Short of time
Panelists warned that time was running out for shipowners to fully prepare for the IMO 2020 implementation in view of both equipment availability from top-tier scrubber manufacturers and shipyard capacity for installations.
Shipowner Scorpio Group and Pacific Green Technologies Group, owner of the ENVI-Marine Exhaust Gas Scrubbing System, alone announced the week of December 3 that they have agreed to purchase and manufacture 60 scrubbers in 2019 with an additional 20 units in 2020.
In addition Scorpio Tankers and Scorpio Bulkers have executed a framework agreement with Pacific Green Marine Technologies, a wholly owned subsidiary of Pacific Green Technologies Group, whereby Scorpio can elect for PGMT to design and engineer scrubbers for up to a further 28 and ten vessels, Pacific Green Technologies said in a statement.
While an increasing number of shipowners has decided to steam the scrubber way, others are less convinced by the benefits. Ardmore, Euronav, Odfjell and Teekay tankers have opted not to scrub as they view the systems as a stop-gap measure until compatible low-sulfur fuels become available.