Throwing scrubbers out with the bath water
Shipyards worldwide are overloaded with orders for installation of scrubbers on seagoing vessels. Against this background, IMO starts discussing environmental hazards from discharge of scrubber washwater. Environmentalists are pushing for a ban on scrubbers and on the use of heavy fuel oil in the Arctic.
Open to criticism
Exhaust gas cleaning systems known as “scrubbers” are among the most popular alternatives to MARPOL compliant marine fuel (with sulphur content below 0.5%). Although capital investments in equipment of ships with scrubbers are quite high, ship owners expect to pay off the cost through the use of a cheaper fuel, saving on repairs (low-sulphur fuel affects the fuel system) and on construction of new ships (specially designed ships are normally required for operation on alternative fuels).
According to classification society DNV GL, shipyards worldwide are overloaded with orders for installation of scrubbers on commercial ships.
“We know that there is currently a four- to five-month backlog of vessels that should have been retrofitted by the end of last year. The number of vessels that need to be retrofitted has accumulated so it will probably take until April or May to complete all scrubber installations... The reasons are manifold. Material shortages and limited yard capacity are the biggest issues. For example, there is only a limited number of manufacturers of GRE pipes in China where most scrubbers are installed. Designers and yards have a high workload of retrofit installations, and lack of staff has doubled the installation time at yards from 40 to 80 days”, said Dr Fabian Kock, Head of Environmental Certification, DNV GL-Maritime.
According to BIMCO, Clarksons estimates that 36% of VLCCs will be scrubber-fitted by the end of 2020. Gas cleaning systems are also being actively installed on cruise liners, container carriers and other types of ships.
Average cost of scrubber including installation ranges between $3 and $5 million depending on ship class with the installation process taking up to half a year.
When speaking at the Oil Terminal conference and exhibition in Saint-Petersburg, oil market analyst Irina Avetisyan, Refinitiv, said that the payback period for scrubbers costing $3.5 million can be about a year if the LSFO/HFSO spread stays at the level of $200 throughout the year. According to Refinitiv, about 2,500 vessels will be fitted with scrubbers during the first months of 2020 with the number of retrofitted ships to grow in the future.
A year-long payback period is a very good indicator of investment efficiency as compared with other alternatives, especially building ships of new designs that foresee operation on such types of fuel as liquefied gas, methanol, etc.
Nevertheless, the clouds are piling up above the scrubbers.
At the end of 2019, the Suez Canal Authority issued a circular (no. 8/2019) related to the IMO 2020 sulphur regulation, in which it also placed a ban on the discharge of wash water from open-loop scrubbers while transiting the Canal. Similar ban was earlier imposed by different ports worldwide (ports of Belgium, Latvia, Lithuania, California and Connecticut, Malaysia, Abu Dhabi, Singapore).
IMO’s Sub-Committee on Pollution Prevention and Response (PPR), meeting this week (17-21 February) at IMO headquarters, will consider possible negative impact of scrubbers on the environment. In particular, it will focus on the risks imposed by discharge of liquid effluents from scrubbers into water for whales and other marine mammals.
The paper prepared by several international environmental organizations including Friends of the Earth International, World Wildlife Fund, and Pacific Environment and submitted to PPR7 states that “Open-loop systems continuously discharge warm, acidic washwater that contains carcinogenic substances such as polycyclic aromatic hydrocarbons (PAHs) and heavy metals. When released into the ocean, these substances pose a threat to aquatic wildlife, including threatened and critically endangered pods of resident killer whales that live off the coast of British Columbia.”
“This week’s negotiations on the use of scrubbers is timely and urgent, as increasing numbers of ships are installing these systems so they can circumvent the IMO’s 2020 fuel sulfur standards while continuing to burn heavy fuel oil. The cumulative impacts on the marine environment of increasing volumes of scrubber waste being discharged into our seas was not adequately considered prior to allowing their use. The vast majority of these scrubbers are open-loop systems, which effectively turn air pollution into water pollution,” said Kendra Ulrich, Senior Shipping Campaigner at Stand.earth.
IMO environmentalists also emphasize that “installing scrubbers also does nothing to address the spill risk associated with the use of heavy fuel oil and provides inferior reductions to black carbon over simply switching to cleaner fuel sources”.
However, studies conducted by DNV GL, the Japanese Ministry of Land, Infrastructure, Transport and Tourism and other organizations confirm that washwater from ships equipped with scrubbers is below the limits set by major international water quality standards.
So, scrubbers face a yet another PR campaign from environmental organizations which call on a ban on the use of heavy fuel oil in the Arctic.
Therefore, the market now offers scrubbers with a closed-loop system and hybrid scrubbers that can run in both open- and closed-loop modes. Actually, such systems are much more expensive as compared with open-loop scrubbers, by 50-80%. That can affect the interest of ship owners and aggravate the situation in the fuel and shipping markets.
Nevertheless, there are orders for such systems. Norwegian Cruise Line has recently placed an order for designing and production of hybrid scrubber systems for its two cruise vessels, Norwegian Breakaway and Norwegian Getaway.
Obviously, hybrid and closed-loop scrubber systems is an economically questionable solution of a niche nature and the future of ships already equipped or being equipped with expensive open-loop systems is an open issue. If such scrubbers are finally banned, a great number of ships will be pushed off the market for yet another fitting with closed-loop and hybrid scrubber systems. Eventually, that will lead to further increase of demand for low-sulphur fuel.