Guide to Marine Scrubbers

This publication from Witherby Publishing Group is a valuable resource that will assist shipowners and operators in complying with the 2020 global sulphur in marine fuel regulations.

Figures for estimated scrubber uptake have been largely based on the projected price and availability of low sulphur fuel. These estimates can be overlaid against the projected operational costs of scrubbers, including the costs of extra fuel, sludge disposal, any chemicals used in the scrubbing process and the maintenance and repair of equipment. This provides an estimate total of around US$45 per ton of bunker fuel scrubbed. Initial costs and financing costs will slightly favour uptake by larger vessels.

A survey of senior technical managers, OEMs, marine lubricant suppliers and scrubber manufacturers, in 2017 by The Strategy Works, found that 40% of senior technical managers in shipping companies would prefer to use scrubbers to comply with the global sulphur restrictions. A survey from the global banking firm UBS Ltd in 2017 showed different results, with 74% of ship owners planning to use low sulphur fuel for global sulphur cap compliance and 19% planning to install scrubbers. However the compliance solutions are divided up, there is a consensus that the shipping community will employ different solutions (including scrubbers) to be compliant with the 2020 sulphur regulations, and that these will depend on individual circumstances.

The charterer and the owner have different responsibilities and this is an important reason why the scrubber market has been slow to take off in specific sectors. Depending on the conditions of the charter party agreement, the cost of fuel may be the responsibility of the operator or the charterer. Since, in some segments of the shipping sector, the contracts in which the charterer is responsible for purchasing the fuel are favoured, pressure could be put on the owners to install scrubbers if the price point for ULSFO is too high. However, the owner would have the considerable initial costs of the scrubber purchase and installation to consider. The installation of a scrubber unit on board a vessel under short term charter (6 months) would not be economic for the charterers, even if it might be in the best interests of the owner.

When a new piece of major legislation is agreed, ship/fleet managers and owners must consider many factors. These include whether there is a significant initial costs associated with the changes, the likelihood of loss of hire during installation of equipment and if there will be potentially significant training and ongoing operational costs. The following basic considerations should be analysed:

• When does the new legislation take effect?
• can it be avoided?
• what ships does it affect (type/age/number)?
• are there any exemptions/extensions available?
• what are the various options available for compliance?
• which has the lowest overall cost?
• what is the lead time required for delivery compared to the due date for compliance?
• what are the majority of other ship owners opting for?
• what is the age profile of the ships in the fleet that are affected?
• does the remaining commercial acceptability, age and current maintenance costs of a ship justify the expenditure or should it be sold/scrapped early? Is there a viable return on the initial costs over the remaining life of the ship?

Industry estimates are that the 2020 requirements could add annual total costs in the order of USD$50 billion to the total shipping industry’s fuel bill in 2020.

Ship owners currently have three alternatives to cope with the mandate:

• Utilising marine distillates
• installing scrubbers on board so that they can continue using HFO
• switching to LNG if the assumption is made that the bunkering infrastructure will be in place.

It is important to note that a scrubber will allow equivalent compliance with both global (0.50% m/m (mass by mass)) and ECA (0.10% m/m) sulphur in fuel requirements. If the choice is made to use low or ultra-low sulphur fuels, switching will still have to be carried out to ensure compliance in the stricter ECA regions.