New Maritime Fuel Rules: Scrubber Solutions

By Greg Trauthwein

Earlier this year in New York City the Exhaust Gas Cleaning System Association (EGCSA) held its annual meeting to discuss the business, technologies and future of scrubbers as a solution to the looming IMO 2020 fuel rules. At the meeting, Maritime Reporter & Engineering News was afforded the opportunity to pick the brains of several leading executives to help understand the challenge and promise that scrubbers provide.

In October 2016 a landmark decision was handed down from the International Maritime Organization (IMO) which set January 1, 2020 as implementation date for a significant reduction in the sulfur content of the fuel oil used by ships. The new rule sets a global sulfur limit of 0.50% in 2020 versus 3.5% allowed today. Despite reservations from shipowners regarding the availability of the new fuel, which at the time of the announcement did not exist, and resistance to the capital expenditure of fitting emission scrubbers, which reportedly can tip the CapEx scale at $10 million per ship, the rule is set to enter force without fail.

“The entry into force of the 0.50% sulfur in fuel oil limit cannot and will not be delayed,” said Kitack Lim, IMO Secretary-General, during an interview with Maritime Reporter & Engineering News in his office at IMO headquarters in London in mid-March. A comprehensive study on availability of fuel oil was carried out by experts and overseen by a steering committee and it concluded there will be enough compliant fuel oil. “The study on the “Assessment of fuel oil availability” concluded that the refinery sector has the capability to supply sufficient quantities of marine fuels with a sulfur content of 0.50% m/m or less and with a sulfur content of 0.10% m/m or less to meet demand for these products, while also meeting demand for non-marine fuels.”

For further insight on scrubbers as a solution – the misconceptions and the facts – Maritime Reporter interviews:

• Stein Auker, Wärtsilä;

• Nick Confuorto, CR Ocean

Engineering;

• Nils Homburg, Saacke Marine

Systems; and

• Marcel Somers, Alfa Laval.

Q: There seems to be a fair amount of misunderstanding in the marketplace regarding scrubbers. What do you find to be the biggest misconception?

Auker, Wärtsilä

There are several. I think the biggest one is that you move the pollution from the air to the water, which is not true. You remove something that is a pollutant and turn it into something that is not a pollutant, namely you remove the SOx … which is a pollutant … and create sulfate, which is not a pollutant, and you release the sulfate to the water.

Confuorto, CR Ocean Engineering

I think the biggest misconception is that scrubbers are a new, unproven technology, but the reality is completely opposite of that. Scrubbers have been used more than 50 years on land and on ships. Today we have 400-500 scrubbers on ships and they seem to be working as designed. It’s time to move on to the next step, and that’s moving existing projects through the pipeline.

Somers, Alfa Laval

What Nick says is true, and its important to realize that flue gas scrubbers on boilers are the same technology. This technology has been around since the 1960s.

Q: There are an estimated 60,000 vessels in the world fleet that may be prospects for scrubbers. By vessel niche, who have been early adopters

Homburg, Saacke Marine Systems

The quickest uptake has been with the cruise and the passenger ships, as public pressure is highest in this segment. Also, this is a money issue. Financing for this segment is easier right now, as the cruise sector is doing quite well.

Auker, Wärtsilä

It’s clear that the cruise industry has been the early movers. Once one of the big cruise companies start to move, you see the others follow in form. After the 2020 decision by the IMO, you are starting to see movement in other sectors, namely container shipping and bulk carriers.

Somers, Alfa Laval

I would just add a few details. Correctly stated, the cruise lines have a green image (to uphold), driven by ECAs. Therefore cruise vessels operating in the ECAs took up scrubbers first in 2015 with the reduction in Sulfur to .1%.

Q: When talk turns to scrubbers, talk turns to cost. What is your rebut for those that say “scrubbers are too expensive”?

Homburg, Saacke Marine Systems

If people do the math, they will see short payback times with the fuel price as it is now (and projected to be in the future). As we saw (during a presentation we saw earlier today, we expect a much larger price gap between the fuels (as we get closer to 2020.). As prices escalate quickly for the new fuel, even on small scrubber systems I think you will see a payback time of around 12 to 18 months. The more fuel you are burning, the more money you will save and the faster the payback time.

Confuorto, CR Ocean Engineering

That is the perfect reply to that question. Cost is important of course, but payback is even more important. When a client can payback the investment in 1 year, that is the key.

Auker, Wärtsilä

Of course there is a capex and an installation cost. The customer needs to do their own math – we are happy to help – and they must find a compelling business case to buy a scrubber. If they cannot, than of course they should not buy a scrubber.

Q: I think it is safe to say that shipowners are confused as to the fuel of the future, and selecting the best product or process to meet ever stricter emission regulations. When you are talking to an owner about a newbuild or a refit project, what is the compelling case for both?

Auker, Wärtsilä

For years now it has been all about the amount of fuel that you burn inside the ECA, but with the 2020 fuel rules and the 0.5% sulfur cap, the talk turns to 0.5% fuel price, fuel quality and fuel availability. We just heard today about the projected fuel price of $715 per ton … if that turns out to be true, that will be a very good case for installing scrubber technology. It is difficult to project what fuel price and availability will look like in 2020.

Q: So looking at the market today, how many scrubbers does your company have installed and working?

Auker, Wärtsilä

By our reference list including our orderbook, we have about 300 scrubbers on about 170 vessels. By 2020, I think the production capacity of scrubbers will be the bottleneck. Manufacturing issues (surround the scrubber tower) can be solved, but then you have to produce (all of the extra equipment, from the valves to the pumps to the automation systems.) Internal capacity with the supplier will limit production, and I see demand now growing faster than supply.

Confuorto, CR Ocean Engineering

We have 20 scrubbers on ships, and all but one are already certified. We have four in design and the projection for 2018 is significant, the inquiry level is very high and if only a portion of this hits, we will have a fantastic year.

Somers, Alfa Laval

I can’t give you any projections, we are stock listed company so you can read all of the public information. I don’t have the exact figures but I believe we have about 150 scrubbers sailing right now, all of them operating as expected.

Homburg, Saacke Marine Systems

We have two scrubber installations running and we have five processing. We see very positive prospects in the coming year, a big upswing in the past year.

Q: We heard today (in the conference) that scrubbers are not an acceptable solution for ships sailing into the waters of and ports of the state of California, a situation which is somewhat surreal given the global nature of the business. That said, how do regional and local laws impact your business?

Homburg, Saacke Marine Systems

Multiple layers of local regulations in different parts of the world are causing confusion on the side of the ship owners, and are in part responsible for the hold up in adoption of the technology. Unifying regulations is the most rational. Shipowners want to design their ship for universal use; the more universal the rules, the better adoption.

Somers, Alfa Laval

I see local regulations becoming more prevalent. If scrubbers enter market as they are predicted, I think it will hurt those with local restrictions like California, because the vessels will simply avoid these harbors (and find someplace new to call). They will do economic harm to themselves.

Confuorto, CR Ocean Engineering

The issue is going to be how many of these will come up. I foresee California changing that stance in the future. Scrubbers are hitting their emissions goal, and if they cannot regulate equipment, I think there will be some legal challenges. Even with these types of regulations, the seas are enormous and the coast control is only a very small drop in the bucket.

Maritime Reporter Magazine, page 42, May 2018

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