As the industry sails towards the International Maritime Organization’s impending sulphur cap regulation, there seems to be a rise in opposition to one of the widely accepted solutions to the 2020 sulphur cap, the open-loop exhaust gas treatment systems (scrubbers).
Namely, certain ports in China and Ireland have started to implement a ban on wash water discharge from open-loop scrubbers as of the beginning of 2019, while major bunkering hubs Singapore and Fujairah have announced plans to do the same starting from January 1, 2020, when the sulphur cap rule comes into force.
Further disagreement with the wash water discharge was expressed by European non-governmental organizations, followed by a proposal submitted by the European Commission that urges the IMO to change its scrubber guidelines calling for “evaluation and harmonization” of scrubber discharges across all ports, world-wide. The main reason behind the bans have been environmental concerns.
However, a three-year study led by cruise major Carnival showed that wash water samples analysed over the period were consistently well within the allowable IMO criteria and regulatory limits. Additionally, Japan decided not to implement the ban on scrubbers following a report in which the country’s Ministry of Land, Infrastructure, Transport and Tourism (MLIT) come to a conclusion that wash water from open-loop scrubbers does not present a significant threat to the marine environment.Shipowners that have already chosen scrubbers for their vessels do not seem to be very concerned about the wash water discharge bans, Jan Othman, director of exhaust gas cleaning at technology group Wärtsilä, said in an interview with World Maritime News.
“There has been a lot of debate about this in recent weeks. The topic also sparked some debate in the industry related to what the impact of the potential bans would be. What we have seen so far is that owners do not seem to be very much concerned about the potential bans and some owners have even said that they have accounted that such a regulation might come into force,” Othman explained.
The lack of concern has been linked to the fact that a small portion of the ship owners’ fuel consumption takes place inside these areas where a ban could potentially be implemented, he continued.
“It does not really change the business case from the owners’ point of view. We don’t see any change in the market behavior due to this, at least not in this point in time. Perhaps there will be an increased interest in the hybrid solutions because of this in the future.”
Speaking about the proposed bans in European ports, Othman said that the company, as well as the owners who have decided to invest in scrubbers, “are a bit puzzled about these discussions because, as far as we can understand, there are no scientific arguments or reasoning behind this potential ban.”
When asked whether Wärtsilä’s wash water treatment system could help shipowners deal with the bans, Othman said that this could be one of the solutions, however, there would need to be a new regulation in place for this.
“Our open-loop system is compliant with the current regulation, but if a new regulation comes into force then that needs to be discussed and agreed upon with the relevant players.”
In 2018, Wärtsilä booked a high number of contracts for both open-loop and hybrid scrubber systems. Still, the company’s orderbook last year showed a greater appetite for open-loop system as owners started ordering the equipment for large ocean-going merchant vessels.
“We’ve had a very active 2018 when it comes to order intake for scrubbers and the market activity only increased toward the end of the year. Our contracting continued as active in the second half of the year as in the first half and we had a record year when it comes to the scrubber order intake by far. Positively, we also see a lot of activity in the market still in 2019 and we haven’t seen any slowdown yet. Now we are primarily selling in 2020 and onwards.”
Nevertheless, Othman continued, shipowners are just now starting to realize that there are very limited possibilities to secure slots for either equipment or drydocking slots for scrubber retrofits.
Looking at 2019 numbers, Wärtsilä’s order intake is still driven by tanker, container, bulker, cruise and ferry segments. Major cruise operators have already secured scrubbers and have either installed them or are in the process of installing scrubbers on their existing fleet. Therefore, Wärtsilä expects to see a slowdown in that segment as cruise lines have been ahead of the other segments with adopting this technology
“In 2018 it was primarily the largest vessel segments that were adopting scrubbers as a means of compliance with the global sulphur cap. Now, owners of smaller vessels are showing an increasing interest in installing scrubbers.”
When it comes to the newbuilding market, the company’s scrubber order intake reached three-digit numbers, Othman said, adding that this segment is expected to remain very active.
“There are various opinions related to the scrubber story in the market. Scrubber appetite will largely depend on how the fuel spread between HFO and MGO is going to develop. As we see things now, that spread is going to be substantial in the forceable future. Hence, there will be a demand for scrubbers also going forward. On the newbuildings side, that market will be present for a long time.”
Regarding the industry’s opinions that the scrubber story might be over by 2023, Othman commented that, due to the strong economic incentive for installing a scrubber, the boom for the retrofit market “will be there for a little bit longer than 2023, but it will eventually be over.”
There are not many uncertainties related to the scrubber technology as these regulations are very clear and straightforward, he explained. There is a dilemma over potential bans for open-loop operations and the discharge of water in certain harbour areas, but that doesn’t have a significant impact on the business case, he pointed out.
On the other hand, there is a lot of concern related to both the availability and the quality of compliant fuel, engine problems related to these new fuel blends, as well as the pricing of this fuel.
“We will continue to see uncertainty being debated and being around still in the industry throughout the year,” Othman concluded.