Despite stricter rules on open-loop scrubbers and plummeting oil prices in 2020, the business case for scrubbers has held firm – but tightening regulations could impact future demand, says the Clean Shipping Alliance 2020’s (CSA) Poul Woodall.
Earlier this month, CSA, whose members represent over 3,000 ships from the commercial shipping and cruise industry, highlighted the ‘crucial’ role that scrubbers had played during the transition to IMO 2020. The industry association flagged the ‘much lower’ sulphur (SOx) reductions achieved by the technology than required by IMO 2020 and pointed to a CE Delft study comparing the CO2 emissions of MARPOL Annex VI compliance options in 2020.
CSA estimates that in excess of 4,000 ships are currently equipped with exhaust gas cleaning systems – and it expects this number to continue to grow. But the scrubber industry has also had to contend with several challenges which have threatened to derail demand.
During 2019, a growing number of ports and countries began to prohibit the use of open-loop scrubbers in their waters amid concerns relating to washwater impact on the environment. And at the end of last year, the International Council on Clean Transportation (ICCT) called on the IMO to consider phasing scrubbers out altogether.
‘A lot of the attention [on scrubbers] goes on the washwater - but is it an issue or is it not an issue?’ asks Woodall. ‘All the data that is available shows that the washwater is within compliance. A lot of the data that we have is better than standard drinking water quality criteria.’
Woodall continues: ‘[Washwater] has got a lot of negative publicity which I think is unjustified.’
According to CSA data, around 20 countries, for a range of reasons, currently have some form of restriction on the use of scrubbers. Asked why these countries have taken such steps, Woodall suggests it is down to a lack of understanding of the impact of the washwater rather than a definitive vote of no confidence in scrubbers. He cites Singapore’s decision to ban the use of open-loop scrubbers from 1 January 2020 as ‘purely a precautionary approach’, noting that the country’s drinking water comes from the ocean.
‘I think that’s what we are seeing in most cases - “we’re not quite sure, so we’d better ban it” – rather than looking at the data,’ says Woodall. ‘[But] there is a lot of data and a lot of science around this.’
Woodall says CSA is ‘actively’ approaching authorities with a range of scientific data to prove the safety of washwater from open-loop scrubbers and has recently managed to convince two countries to overturn the bans, but he concedes there have also been countries unwilling to reverse their decisions.
‘It is a complicated matter,’ says Woodall, ‘but one thing’s for sure: all the [scrubber] systems have been certified and they comply with the IMO limits.’
2020 was always going to be a chaotic year for the shipping industry, a chaos further intensified by the coronavirus pandemic. One of the key concerns ahead of 1 January 2020 centred on the availability of IMO 2020-compliant very low sulphur fuel oil (VLSFO) but, according to fuel oil non-availability report (FONAR) data provided by the IMO in late January, there have been 55 cases of non-availability. Did CSA’s members encounter any issues related to the non-availability of high sulphur fuel oil?
‘There has really been no issue about not being able to get HFO anywhere,’ says Woodall.
And how about the business case? At the turn of 2020, the price differential between VLSFO and HSFO in hub ports was approximately $300 but by the start of Q2, this had narrowed considerably to around $100. Was this cause for concern among CSA members?
‘There may have been some concerns from a financial perspective but from a functional perspective, there’s really no concern,’ says Woodall. ‘They operate well.’
Woodall continues: ‘It is driven partly by finance, but it is also driven by emissions and probably the latter [will be more important] going forward.’
In fact, regulation rather than oil prices could hold more of a sway on the future of exhaust gas cleaning systems. Woodall points to several legislative measures which are likely to affect the shipping sector in the short-term, and by extension the market for scrubbers. These include the Carbon Intensity Indicator and the Energy Efficiency Existing Ships Index, both of which are expected to be adopted at MEPC 76 in June, as well as regional regulation such as the EU Emissions Trading System. The question will be, says Woodall, how scrubbers fit into these.
‘Scrubbers are definitely a bridging solution and one of the better ones,’ says Woodall, in relation to shipping’s longer-term decarbonisation goal. ‘The thing is, none of us really know where we’ll be in 20-25 years’ time, except that it will be different to where we are today,’ says Woodall. ‘We need to find technologies and solutions available that represent the best available option for the period in question here.’
And to those who argue that scrubbers perpetuate the use of oil at a time when industries should be seeking to move away from fossil-based solutions?
‘We don’t have the ultimate solution yet, it’s not there,’ says Woodall. ‘All the companies that operate ships today, including the ones that have fitted exhaust gas cleaning systems, they are also looking into the new fuels. But we also know that the solution at the scale that shipping needs is not just round the corner. It’s a lot of small steps to get to where we need to be.’