Scrubbers seen losing favour as solution to 2020 sulphur cap

The topic of the 2020 sulphur cap and related issue of scrubbers was prominent at the Marine Money Hong Kong Ship Finance Forum despite it being a mainly finance-based event, suggesting its prominence in the considerations of industry players.

The issue was raised at various sessions including the keynote address by Hong Kong Shipowners Association chairman Jack Hsu, as well as various owners and ship managers on the dry bulk and ship managers panels respectively.

Hsu, who is also md of Oak Maritime, first drew attention to the issue by giving an anecdote of a rickshaw puller who has been eating food scraps but is now forced to choose between wearing an expensive and not guaranteed effective dialysis machine if he wants to keep eating the scraps or eat more healthy but also more expensive food.

The better option he suggested, would be for him to switch to the more healthy food and hope that his passengers will help pay for the cost of it. Although not specifically stating it, the conclusion of the anecdote seemed to suggest where his preferences lie in relation to the use of scrubbers compared to switching to low sulphur fuel.

Precious Shipping md Khalid Hashim was much more explicit in his opinion about the scrubbers. “It’s a useless technology that will be outdated very shortly,” he asserted, adding that there will be problems with the discharge of the byproducts of the scrubber systems. “It will become a nightmare,” Hashim predicted.

“From an owner’s perspective I would just say simply burn low sulphur oil,” he said adding that charterers will just have to pay for the increased costs.

Moving on to the ship managers, the swing towards the use of low sulphur fuels was also pretty clear. Framing the discussion from the outset, Anglo-Eastern Univan Group ceo Bjorn Hojgaard said he expected less than 10 out of the 632 ships they manage to be installed with scrubbers.

Additionally, he pointed out that estimates suggest the cost for the shipping industry to install scrubbers as a solution would be about six to seven times that of the refineries re-configuring themselves to produce more low sulphur fuel.

“This is an issue that should be resolved at source and not at combustion,” was the way V.Group cco Martin Gaard Christiansen put it.

Meanwhile Fleet Management director and parent Caravel Group’s coo Angad Banga suggested that if there are commercial incentives a solution will be found. He said that looking at the direction the crack spreads are going “hopefully that incentivises a shore-based solution to produce more low sulphur fuel oil which is ultimately the best solution”.

Rounding out the discussion, Bernhard Shulte Shipmanagement (HK) md Firoze Mirza also noted that the decision to install scrubbers can be a bit of a market gamble as well since if too many people go on that route, the differentials between low and high sulphur fuel will narrow and owners will not get a return on their investment. However if too few people use scrubbers, instead of widening the spread, the supply of high sulphur fuel may simply be eliminated.

Posted 13 April 2018

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Vincent Wee

Asia Editor, Seatrade Maritime News

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