IMO 2020 has placed enormous pressure on stakeholders throughout the maritime industry. It is understandable, then, that debates around the most effective way to comply with the IMO’s new emissions standards have been animated.
The big question on shipowners’ minds has been: what do we do to effectively and affordably meet the new 0.5% sulphur (sulfur) cap?
There are three options: switch to low sulphur fuel (LSFO), convert the propulsion system to run on liquefied natural gas (LNG), or install an exhaust gas cleaning system (EGCS), also known as a gas scrubber.
Scrubbers, particularly, have been the subject of passionate discussion. This is healthy.
However, the reasoning of the opponents of scrubbers has occasionally been skewed by thinking that is not grounded in science.
They seem to have three main objections: IMO delegates never intended for scrubbers to be adopted in the way that they have been; just one disruptive event could make them environmentally unacceptable; they only make economic sense based on a fuel price spread that may not last.
Let’s consider these each in turn.
IMO delegates never intended for scrubbers to be adopted in the way that they have been
The IMO’s rules on ship pollution were enshrined in the International Convention on the Prevention of Pollution from Ships, or MARPOL 73/78.
Annex VI, which governs the emissions standards and means of compliance was introduced as part of the 1997 Protocol in September 1997.
Scrubbers were not originally included as part of Annex VI. Opponents of gas scrubbers maintain that this suggests that the IMO did not envisage scrubbers being part of any long-term solution. In their opinion, they were permitted by the IMO purely as a financially-accessible alternative that would allow owners to see out the life cycle of current vessels.
The IMO’s actions, however, don’t appear to support this notion. MARPOL Annex VI was officially adopted in 2005. Since then the IMO’s Marine Environment Protection Committee (MEPC) has convened more than 20 times.
Rather than changing its stance on scrubbers, the MEPC has consistently sought to refine it.
No mention of time limits or restrictions to retrofits. Of course, there will be representatives at the IMO who oppose scrubbers. Some may even feel “horror”. But that does not equal a groundswell of opposition.
It is dangerous to presume that any individual can speak for the intentions of the MEPC when they first met on this matter more than 20 years ago.
Instead, we should ask how the IMO has engaged with this topic over time. On the basis of that assessment, the support is clearly for scrubbers.
Just one disruptive event could make them environmentally unacceptable
The anti-scrubber brigade also believes that the use of scrubbers with high-sulphur fuel oil (HSFO) is antithetical to the spirit of MARPOL Annex VI, as well as socio-political trends.
They assert that this solution is runs contrary to everything that society is going to want from us and we are potentially being seen as trying to dodge the drift and trend of legislation.
They’re certainly correct in one way: the shipping industry is, and will increasingly be, expected to reduce its use of fuels that produce greenhouse gases and other harmful emissions. That is why it took the step to initiate IMO 2020.
However, the logical conclusion to that environmentally-friendly shift will be a world fleet of vessels powered by alternative energy, not ships running on LSFO.
That is a long way off. Until then, we should be using every means possible to help the shipping industry meet its cleaner air objectives. Yes, it may be easier – and politically fashionable – to suggest that society wants to see lower carbon fuels. But what society really needs is air it can breathe and air that is not toxic.
Scrubbers are critical to that outcome. As we have discussed here before, burning LSFO is far from a magic bullet. It comes with its own environmental hazards which the public are unlikely to find pleasant.
Opponents also point to the hypothetical actions of a “bad shipowner” somewhere in the world over the next 12 months becoming a catalyst for a major policy change against scrubbers. This shipowner would, apparently, be burning HSFO and cleaning exhaust fumes with a scrubber.
It is difficult to see what these “bad shipowner” actions may include. Like the maritime industry itself, IMO 2020 appears to have gone largely unnoticed by the general public. Geopolitically, it is barely a blip on the radar.
The only time that poor operations by shipowners seem to enter the public consciousness is in the instance of environmental disasters such as oil spills. Even in the event of such a tragedy, lighter fuels pose a host of toxic risks that are unique to their fuel type.
Protecting the world’s air and marine ecosystems is a complex problem that spans ecology, sociology, economics, politics and psychology. Solving it will require multiple solutions.
Continued use of HSFO with exhaust gas cleaning systems has repeatedly been confirmed as an important part of the IMO’s policymaking arsenal.
They only make economic sense based on a fuel price spread that may not last.
Scrubber opponents’ final argument against scrubbers is an economic one.
They maintain that the value of installing a scrubber relies on a persistently high price spread between LSFO and HSFO, and that a spread of this kind will not last.
Recent analysis points to a significant stretch in the price gap between high-sulphur and low-sulphur fuels next year onwards. This is universally anticipated.
They may be right that the prices of LSFO and HSFO will restabilise in the years after IMO 2020 takes effect.
However, they are mistaken in suggesting that this eliminates the economic value of a scrubber.
Though scrubber installations can be expensive, fuel price differentials of the magnitude expected do not need to last all that long for owners to make their money back. In larger vessels, the payoff period is months, not years.
And, with so much uncertainty persisting about the refining industry’s ability to produce the required amount of compliant fuel in the next 12 months, these price spreads could last longer than anyone expects.
Opponents to scrubbers also point to the higher fuel consumption required to operate scrubbers. This is also true, but the increase in energy use is small.
However, the additional cost is negligible compared to the savings on offer for those who burn low-cost HSFO with a scrubber.
A reduced price spread between HSFO and LSFO is not the same as cost equality. Nobody is predicting that the HSFO and LSFO prices are going to meet, only that the gap between the two is going to close.
HSFO will continue to be cheaper than LSFO in the years to come. Those who use HSFO will continue to save money.
The fact that the marginal benefit may become smaller does not take away from the important fact that the benefit itself will endure.