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Scrubbers

Glander International Bunkering: The growing role of scrubbers in bunker market

Shipping firms have been installing scrubbers at pace, with HSFO representing 32.3% of Singapore’s total demand last year – up from 29.2% in 2022, 25.8% in 2021 and 21.3% in 2020, says Glander.

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Global bunker trading firm Glander International Bunkering on Thursday (15 February) published an article discussing the return of High Sulphur Fuel Oil (HSFO) and adoption of scrubbers as well as what that means for costs and compliance:

While the bunker industry’s attention has been focused on alternative fuels, a quiet revolution has been going on behind the scenes: the return of HSFO. 3.5% sulphur fuel oil had been the dominant grade of bunker fuel up until 2020, when the IMO’s global 0.50% sulphur limit shifted the majority of demand to VLSFO. But HSFO was not banned – ships had the choice of installing exhaust gas cleaning systems, or scrubbers, to allow them to continue burning the cheaper high-sulphur product. Shipping firms have since been installing the systems at pace, with HSFO representing 32.3% of Singapore’s total demand last year – up from 29.2% in 2022, 25.8% in 2021 and 21.3% in 2020. The systems work by spraying water into a vessel’s exhaust, washing out sulphur and other emissions and leaving them still compliant with the 0.50% limit while burning cheaper HSFO.

Economic Considerations

The main reason to use a scrubber is to generate savings in fuel bills. On a global average basis, delivered HSFO has traded at a discount to VLSFO of about $65-405/mt since the start of 2020. Depending on the size and type of ship, scrubbers can cost between about $2 million and $8 million to install. Operating costs are minimal, with only a small extra power requirement needed to run the system, so the bulk of the fuel savings can go towards paying off the initial capital expenditure. Installing the systems usually requires the ship to be out of service at a dry dock for two or three weeks, but this can be arranged at the same time as scheduled dry-docking. Depending on the HSFO-VLSFO price spread, the systems typically pay for themselves within a few years, after which time the fuel-bill savings almost all come as improved profitability. In 2022, Eagle Bulk said it expected its $100 million investment in scrubbers to have paid off by the end of the year, within two years of IMO 2020.

Environmental Impact

The environmental impact of scrubbers is a contested issue. The majority of scrubbers in use are open-loop models that discharge their washwater into the sea, rather than retaining it for disposal at ports. Opponents of the technology regard this as just shifting shipping’s sulphur pollution problem from the atmosphere into the oceans, and have raised concerns about the impact on the marine environment. For its part, the scrubber industry funded research on the environmental impact of washwater in 2021. The report found no toxicity impact for fish, and some short-term effects on algae and crustaceans in high concentrations. The report characterised the risk to the aquatic environment as acceptable. One other environmental effect should be considered. Because HSFO requires less energy use by refineries to produce than VLSFO, the use of HSFO with a scrubber comes with marginally lower net GHG emissions than using VLSFO.

Challenges and Risks

The main challenges around using a scrubber are around regulatory risk and HSFO availability. The regulatory risk concerns the possibility of ships not being allowed to use their scrubbers, meaning they will need to consume VLSFO and forgo the fuel savings. While the IMO recognised scrubbers as a valid means of sulphur limit compliance, a range of port authorities around the world have banned the discharge of washwater from open-loop models in their waters since 2020, citing environmental concerns. For most ships, these areas where scrubbers cannot be used represent only a small fraction of their area of operation, meaning that they can still generate enough fuel savings by using the systems, but for some more geographically-confined vessels the bans may have a larger impact. Over the longer-term, some politicians are arguing for a wider ban on the use of scrubbers. Were a large bloc such as the EU to ban scrubber washwater discharge across its jurisdiction, this would pose a much larger threat to the systems’ viability. A more pressing concern is the availability of HSFO at ports around the world. While HSFO was the dominant bunker fuel grade, it was easily available worldwide, but it has since become more of a niche product at some ports. Refineries are still producing HSFO in large quantities, but at ports where few scrubber-equipped ships call for bunkers, some suppliers have given up on selling it. With fewer suppliers competing for HSFO demand at these ports, competition is limited and margins creep up, significantly cutting into the discount for HSFO versus VLSFO. This can result in a situation as seen in Gibraltar last year, where the HSFO price approached parity with VLSFO in September.

Future Outlook

The future outlook for scrubbers will depend in part on how quick the shipping industry is to abandon fossil fuels altogether. With any change on that scale looking unlikely for at least the next decade, the systems are probably set to remain a significant presence in the global bunker market for many more years, absent any wider move against them by regulators. One factor that may keep the systems relevant over a longer period will be their adaptation to cover other emissions. Scrubber manufacturers are increasingly developing models that combine conventional scrubbers with carbon capture systems – if this technology proves economically viable and is accepted by regulators, the combined systems are likely to become an attractive choice for shipowners wary over the shift to alternative fuels.

 

Photo credit: Glander International Bunkering
Published: 16 February, 2024

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Decarbonisation

US Congress members urge Biden to issue EO on maritime decarbonisation

In a letter, members urge the US President to issue Executive Order to include ban the use of sulphur scrubbers and establish a goal-based fuel standard for ships calling on U.S. ports, amongst others.

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US Congresswoman Nanette Barragán recently led 15 Members of Congress in a letter to US President Joe Biden, urging his administration to issue an Executive Order to support the decarbonisation of the maritime industry. 

Greenhouse gas emissions from international shipping are projected to increase, and it’s critical that the federal government take action to reduce emissions and address the pollution impacts that shipping has on environmental justice communities. 

The Members wrote: “We want to thank you for leadership in addressing the global climate crisis and for the actions you have already taken to make sure that the United States cuts all greenhouse gas emissions from the transportation sector by 2050.”

“We now ask that you build on these commitments by issuing an Executive Order to spark innovation and open opportunities for decarbonising the maritime sector and future-proof this critical component of our supply chains.”

“We strongly urge your Administration to make this Executive Order effective, actionable, and equitable by including specific, time-bound actions and creating and maintaining high-quality jobs and advancing environmental justice.”

The letter includes several recommendations that the President should include in an Executive Order to help decarbonise the maritime industry:

  • Use existing Clean Air Act authority to establish a goal-based fuel standard for ships calling on US ports.
  • Use existing authorities to eliminate in-port ship emissions by 2030.
  • Immediately establish a monitoring, reporting, and verification mechanism to collect fuel consumption and emissions data from all ships that traverse US waters and use US ports, building a baseline for emissions management.
  • Direct resources toward the electrification and quieting of the US federal ferry and harbour craft fleet.
  • Support US shipbuilders and maritime stakeholders to build low- and zero-emission and quiet marine vessels.
  • Support the development, demonstration, and value chains of zero-emission alternative fuels and technologies for the maritime sector.
  • Phase out and ban the use of sulphur scrubbers on ships in US waters.

“The Biden administration has already made significant commitments to eliminate emissions from the shipping industry, but there is more that can be done immediately through executive action,” said Carrie Bonfield, Ocean Conservancy’s U.S. Policy Manager, Shipping Emissions. 

“With the support of 60 organisations, eight industry organisations, over 24,000 members of the public and now members of Congress, we urge the Biden administration to issue an executive order with these seven recommendations immediately.”

“There is no time to waste: we must get to work eliminating emissions from the maritime sector if we are to meet our climate goals and protect the public from these harmful pollutants.”

“We thank Representative Barragan and all the Congressional leaders who joined on this letter calling for President Biden to issue an executive order on shipping decarbonisation.” 

Representative Barragán was joined on the letter by Representatives Suzanne Bonamici, Adriano Espaillat, Robert Garcia, Jimmy Gomez, Jared Huffman, Pramila Jayapal, Barbara Lee, Doris Matsui, Kevin Mullin, Chellie Pingree, Katie Porter, Delia Ramirez, Mark Takano, Shri Thanedar, and Rashida Tlaib.

 

Photo credit: william william on Unsplash
Published: 30 July 2024

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Scrubbers

Shipping industry making billions by running ships with scrubbers on ‘cheap’ heavy fuel oil, says study

New study from Chalmers University of Technology showed that discharge from ships with scrubbers have caused pollution corresponding to socio-economic costs of more than EUR 680 million between 2014 and 2022.

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Shipping industry making billions by running ships with scrubbers on cheap heavy fuel oil, says study

A new study from Chalmers University of Technology, Sweden, released on Tuesday (7 May), showed that discharge from ships with scrubbers have caused pollution corresponding to socio-economic costs of more than EUR 680 million (USD 731 million) between 2014 and 2022. 

At the same time, the researchers of the study titled Strong economic incentives of ship scrubbers promoting pollution, noted that the shipping companies' investments in the much-discussed technology, where exhaust gases are "washed" and discharged into the sea, have already been recouped for most of the ships. 

“This means that the industry is now making billions of euros by running its ships on cheap heavy fuel oil instead of cleaner fuel,” the researchers claimed. 

 “We see a clear conflict of interest, where private economic interests come at the expense of the marine environment in one of the world's most sensitive seas," said Chalmers doctoral student Anna Lunde Hermansson, who is one of the authors of the new study, published in Nature Sustainability.

The study has been prompted by the ongoing discussion on a potential ban of scrubber water discharge – where large volumes of polluted water is produced and discharged from the ships' exhaust gas cleaning systems. The issue is on the agenda at multiple levels within the International Maritime Organization (IMO) and is also being discussed at EU level as well as on national levels such as the Swedish Parliament, although a Swedish decision on a ban is yet to be made.

Anna Lunde Hermansson and Chalmers colleagues Erik Ytreberg and Ida-Maja Hassellöv have been researching the environmental impact of shipping for many years and are contributing with their expertise in both international and national contexts. 

In a previous study, for example, they have shown that more than 200 million cubic metres of environmentally hazardous scrubber water is discharged into the Baltic Sea annually and that scrubber discharge water accounts for up to 9 percent of the total emissions of certain carcinogenic polycyclic aromatic hydrocarbons (PAHs) into the Baltic Sea. 

Excluding oil spill costs

In the new study, the Chalmers researchers calculated both the external costs of scrubber water discharge, and the financial balance sheets of over 3,800 vessels that invested in the scrubber technology. As for the costs associated with the degradation of marine ecosystems, the study shows that between the years 2014 and 2022, scrubber water discharges have polluted at a cost of over EUR 680 million in the Baltic Sea area. 

The calculations are based on models for willingness to pay to avoid marine environmental degradation, but according to the researchers, the estimates should be regarded as an underestimate. For example, direct costs associated with heavy fuel oil spills from ships using scrubbers are not included. The multi-million euro sum that it costs to clean up oil after ships have grounded and leak oil, for example Marco Polo on the Swedish coast of Blekinge last autumn, are not included in the calculations. 

“If the scrubbers had not existed, no ships today would have been allowed to run on this dirty residual fuel. That is why the scrubber issue is highly relevant to push the shipping industry towards less negative environmental impact," says Lunde Hermansson.

Restrictions in several countries

In terms of the shipowner perspective, the researchers calculated the costs of installing and maintaining the scrubber systems, as well as the monetary gain from running the scrubber-equipped vessels on the cheaper and dirtier heavy fuel oil instead of the more expensive low-sulphur fuel alternatives. According to the calculations, the majority of the shipping companies that invested in scrubbers have already reached break even, and the total surplus by the end of 2022 for all of the 3,800 vessels, was EUR 4.7 billion. The researchers also note that more than 95 percent of the most common scrubber system (so-called open loop) are repaid within five years.

“From the industry's point of view, it is often stressed that shipping companies have acted in good faith by investing in technology that would solve the problem of sulphur content in air emissions and that they should not be penalised. Our calculations show that most investments have already been recouped and that this is no longer a valid argument," said Lunde Hermansson.

Recently, Denmark has decided to ban the discharge of scrubber water into so-called territorial waters, within 12 nautical miles of the coast. A number of countries around the world, such as Germany, France, Portugal, Turkey and China, have also adopted national bans or restrictions.

In Sweden, there is currently no general ban, although some ports, such as the Port of Gothenburg, have banned the discharge of scrubber water in their area. 

“We now hope that the issue will also be given priority in the Swedish Parliament. This is a low-hanging fruit where we can reduce our negative impact on the vital marine environment,” said Lunde Hermansson.

Note: The study titled ‘Strong economic incentives of ship scrubbers promoting pollution’ can be found here.

 

Photo credit: Chalmers University of Technology
Published: 8 May 2024

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Scrubbers

Denmark government considers ban on wastewater discharge from scrubbers

New figures from Danish Environmental Protection Agency show that discharge of scrubber water from ships is a significant source of several of the heavy metals and tar substances that pollute marine environment.

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Denmark government considers ban on wastewater discharge from scrubbers

Denmark’s Minister of the Environment Magnus Heunicke on Friday (8 March) said he will discuss with Parliament on how the discharge of wastewater from scrubbers can be banned from its waters.

In a statement on the ministry’s website, the ministry said new figures from the Danish Environmental Protection Agency show that the discharge of scrubber water from ships is a significant source of several of the heavy metals and tar substances that pollute the marine environment. 

Ships use so-called scrubbers to clean the flue gas of sulphur, by washing the smoke and then discharging the scrubber water directly into the sea.

Heavy metals in fish and shellfish for human consumption can have serious negative effects on humans in large quantities. For example, excessive amounts of lead can affect the development of the central nervous system, including the ability to learn and remember, while cadmium can affect the function of the kidneys.

"When heavy metals and tar substances are discharged into our marine environment, they largely do not disappear and remain in constant circulation in the sea,” Heunicke said. 

“The substances accumulate on the seabed and in the ocean's food chains, and this is deeply worrying for our marine environment and our health. We have to find a long-term solution to that.”

 

Photo credit: Denmark’s Ministry of the Environment
Published: 12 March 2024

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