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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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Bunker Fuel

Titan locks horns with Shell over newbuilding order for conventional fuelled tankers

‘This move seems to contrast the agenda both our companies were pushing for, to make the maritime industry cleaner by investing in bunkering infrastructure to accommodate decarbonisation of shipping,’ says Titan.

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RESIZED Titan logo

LNG bunker fuel supplier Titan on Thursday (17 October) has slammed energy giant Shell for its recent decision to order 10 conventional marine-fuelled product tankers fitted with scrubbers.

Titan said the move seemed “to contrast the agenda” both companies were pushing for, to make the maritime industry cleaner by investing in bunkering infrastructure to accommodate the decarbonisation of shipping.

“Shell, are you forfeiting your right to be a leader of the energy transition? With great power comes great responsibility,” it said in a social media post. 

“You carefully positioned yourself as an industry leader in the movement towards more sustainable and cleaner marine fuels. With your size, you hugely influence the industry and are a strong advocate for LNG as a marine fuel,” it said, adding that it was “surprised” when it saw a news report on the move. 

Given Shell’s leadership role, Titan said the decision raised questions about how it aligned with the company’s commitment to decarbonisation. 

“We’re genuinely interested in hearing more about your strategy for balancing these choices and how you view the LNG pathway in the bigger picture,” it said. 

It also said that Shell, adding more scrubber-fitted conventional fuel tankers to the current fleet sends a “strange signal” to the industry. 

“At Titan, we remain fully committed to driving this transition forward, offering a reliable supply of LNG, bio-LNG, and soon e-LNG to those already leading the way. Our focus remains on putting clean fuel into every ship,” Titan said. 

“Let’s continue pushing the boundaries and make sure shipping doesn’t take a step back.”

 

Photo credit: Titan
Published: 18 October 2024

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Methanol

Singapore-based X-Press Feeders orders six methanol-ready boxships with scrubbers

Firm says it has ordered six 11,000-TEU ships from Shanghai Waigaoqiao Shipbuilding which are scheduled to be delivered between Q3 2027 and Q4 2028.

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Singapore-based global maritime container shipping company X-Press Feeders on Thursday (17 October) said it has ordered six 11,000-TEU methanol-ready, scrubber-fitted container ships from Shanghai Waigaoqiao Shipbuilding.

The vessels are scheduled to be delivered between Q3 2027 and Q4 2028.

“These vessels are part of our fleet renewal strategy to deploy the right tonnage to our core trades and thereby maintain our competitiveness,” it said in a statement to Manifold Times

The company added “deployment details will be made known nearer to delivery dates.”

Manifold Times previously reported X-Press Feeder launching its second green methanol-powered route, the Green Baltic X-PRESS (GBX).

It is part of Europe’s first scheduled feeder network powered by green methanol. The expansion follows the successful launch of the Green Finland X-PRESS (GFX) in July and marked another significant milestone in the company’s commitment to sustainable shipping.

Related: X-Press Feeders methanol-powered vessel makes inaugural call at Klaipėda
Related: Singapore-based X-Press Feeders launches second green methanol-powered feeder route
Related: Singapore-based X-Press Feeders launches Europe’s first green methanol feeder network
Related: X-Press Feeders takes delivery of world’s first methanol dual-fuel retrofit boxship

 

Photo credit: Scott Graham on Unsplash
Published 17 October 2024

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Bunker Fuel

SIBCON 2024: Oldendorff, Peninsula discuss uptake of traditional bunker fuels, risk management

‘The majority of the orderbook today, in all segments, is not dual fuel mainly due to costs. We cannot run away from that,’ shared the Director of Bunkers at Oldendorff Carriers.

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Jens Oldendorff

Representatives of bulk shipowner Oldendorff Carriers GmbH & Co. KG. and bunkering firm Peninsula, amongst others, met at the Fuel Oil Markets - Projections and Supply Chain Resilience panel discussion session during the 23rd Singapore International Bunkering Conference and Exhibition (SIBCON 2024).

Topics discussed included the increased uptake of traditional marine fuels and importance of robust risk management.

Jens Maul Jørgensen, Director of Bunkers, Oldendorff Carriers GmbH & Co. KG, noted the dry bulk segment to be welcoming more than a thousand newbuildings within the next three years. Data from shipyards have indicated most of these vessels, especially the bigger ones, having scrubbers onboard.

“The majority of the orderbook today, in all segments, is not dual fuel mainly due to costs. We cannot run away from that; the vessel need fuel to sail,” he explained.

Meanwhile, areas such as the Amsterdam–Rotterdam–Antwerp (ARA) region have seen even more high sulphur fuel oil (HSFO) than LSFO supplied every month, which shows demand for traditional HSFO to be increasing. 

New Emission Control Areas (ECAs) such as the Mediterranean Sea ECA taking effect from 1 May 2025 will also mean more consumption of low sulphur bunker products.

Jørgensen, who is responsible for purchase bunker fuels for approximately 750 bulk carriers, next highlighted the importance of managing proper exposure control due to fluctuating oil prices.

“If we don't hedge, we speculate. We must make sure that the prices are safe as nobody can predict what is going on in six months. Being in a open position will be a big risk, especially in this market, so proper exposure control is the key.”

Kenny Peninsula

Kenny MacLean, Chief Operating Officer, Peninsula agreed with Jørgensen approach towards managing risk.

“It's the same story, but we're buying bulk, and so it's progressively even more important. I think the bunker industry in general has had a bit of a checkered past with companies that haven't paid too much attention to their risk management,” shared MacLean.

“That's something that Peninsula is absolutely laser focused on. So obviously, all our purchases are hedged and that's of critical importance. 

“Other areas that are super important is making sure that you're getting economies of scale out of the purchases as well. But really, it's that hedging, derivatives, price risk management side that’s of critical importance in our industry in general.”

Concurring with Jørgensen’s observation of high consumption of low sulphur bunker products such as marine gas oil (MGO) within ECAs, MacLean added the similar regions have also been driving the increased use of biofuels. 

“What we try to do is have a very diverse customer base, and our supply decisions are pretty much based around aggregating that customer demand by being a bit more customer centric and really getting into our customers and asking, ‘What are the solutions that you're going to need?’” he said.

“It's our job as a bunker supplier to aggregate that fuel together and make sure that we can make it available in the right place at the right time, otherwise, you're going to be left just with a few very large bunkering hubs around the world. 

“It's incumbent upon bunker suppliers like Peninsula to make sure that if it's in the Mediterranean we've got the full range of products available so that when Jens knocks and says, ‘Actually, I'd quite like some biofuel guys’ we are there with the solutions ready and available.”

 

Photo credit: Manifold Times
Published: 17 October 2024

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