THE Exhaust Gas Cleaning Systems Association — the scrubber club as I like to call it — is saying it can deliver up to 2,000 systems to shipping in northern Europe by 2015.
If that is true, it is good news for its members, who stand to reap a hefty income from each $3m system they sell. The bad news is, they are just not going to get the orders.
EGCSA director Don Gregory has said owners will guarantee that their product will work. He has not, however, said if this guarantee is for the lifetime of a ship.
The problem is getting operators to invest. If the owner has the vessel chartered out on a bareboat charter, what incentive has it to invest in a system that it still does not trust?
The idea of forming a financial model to help pay for the system using the price differential between the distillate fuel the ship would otherwise use and the heavy fuel oil it still can use sounds, therefore, like a good one.
Something similar was launched by MAN Diesel nearly two years ago, mostly as a way to get owners to retrofit turbocharger cut when the economic crash began to bite and slow steaming begin to look attractive for survival reasons as much as environmental ones.
Perhaps it is time for the legislators to look at this model, or the one pushed by the Norwegian NOx fund, as a way of putting a carrot where they are currently trying to wave a stick. It need not just be for the scrubbers. It can be for the conversion to liquefied natural gas, or any other technology, to meet the huge range of environmental challenges the industry faces.
Shipowners need the encouragement. The SOx challenge in the emission control areas has them staring at the approaching headlights like startled rabbits and they need the incentive to act.
Speak to any owner and you will get the same response. The jury is out on what to do as the costs are as high as the risks.
So someone needs to give these rabbits a carrot and get them installing systems, otherwise another deadline will be reached and yet again the regulators will be asked to turn a blind eye.
Look at the embarrassment of the tanker owners who suddenly realised — five years after being told — there was a European 0.1% SOx limit in ports; or that the first deadline for the ballast water convention had to be pushed back as not enough International Maritime Organization member states had ratified it to make it enforceable.
The regulators who set the rules need to use carrots as well as sticks.
One Comment
Craig:
Interesting article, and one to which I’m going to link.
As you know, STI is on the “front lines” of this market. I can tell you that we are starting to see some cracks in the owner reluctance to invest. The deadline is looming soon, and most of the big companies are starting to realize that whatever they do, they need to do something.
As to the charters, we have one ship owner who was instructed by the charterer to find a scrubber…They determined in-house that scrubbing made the most financial sense, particularly in European operations. Our bid is in right now. So, there is some, I guess you could say “movement” in the market.
However, the most critical issue is not one of savings over the long-term. It is pretty well understood how diferences in fuel type save money, and most scrubbing systems on the market adequately remove sulphur within the prescribed limits (ours and other mfrs).
It is the initial capital investment that is the barrier. The thinking is short term… Months… rather than over the long haul. Shareholder pressure is the real impediment to investment, rather than technical skepticism. We struggle to find a solution, through subsidy, but even that is often not enough.