Scrubber sales boom as sulphur limits tighten
Demand for cleaning technology is growing as regulators tackle heavy fuel oil emissions.
The shipping industry has decided to take a major leap forward in order to ensure its position as the most environmentally friendly means of transportation. As of January 2020, the current global sulphur emissions limit of 3.5% will be slashed to 0.5%, thereby reducing the level of harmful emissions produced by ships.
According to Jan Othman, Wärtsilä Marine Power Solutions’ Director for Exhaust Treatment, the new IMO regulations will help make shipping greener. “We have seen examples of this already in Northern Europe and North America, where regulations are clearly effective in driving investments into cleaning technologies.”
To comply with the new IMO standards, shipping operators will have to select one of three alternative solutions to cut their emissions. The first option is to switch to compliant low sulphur fuels. Currently, sulphur-laden, heavy fuel oil (HFO) is the most commonly used source of energy in shipping. The second alternative is to install exhaust gas cleaning technology, also widely referred to as a scrubber. Thirdly, operators can make the transition to liquefied natural gas (LNG) power.
LNG, which is by far the cleanest fossil fuel alternative, continues to gain ground, and Wärtsilä’s share in LNG engines and technology is growing steadily in comparison to diesel and HFO engines. The technology, however, remains expensive to retrofit and there are still gaps in the infrastructure in certain parts of the world. Nonetheless, LNG is a solid solution, especially with regard to newbuild vessels.
Cleaning up sulphur
An increasingly attractive solution for ships operating over long distances and consuming large amounts of fuel, is to install scrubbers. The market demand for this type of technology has grown and will inevitably continue to grow over the coming years.
Jan Othman explains, “The first movers in this space have been the established players, and during 2018 there has been a strong uptake of this technology across geographical markets and vessel segments. These are operators who are investing in cleaning technology today in preparation for the IMO deadline. While smaller operators may find the situation difficult, the strong business case for being able to continue running on HFO is driving the installation of scrubbers to vessels, thus making financing increasingly available.”
“In the second half of 2017, the market really took off for scrubbers. There was quite a significant rise in order intake, growing by three digits. This trend continues, and there are more and more retrofit projects for this technology. At the end of 2017, there were 370 projects contracted in the marine industry, while this year, the cumulative figure is over 2,000, so the market is very active. This unprecedented growth is generating a high level of orders for Wärtsilä and we expect that 2019 will be a hectic year.”
In total, there are some 90,000 vessels operating worldwide, and although not all of these will install exhaust gas cleaning systems, this represents a significant business opportunity for Wärtsilä. As Othman points out: “The competition is also increasing in this technology. However, many of these competitors have a more limited offering and are lacking some key capabilities, so we expect that we will continue to be a leading player in this market.”
He continues: “We expect the market to continue to be very active in the coming years and that the retrofit boom will continue. This is due to the fact that there is insufficient capacity in the market to retrofit all vessels prior to 2020. Moreover, based on the high adaptation rate of scrubbers for newbuilds we have experienced during the last 18 months, we expect this market to continue to be active going forward.”
“Before this period of growth, scrubbers were mainly purchased for ships operating in the Baltic and North Seas, and in waters around the United States, and often the systems installed were more complex hybrid systems.” Othman notes that: “Now that the market has grown significantly, there has been a clear shift to the less complex open-loop systems. In 2018, some two thirds of the systems being installed are open-loop, while previously hybrid systems had the clear majority.”
Today, of all the suppliers, Wärtsilä has the broadest portfolio of scrubbers for different vessel types. The company is actively working on further reducing the operational costs and enhancing efficiency through continuous product development. The amount of physical space taken by scrubbers onboard a vessel is also an issue for shippers, so the less space the cleaning unit requires the better.
The end of bunker fuel?
As the industry shifts to limit sulphur emissions and comply with new IMO regulations, the impact on bunkering and the debate on how the new legislation will affect the imported sulphur market remains open. Currently, the expectation is that heavy fuel oil use will continue, while demand for scrubbers continues to rise.
“HFO will continue to fuel marine applications,” Othman states, “however, abatement technology will secure compliance with the new regulations, and the amount of harmful emissions generated by shipping will be significantly cut.”
Othman concludes that research and development continue to be a priority in the advancement of this technology. “We continue to develop our products to further reduce particulate emissions, as well as offer new solutions to this end. This is both an opportunity and a challenge. However, it is expected that regulations will continue to tighten in the future, and Wärtsilä will continue to offer industry-leading cleaning technology to support the transformation to cleaner operations at sea.”