Wärtsilä, Clean Marine Energy to Offer "Scrubber Finance"

Wärtsilä says the agreement marks the "first collaboration agreement that will provide a convenient funding solution to drive the uptake of exhaust gas cleaning technology."

Wärtsilä Corporation (Wärtsilä) Friday announced it has teamed up with Clean Marine Energy (CME) to offer "scrubber finance" to shipowners, in a move intended to ease the financial burden on ship owners looking to install scrubber systems to comply with sulfur emissions legislation.

The agreement marks the "first collaboration agreement that will provide a convenient funding solution to drive the uptake of exhaust gas cleaning technology," said Wärtsilä.

The initiative focuses on offering incentives to shipowners to install scrubbers, with returns taken from the "fuel price spread," being the difference between the price of marine gasoil (MGO) and traditional heavy fuel oil (HFO) bunkers.

Wärtsilä estimates that, under the financing deal shipowners will pay back their investment in the technology over four to six years.

The company said this allows shipowners to avoid finding upfront capital for such installations, which can run to between $3 million and $12 million per vessel.

While such capital investment is difficult to pass on to charters, a fuel premium should be easier to include as part of the shipowner's fees.

"This funding concept enables ship owners to increase the value of their asset without taking on additional debt, thereby making it easier to achieve long-term compliance with increasingly stringent environmental legislation," said Juha Kytölä, Vice President, Wärtsilä Environmental Solutions.

Pace Ralli of CME added that "despite lower fuel costs, there is an even greater spread between HFO and MGO; as much as 90% in some cases."

"This allows us to inject capital to pay for the installation of a scrubber, allow the ship owner some of the benefits of continuing to burn HFO and still take out a return."

In January, Liberian Registry announced a partnership with EfficientShip Finance to offer incentives to shipowners to make environmentally friendly retrofits to vessels, which would be paid back out of efficiency savings.