IMO 2020: Gibson Sees Scrubber Sceptics Coming Under Pressure

Thursday October 25, 2018

Scrubber sceptics could find themselves under pressure to buy into the technology or risk finding themselves at a severe disadvantage in the post-2020 market, Gibson warns.

With interest in scrubbers as an IMO 2020 solution almost nonexistent at the start of the year, the latest thinking from DNV GL indicates there are now 1,850 vessels with installed or confirmed orders for scrubbers and the number will "easily" reach 2,500 by 2020.

"The fact that scrubbers are becoming more and more popular is not surprising. There is a strong financial argument in favour of installation, on the basis of a short repayment period of the costs involved and prospects for additional savings thereafter," says Gibson.

Scrubbers, or exhaust gas cleaning systems (EGCS) as they are more accurately known, will allow vessels to continue burning cheaper, but otherwise non-compliant HSFO after the 0.50% global sulfur cap comes into play from January 1, 2020.

As to what the HSFO discount will be, estimates currently range from $200/tonne to $450/tonne, Gibson says.

"If the forward prices are used as an indication of the future spread, the difference in swap contracts for high sulphur fuel oil vs 0.1% sulphur gasoil basis FOB ARA is currently trading just over $350/tonne for the 1st quarter 2020," Gibson says, adding that the spread will likely narrow over time meaning the early adopters of scrubbers will see the highest cost benefit.

But to fully realize the cost savings, vessels equipped with scrubbers will also have to find HSFO to lift and burn; supplier sources from numerous global locations tell Ship & Bunker the ongoing supply of fuel oil is far from being a given.

Still, if the market plays out how Gibson and other scrubber bulls think it might, the number of scrubber equipped vessel will continue to grow to a point where "owners that remain sceptical of the technology could come under pressure to follow suit in order not to find themselves at severe disadvantage versus the scrubber-equipped competition."

"If the current trend continues, sooner or later the majority of the fleet could be scrubber fitted."

With some 60,000 vessels affected by the IMO 2020 rule, there is still a very long way to go before that happens.

And not only are there still plenty of owners yet to be convinced that marine scrubbers make more sense than a fuel-based solution, there are a growing number of voices actively criticizing the technology.