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Pandemic forces shipowners to shelve scrubber installation

SHIPOWNERS are postponing or cancelling the installation of scrubbers that extract sulphur emissions from their vessels as the coronavirus pandemic tightens finances, reports Reuters

16 June 2020 - 23:54

SHIPOWNERS are postponing or cancelling the installation of scrubbers that extract sulphur emissions from their vessels as the coronavirus pandemic tightens finances, reports Reuters.

Regulations from UN's agency the International Maritime Organisation (IMO), which took effect in January, were viewed by the oil and shipping industries as one of the first worldwide efforts to enforce environmental change.



The rules aimed to make ships use fuel with a sulphur content of 0.5 per cent, compared with 3.5 per cent previously. Operators had the alternative option to install devices - scrubbers - to strip out the pollutant.



In the run-up to IMO 2020, dozens of traders and shipowners, bet on installing scrubbers hoping to make a profit from buying cheaper high-sulphur fuel as the newly developed 0.5 per cent alternative would be in tight supply.



But with an average cost of US$2 million to install just one, the stakes were already high for fleet operators often facing investments of more than $100 million.



Now the industry financial squeeze, caused by a decline in demand for shipping due to the Covid-19 crisis, may mean scrubbers become less of an option for ship owners to comply with regulations.



Leading Norwegian firm Wallenius Wilhemsen, which transports cars and other vehicles, told Reuters it had cancelled scrubbers for nine ships in the past few months and postponed an additional eight until later this year or 2021.'As a result primarily of the Covid-19 pandemic, customers have significantly reduced their output of vehicles,' a spokeswoman said. 'With that comes a reduction in revenues and we are taking all necessary steps to reduce cash outflows.'



Clarksons Research said it recorded a significant slowing in the number of ships already in service installing scrubbers, estimating there were under 100 vessels undergoing retrofits versus over 300 at the start of the year.



Clarksons said the number of ships pending retrofits was 750 - some of which may be postponed or cancelled - versus a peak of over 2,000 pending in the middle of 2019. They estimated there were now 3,015 ships fitted with scrubbers, from 506 at the start of 2019.


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