SAFETY4SEA: Do you believe that the industry is ready for the 2020 Sulphur Cap in less than 21 months? What are the key issues to consider and how should the operators prioritize their actions ?
Ioannis Chiotopoulos: The introduction of the new global sulphur cap in 2020 is causing nothing short of a paradigm shift in marine fuel. It is more than just another regulation — it is a complex challenge, and how operators choose to comply may ultimately impact the future competitiveness of their assets. There is a great deal of uncertainty related to enforcement, fuel availability and technological solutions. A complicating factor is the regional and local regulations, which in some cases stipulate stricter requirements and in others, prohibit certain compliance options.
There is no one-size-fits-all solution, and the best option very much depends on vessel type, size of vessel, operational patterns and which fuels are available in the short and long term. For options requiring a retrofit, it is also important to consider the complexity of installation, possible off-hire and the remaining lifetime of the ship.
S4S: What are your thoughts towards compliance options with the 2020 Sulphur cap? Should we expect more newbuilding projects like Almi Tankers to opt for scrubbers or you are considering other options to become mainstream as well and why?
I.Ch.: HFO will still be an option after 2020. This might be an alternative for owners who are concerned about price increase and availability of compliant fuels. In the long run, if the price difference between high and low sulphur fuels is high and maintenance proves to be manageable, scrubbers may become a widespread technology.
Low sulphur compliant hybrid fuels are expected to be available, as refineries gear up their plants. De-sulphurisation is costly and refineries may opt to refine higher grade fuels rather than invest in de-sulphurisation systems. Some stakeholders in the industry are concerned if the supply of de-sulphurised fuels will cover the demand by 2020, leaving the world fleet to rely on MGO or distillate blends.
With the IMO 0.5% sulphur cap, it is expected that LNG as fuel will gain a more favourable position as a marine fuel. LNG as fuel is now a technically proven solution, and LNG bunkering infrastructure is developing rapidly. While conventional oil-based fuels will remain the main fuel option for most existing vessels in the near future, the commercial opportunities of LNG are interesting - mainly for newbuilds, but in some cases also for conversion projects.
S4S: From your experience, which are operators’ key drivers and barriers to invest in scrubber technology?
I.Ch.: It is clear that every owner has an interest in identifying the most economical and competitive strategy for sulphur cap compliance. The installation of a scrubber could be complex, especially for retrofits. There is a significant investment cost for the exhaust gas cleaning plant, and there will also be operational expenses related to increased power consumption, need for chemical consumables and sludge handling. Will the scrubber manufacturers in the short term have the capacity to produce and install sufficient amount of systems on vessels to make it a common sight at sea?
Based on our research a SOx scrubber installation may prove to be the most cost-efficient choice over a ten year period. It must be noted however, that the industry’s experience with respect to scrubber technology is mainly limited to some passenger and ro-ro vessels operating in ECAs.
S4S: From you experience with Almi Altas, what is your advice to other industry stakeholders towards preparation and compliance with the 2020 deadline?
I.Ch.: DNV GL has compiled and thoroughly analyzed available information to give shipowners a comprehensive overview of the various compliance options. Every ship is different and so is its operational profile. The ultimate decision between HFO and scrubber, distillate fuel (MGO), LNG, low-sulphur fuels (0.50 % S) or other, alternative fuels should to be evaluated individually. And needless to say, any unexpected event, such as volatile changes of fossil fuel prices, can substantially change the outcome. It should however be noted that by 2020, a vast majority of ships will continue to run on whichever compliant fuel, that can be supplied in a port. This will be a higher-valued product compared to conventional HFO, and will thus inevitably increase operating costs. It is in owners’ best interest to investigate all compliance options which may increase their competitive edge.
The views presented hereabove are only those of the author and not necessarily those of SAFETY4SEA and are for information sharing and discussion purposes only.
About Ioannis Chiotopoulos
Ioannis Chiotopoulos is the Regional Manager South East Europe, Middle East & Africa at DNV GL – Maritime. He has obtained his Master of Science, Maritime Technology, at the University of Newcastle-upon-Tyne, and a Master of Science, Naval Architecture and Marine Engineering, at the National Technical University of Athens. Mr. Chiotopoulos has held a variety of positions within DNV, such as Fleet in Service and Newbuilding Surveyor, Site Manager, Newbuilding Production Manager and District/Area Manager in Greece, Korea and China.