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Scrubber fitting trends: What’s happening?

Niels Rasmussen, chief shipping analyst at BIMCO has been crunching the numbers on the percentage of ships fitted with exhaust gas scrubbers, or exhaust gas cleaning systems (EGCS) more formally.

“Scrubbers were installed on 399 ships in 2022, a fall of 24% year on year, and currently 13% of bulker, container, and tanker ships have a scrubber installed,” he says. “Despite the slowing rate of installations, the share of ships with a scrubber is set to increase in coming years as 17% of ships on the shipyards’ order books are expected to have a scrubber installed.”

Since a January 1, 2020, deadline, IMO regulations mean that ships have had to use ultra or low sulfur fuel (ULSFO or VLSFO) to comply with limits for sulfur emissions. However, ships can continue to use the less expensive heavy fuel oil (HFO) if they install a scrubber. But the price premium for VLSFO has turned out to be less than initially estimated.

On December 31, 2019, the day before the new IMO regulation was implemented, the price premium for VLSFO over HFO in six of the world’s largest bunkering ports averaged $347/tonne. Since then, the premium has averaged $149/tonne. It has been as low as $50/tonne for an extended period during 2020 and as high as $400/tonne during June/July 2022.

Niels Rasmussen looks at exhaust gas scrubber trends
Niels Rasmussen, chief shipping analyst at BIMCO: “The lower-than-expected VLSFO premium has likely discouraged owners from installing scrubbers.”

“The higher the VLSFO premium, the more attractive the investment in a scrubber is because the payback period is shorter,” says Rasmussen. “The lower-than-expected VLSFO premium has likely discouraged owners from installing scrubbers, particularly on smaller ships with lower bunker consumption and lower savings as a result.”

In fact, the average dry bulk, container, and tanker ship with a scrubber has a deadweight capacity of 140,845 tonnes whereas those without have an average of 51,743 deadweight tonnes.

Therefore, the 13% of the dry bulk, container, and tanker ships with scrubbers represents 29% of the deadweight capacity. The crude tanker fleet has the highest installation rate with 32% of the ships and 38% of the deadweight capacity having scrubbers installed.

The percentage of ships with scrubbers is set to increase in the coming years as 17% of the dry bulk, container, and tanker ships in the shipyards’ order books are expected to have scrubbers installed. However, those 17% only amount to 24% of the deadweight capacity in the order book and the scrubber deadweight percentage could therefore decrease.

“In the long term, the use of scrubbers to cut sulfur emissions may reduce as decarbonization efforts will increase the use of alternative fuels that are sulfur compliant,” says Rasmussen.

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