Union Maritime to fit emissions-cleaning scrubber without upfront cost

Sep 30, 2016

Union Maritime to fit emissions-cleaning scrubber without upfront cost

UK shipping company Union Maritime has signed an agreement to fit an emissions-cleaning scrubber to one of its vessels without having to pay upfront, the company said Thursday, in a deal which may make the technology more attractive to shipowners.

Scrubbers — equipment attached to ships that spray water into their exhaust to remove chemicals like sulfur — allow shipowners to continue burning cheaper, dirtier marine fuels while complying with increasingly strict environmental regulations.

US-based Pacific Green Technologies Marine will fit a scrubber to Union Maritime’s chemical tanker Westminster in the first quarter of 2017 for $1.995 million. The shipping company will pay PGTM in instalments based on savings from buying cheaper fuel.

Union Maritime guarantees operating the vessel in Europe’s emission control area — where it will save money by continuing to burn fuel oil while others are forced to buy more expensive marine gasoil — for at least 145 days/year, and forecasts daily savings of about $2,700 based on current prices.

That would allow it to pay its bill in about five years or less, but leaves PGTM exposed to the risk of a longer payback time if fuel oil and gasoil prices were to converge and leave lower daily savings.

Fuel oil demand is likely to shrink radically in either 2020 or 2025 when the International Maritime Organization imposes its worldwide 0.5% sulfur limit on marine fuel emissions, driving most bunker demand from fuel oil to gasoil-based fuels.

But if a significant portion of the global fleet installs scrubbers, some marine fuel oil demand will be preserved.

The upfront cost of installing a scrubber — as much as $5 million for some vessels — and the uncertain time it will take for the equipment to pay for itself have been major barriers to widespread uptake of the technology.

If scrubber manufacturers or other third parties are willing to shoulder the risk of the investment, more shipowners are likely to consider the option.

But many would be wary of extending free credit to the shipping industry, particularly in the wake of the collapse of South Korea’s Hanjin Shipping last month.

Union Maritime said it has agreed to buy up to 10 more scrubbers from PGTM if the agreement proved successful.

Source: Platts

Source from : International Shipping News,Shipping: Emission Possible