A study on impact of the IMO year 2020 sulphur cap on shipping (the feasibility of scrubber installation as solution to IMO 2020)

• Main Author: He, Qiuting
• Other Authors: Tan Siah-Ann Kenneth
• Format: Final Year Project
• Language: English
• Published: 2018
• Subjects: DRNTU::Engineering::Maritime studies
• Online Access: http://hdl.handle.net/10356/75520
• Institution: Nanyang Technological University

Being one of the world’s top sulphur emitter, the shipping industry had contributed fair amount of pollutants to the atmosphere through the burning of Heavy Sulphur Fuel Oil (HSFO). This has led to detrimental effect on both environment and human health, especially the coastal populations. In effort to control and minimise maritime pollution, a revised global sulphur limit at 0.5% mass by mass (m/m) was set by the International Maritime Organisation (IMO) that will take effect on 1 January 2020. Reflecting a significant 3% m/m cut from the current limit, a knock-on effort will be experienced globally across the shipping, refining and bunkering sectors. With many available solutions in the market to achieve compliance, this report focused on analysing the practicability of scrubber uptake to deal with the upcoming sulphur regulation through both primary and secondary research. Using information gathered, analysis and discussions were conducted to evaluate the impacts brought by scrubbers and serve as a decision-making tool in helping shipowners to make informed choice. Being profit-driven, compliance cost, supply availability and sustainability remain as top concerns when shipowners are assessing the feasibility of scrubber installation. Although huge capital outlay is required, scrubber technology allows shipowner to achieve great savings through expected drop in price of HSFO. However, due to uncertainties contributes by both shipowners and refineries that ultimately determines the future supply for both HSFO and VLSFO, it is difficult for shipowners to calculate the payback period for scrubber investment. While supply availability in terms of fuel and infrastructure readiness is already present, other considerations such as the profile of existing fleet, downtimes and off-hires and trading region must be considered to determine if scrubber uptake is feasible. Furthermore, the ever-changing regulatory landscape, technological immaturity and potential environmental issues may hinder scrubber uptake in the long run where research and technical studies are essential to achieving maximum operational efficiency. To achieve an objective view on scrubber uptake, comparisons with other solutions were also made to derive recommendation based on immediate, short-term and long-term basis, relative to IMO 2020 implementation date. Analysis concludes that scrubber will be the most cost-effective solution in short-term that allows shipowner to reap the benefits of substantial fuel saving opportunities at high bunkering efficiency.