QUESTION 1. Starting with a general overview - given that the deadline for the reduction of global sulphur content emissions of no more than 0.50% m/m against the current limit of 3.50% is due to come into force in 2020 (just 18 months), is the marine industry sleep walking into a major problem and setting itself up to fail?
There are three alternatives for the industry to comply with the new regulations, 1) Install a scrubber, 2) switch over to run on low sulphur fuels, and 3) Convert vessels to run on LNG. From our perspective, we experience that owners are increasingly realizing that installing a scrubber is economically the most sensible option, but many owners have postponed their investment decisions to a late stage. The strength of the scrubber option as primary mean of compliance is primarily driven by a high expected spread in fuel prices for HFO versus MGO. However, we do believe that not all owners will be able to secure yard slots for retrofitting the vessels before the 2020 deadline. Due to the limited availability of LNG, we believe that
the conversion to LNG will be less attractive as a mean for compliance compared to scrubbers. When it comes to the availability of MGO, we believe that bunker suppliers and refiners are in a better position to comment on this than Wärtsilä.
QUESTION 2. In Wärtsilä’s opinion, how big an issue is the new global sulphur cap regulation for the shipping industry to cope with and implement; what are the key challenges and have you any estimate as to how many vessels are affected?
We believe that this will be a rather big issue for the industry to cope with and the primary concern among ship-owners is the availability of compliant fuel and the expected high fuel spread between MGO and HFO. Moreover, we experience that owners are increasingly concerned about securing slots from both yards and equipment suppliers for retrofitting scrubbers prior that the new regulation comes into force. We believe that only a minority of the world’s fleet of approximately 60,000 vessels will have installed a scrubber before
the deadline, but we believe that many owners will still opt to do so after the deadline due to the strong economic incentive for owners to install a scrubber.
QUESTION 3. The estimates of the cost to the shipping industry we have seen vary wildly from $24 billion to $60 billion. Is there a concern or suspicion that third world operators/shipowners in particular will struggle financially to make the investments required to bring their fleets into line in time?
Yes, we believe that there is a concern in the industry related to this, and we see that owners across all vessel segments and markets are worried about the financial consequence of the new regulations.
QUESTION 4. Why can’t the fuel suppliers just develop low sulphur fuels to ease the burden?
We believe that bunker suppliers and refiners are in a better position to comment on this than Wärtsilä.
The Report • June 2018 • Issue 84 | 69
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