With effect from January 1, ships operating within 200 nautical miles of shore in North America and Northwest Europe must use fuel with a maximum sulfur content of 0.1% or find an alternative means of compliance, which typically means buying a scrubber system.
Scrubbers allow a shipowner to continue to use high-sulfur bunker fuel, which is less expensive than lower-sulfur fuels, by, in effect, stripping sulfur out of the emissions and allowing the ship to meet the stricter sulfur cap.
For years, scrubber manufacturers have marketed the system as a way to save money by avoiding the costs of expensive, low sulfur fuels. But these fuels are not so expensive anymore. Emission Control Area-compliant MGO in Houston has averaged $603/mt in 2015, roughly 40% less than prices over the same period in 2014, Platts data show.
"The short-term scrubber market will be very much affected by the high versus low-sulfur fuel differential in price," said scrubber manufacturer DuPont, (therefore) shipowners are likely to turn to low sulfur fuels for ECA compliance rather than alternative measures as long as bunker prices remain low relative to recent history.
"The global oil price drop seems to be impacting the scrubber adoption negatively," consulting firm MEC Intelligence confirmed in a February report. "Orders nearly doubled for the six-month period of April-September 2014 while in the last four months growth has been about 19%."
A total of 160 vessels had scrubbers installed by the end of January, compared with 135 by September 2014, MEC Intelligence said.