Hot Issue

Extending the
ban on discharging
wash water and the
competitiveness of
open-loop scrubbers

Yeon-tae Kim
(Technology Sales Team Leader
of Korean Register)

In order to regulate sulfur oxides, the air pollutant emitted from ships, IMO will strengthen the global sulfur oxides emission standard from 3.5% to 0.5% as of January 1, 2020. Ship owners are taking action by installing scrubbers, a sulfur oxide-reducing device, as a way to meet such regulations. Managing Director Yeon-tae Kim, Technical Sales Team Leader of Korean Register, has submitted an article about an open-loop scrubber that has emerged as a hot issue in the shipping industry.

With the recent announcement of a policy to ban on discharging wash water from open-loop scrubbers by some ports in the UAE following Singapore and China, the scramble to install scrubbers, which has so far been a hot topic internationally, has been on the decline. Scrubber advocates are responding with strong opposition. They argue that there is no scientific basis for how harmful wash water is to the sea. It is necessary to examine the strengths and limitations of these claims because the mixed claims surrounding the wash water from a scrubber increase the anxieties of ship owners.

According to a survey conducted by Korean Register, the percentage of new ships with scrubbers installed at the nation’s eight largest shipbuilders soared from 25 percent before 2018 to 61 percent and 86 percent in the first half and the third quarter of 2018, respectively. This increase has been the same for existing ships as well as new ships. As plans for installing scrubbers mainly on large ships continued to be announced, major scrubber manufacturers have already completed contracting all their work for the next year or two. Orders have also flooded in even inexperienced latecomers. Most of these were open-loop scrubbers.

However, the frenzy has slowed as Singapore, the world's largest bunker port, and China, the largest import and export country, announced their policies to ban on discharging wash water from open-loop scrubbers in their ports. Furthermore, as the price gap between low-sulfur and high-sulfur fuel oil, which was expected to be between $300 and $350 per ton last year, has been decreasing with the recent plunge in fuel oil, a growing number of people have begun to question the economics of open-loop scrubbers.

Open-loop scrubbers (Image Courtesy of Wärtsilä)

So how harmful is the wash water to the environment?
Several studies were submitted to the 6th Conference on Pollution Prevention and Response (PPR) which was held February 18-19, 2019 under the International Maritime Organization (IMO), but they claimed conflicting results, and it is expected that it will take a long time to officially determine the environmental impact of wash water.

Panama-backed study was presented to the conference claimed that further research was needed because pollutants in wash water could affect the marine ecosystem. However, the documents submitted by Japan indicated that Japan decided to allow the discharge of wash water from a scrubber in its ports as well as its coastal waters, as they see the effects from wash water would not be significant enough to warrant prohibition. To resolve this controversy, an official investigation is expected at the IMO level.

We need to look at regulations on the high seas, which are different from regional regulations, such as Singapore and China. The regulations on the high seas are enforced through IMO, and the regulatory areas are wide, which greatly affects the competitiveness of open-loop scrubbers. In order for regulations on the high seas to be enforced, the IMO-level environmental impact assessment of wash water must be conducted first.

Recently delivered “Universal Leader’ is equipped with a scrubber system. From the exterior of the ship, the part where the scrubber is installed can be seen.

If the assessment results conclude that regulation of wash water discharge is required, legislation shall be enacted in accordance with IMO's procedures. IMO procedures for environmental impact assessment, legislation and implementation will take years to accomplish. Therefore, it is expected that there will be no restrictions on the discharge of wash water on the high seas for many years. Ports and coastal countries can still regulate discharge in their jurisdictions, but this is a regulation under their own laws and is only valid within their coastal waters.

Currently, most of the ships that install open-loop scrubbers are large ships, which are not expected to be significantly affected by the expansion of the discharge control areas by these individual countries. This is because large ships consume a large amount of fuel oil and spend a lower percentage of their operational time on coastal waters. The coastal operation percentage of bulk carriers and tankers of medium size or above is not high as well.

For new MR tankers, the investment payback period is about two years at a fuel oil difference of USD 250/ton, even if 30 percent of their total operation is operated with low-sulfur fuel oil. Larger ships take less than a year under the same conditions. Since the price difference between low-sulfur and high-sulfur fuel oil is expected to be substantial for one or two years after 2020, it is believed that ships that have completed the installation at the beginning of the enforcement of the Convention will be able to recover their investment in a short period of time.

To sum up, the expansion of wash water discharge prohibition areas does not seem so influential that they could cool the demand for open-loop scrubber installations, given that such regulations are likely to stay within coastal waters for many years and ships that are installing open-loop scrubbers are mostly ships that spend relatively little time on coastal waters.

However, it is certain that open-loop scrubbers are less economical for small and medium-sized ships with high percentage of coastal operation. Since more and more countries are expected to review the regulations ahead of the enforcement of the Convention in 2020, it is deemed necessary for shipping companies to identify their open-loop scrubber operating ratio after considering the areas their ships operate in.

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