The Economic Impact of Scrubbers in the Shipping Sector

Sea-Intelligence analysis shows that scrubbers, exhaust gas cleaning systems installed on vessels, have generated $13 billion in savings on shipping fuel. Scrubbers enable the use of IFO380 fuel, which has higher sulphur content and is cheaper than alternatives. Researchers noted that as scrubber installations increase, the proportion of vessels able to capitalize on the potential to purchase cheaper standard fuel rather than the more expensive low-sulphur Very Low Sulphur Fuel Oil (VLSFO) will rise.

The current price premium for VLSFO is set at $166 per tonne.

Through a model used to estimate daily global fuel consumption across the entire industry, shipping lines have collectively saved $13 billion through scrubber use since the adoption of IMO 2020.

Sea-Intelligence CEO Alan Murphy noted that this development demonstrates that the shipping sector's costs are motivated by regulatory action. However, financial incentives do not always produce the outcomes that regulation advocates expect. Rather than switching to low-sulphur fuel, using standard fuel with scrubbers—which fully complies with regulations—is more cost-effective.

He also highlighted the challenges of policies aimed at reducing carbon emissions. Cost-focused regulations, such as the EU's ETS carbon price on shipping, are proving effective. Murphy added that it remains to be seen whether the industry will find ways to comply literally with regulations.

In January, Sea-Intelligence forecasted that the continued Red Sea crisis would increase CO2 emissions from shipping companies.

Key Points:

• Scrubbers have saved $13 billion on shipping fuel.

• Scrubber use makes it possible to use cheaper, higher-sulphur fuel.

• Compared to VLSFO, scrubber use reduces costs.

• The shipping sector is motivated by cost-focused regulations.

• Using scrubbers is more cost-effective than switching to low-sulphur fuel.

• We are subject to the impact of policies aimed at reducing carbon emissions.

News Link: https://www.porttechnology.org/news/scrubbers-save-13-billion-in-shipping-fuel/