EnvironmentFinance and Insurance

Financing of scrubbers comes under attack

How shipowners go about financing scrubber installations is attracting criticism across the globe.

Scrubbers have hit the mainstream press headlines recently, especially open loop ones, with concern growing that the technology will not help improve the environment. Nevertheless, there are estimated to be at least 2,000 scrubbers installed come the January 1, 2020 implementation of the global sulphur cap, led by large, listed shipowners who have moved to install exhaust gas cleaning systems on their biggest ships.

There are an increasing number of listed shipowners such as John Fredriksen, Scorpio and most recently Torm who have opted to buy into scrubber manufacturers. This type of investment strategy is now being questioned

Vinay Gupta, managing director of Singapore shipmanager Union Marine Management Services, told Splash today: “With the recent trend for the public listed companies to enter joint ventures with scrubber manufacturers the headlines should be how the public’s money is being washed down through the scrubbers into the coffers of some individuals.”

Gupta continued: “It is no mystery why public listed companies are seeing scrubbers as an alternative whereas the serious shipowners are not. This nexus between the scrubber manufacturers and the public listed owners reminds me of the idiom: ‘You scratch my back and I scratch yours’.”

Renowned ship financier and Splash columnist Dagfinn Lunde also has taken aim at the financing of scrubbers. In an upcoming column due to be published on this site later this week, Lunde takes attacks the raft of banks espousing to be taking environmentally friendly decisions in extending credit lines who have helped owners buy scrubbers.

“Scrubbers are a cheat and it is a travesty – though sadly not surprising – the so-called ‘green’ banks have been happy to extend credit lines to their biggest shipping clients to buy these polluter diluters,” Lunde writes in his latest column for Splash.

Tanker giant Euronav and its CEO, Paddy Rodgers, have been among the most vocal opponents of scrubber technology in recent months. Euronav’s third quarter results, published at the end of last month, stated: “Promoters of [scrubbers] argue that the open oceans dilute waste water, rendering it harmless. But the solution to pollution is not dilution. Like plastic contamination over the years, we don’t know what the cumulative effect of this waste water will be or how it will interact with existing seaborne pollutants, particularly in congested sea-lanes like the English Channel, Malacca Straits or Baltic Sea.”

Diane Gilpin from the Smart Green Shipping Alliance suggested today scrubbers were a misplaced investment, telling Splash: “We are witnessing the effects of leaving necessary action to reduce emissions too late and aiming only for compliance. This hastiness has resulted in expensive, dubious decisions. Strategic investments in solutions to reduce overall fuel consumption are better business and more ethical, leading to long-term sustainability for investors and financiers.”

Faig Abbasov from NGO Transport & Environment concurred, telling Splash: “Scrubbers will make decarbonisation process a much more painful and disruptive process for the industry and waste billions of investment into dead-end technology.”

The Norwegian Maritime Authority has recently stated it is considering banning all ships with scrubbers – whether open, closed or hybrid – from entering many of its pristine fjords, with a number of famous names in shipping predicting that open loop scrubbers could be banned worldwide in the near future.

Sam Chambers

Starting out with the Informa Group in 2000 in Hong Kong, Sam Chambers became editor of Maritime Asia magazine as well as East Asia Editor for the world’s oldest newspaper, Lloyd’s List. In 2005 he pursued a freelance career and wrote for a variety of titles including taking on the role of Asia Editor at Seatrade magazine and China correspondent for Supply Chain Asia. His work has also appeared in The Economist, The New York Times, The Sunday Times and The International Herald Tribune.


  1. A very timely warning.

    The rate of return on an open loop exhaust gas scrubber can appear sensational, depending on the assumptions that are put into the calculation, but, since there are no facts, the whole thing is guesswork. We don’t know what the return on an open loop scrubber will be, and we don’t know how they will be treated by littoral States. Indeed closed loop scrubbers, which are more expensive, might be just as risky.

    It may be best to fall back on the old adage, “If it looks too good to be true, it probably is too good to be true.”

  2. But of course the low sulphur fuels lobby has no agenda does it. They won’t be championing a bunker adjustment factor to pass on to the charterer and ultimately the consumer.

    Why the objection now, when open loop scrubbers have been around for a while now. Where was the vocal opposition 1-2 years ago.

    Obviously all articles have a bias viewpoint whether for scrubbers or compliant fuel.

    But I sniff a paid for article by the low sulphur fuels brigade.

    1. So you think the author has been paid by the low sulphur fuel industry to publish this article? That’s a bit absurd. It’s a pretty common trend nowadays that many people are challenging the environmental benefits of an open loop scrubber system, this article is no different. The majority of ship owners are only going to be as responsible as they’re required to be. Open loop scrubbers are not a “cheat” or loophole because the IMO clearly states it is an acceptable solution to the sulphur cap. Thankfully, a lot of flag states and local authorities recognize that open loop, and scrubbers in general, is not a proper solution and so they are enforcing stricter regulations.

  3. It appears we are moving the pollution from the air and putting it into the ocean.

    “Out of sight, out of mind.”

    From the start, this pollution abatement process has been flawed. That is what we have learned to accept throughout the history of governments & regulators becoming involved in any process to correct or “fix” a perceived problem. Instead of incentivizing an effort to stop doing something bad, regulators always take the route of penalizing those that don’t fall in line. Putting in place an arbitrary deadline in the future and telling everyone “You better do this right…or else!” appears to be shaping up into a chaotic failure, as some predicted it would be.

    We’re all aware there are many players involved; bunker suppliers, refiners, shipowners, oil majors, etc. All of them are pointing fingers at each other for the state of affairs we find ourselves in today. There is a whole lot of hand-wringing going on. But that doesn’t provide an honest excuse to not have made an effort to find a long-term permanent solution to the air pollution problem, without simply making it a water pollution problem. The incentivized effort should have started years ago.

    Sam’s article reminds us of the issue of unintended consequences. With a vast number of scrubber installations now required within a defined time frame, obviously, it will be an economic boom to those who provide this service. Can anyone blame shipowners and operators for becoming involved? Given the money-making (or saving) opportunity, how does anyone NOT see that savvy penny-pinching owner would NOT seize this opportunity?

    It’s too bad that those in authority did not (will not?) take a different tack and offer some extensive financial or operational incentive to vessel owners (and everyone else in the fuel supply logistics chain) over a defined period of time to coerce a positive environmental change. Some tax reduction scheme, fees or costs reduced, anything for the owner or flag state or country, or ports, or suppliers, refiners …. anything creative that would provide a positive benefit to move ahead with investment into significant change to accomplish a positive outcome. The greater the effort and shorter amount of time for the change by owners should have provided the greatest incentive. Those that sit back a ‘wait it out’ should be the ones that gain nothing at all.

    Cracking the whip by the IMO, in the long run, doesn’t seem to have been enough to get shipowners and the fuel supply business to examine what really is up ahead until they are almost about to collide with a whole new set of challenges. With little more than a year ahead to solve this “new” problem, it’s pretty clear it will all get much more chaotic before the intended environmental results ever get better.

  4. https://www.frontiersin.org/articles/10.3389/fmars.2018.00139/full

    Three types of wet scrubbers are commonly used—open or closed loop systems and hybrid systems. Wet scrubbers use seawater or fresh water as cleaning media for sulfur dioxide (SOx) producing sulfurous acid, sulfuric acid, and calcium sulfate. In contact with fine dispersed water, SO2 dissolves and is removed from the exhaust gas. The natural buffering capacity of seawater or freshwater amended with sodium hydroxide are used to neutralize the acid ions formed in this process.

    As long as the open loop discharge is treated with NaOH before discharge into low alkalinity seawater it’s fine.

    Before discharge (open loop) or recirculation (closed loop) of the scrubber wash water, it can be cleaned in order to remove the so-called “scrubber sludge” containing PM, heavy metals, and partially oily residues.

    Maybe some of you need to dig a bit deeper instead of relying on your chosen confirmation bias from industry sources you seem to champion.

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