The Wall Street Journal reports the owners of 60,000 cargo ships are bracing for tighter emissions rules that are forcing them to make a multibillion-dollar choice: Start buying cleaner-burning fuel or invest in a device that treats the ship’s exhaust before letting it out.
It isn’t an easy call. Retrofitting a vessel with a sulfur-trapping exhaust system, known as a “scrubber,” costs as much as $10 million, while cleaner fuels are about 55% more expensive than the ones shipping operators use now. Whether it makes sense to install scrubbers and absorb a bigger financial hit upfront depends on whether scrubbers will be adequate to meet even stricter pollution caps expected in the future and the availability and cost of cleaner fuels. Both factors are difficult to gauge.
Scrubbers involve “a complicated and expensive installation of $5-10 million per ship and the benefit to the environment is still not clear,” said Soren Toft, chief operating officer at Maersk Line, the world’s biggest container operator. “It’s like installing small refineries in approximately 60,000 vessels and it’s not a very sensible way of doing things.”
The deliberations stem from new caps on sulfur emissions issued by global regulator International Maritime Organization that will go into effect in January 2020. (Source: Wall Street Journal)
Articles are chosen for summary in this Market Intelligence blog based on newsworthiness in conjunction with The Infinite Loop themes. Any opinions and views expressed in the articles are generally those of the underlying author from the source listed, are not necessarily current as of the date of this blog, may change as market or other conditions change, and may differ from views expressed by Ivy Investment Management Company and its associates or affiliates. Actual investments or investment decisions made by Ivy Investment Management Company and its affiliates will not necessarily reflect the views expressed in the articles. These articles are distributed for educational purposes only and are not investment advice or a recommendation to purchase, sell or hold any specific security mentioned in the article or to engage in any investment strategy. Investment decisions should always be made based on each investor’s specific financial needs, objectives, goals, time horizon and risk tolerance. Securities discussed may not be suitable for all investors.