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Chris Swanhart, Diane Byrne
Diane Byrne 00:16
Welcome to Megayacht News Radio! I’m Diane Byrne, your host for this podcast series, in which we share conversations with interesting and inspiring people in the large yacht industry. In yachting, regulations come from a variety of sources. One of them is the International Maritime Organization, also known as the IMO, which is a specialized agency of the United Nations. The IMO has a particular focus on improving the safety and security of international shipping and preventing pollution from vessels of all kinds. To that latter point, the IMO has a set of emissions standards commonly referred to as the Tier III standards, which will begin applying to a significant number of megayachts starting on January 1, 2021. There’s been a lot of talk about Tier III over the past few years within yachting. But unfortunately, few owners and their advisors really understand entirely what it means. So consider today’s podcast an Education 101 session. I’m pleased to welcome Chris Swanhart of DLBA Naval Architects to talk about it some more. The design studio has been working closely not only with yacht builders, but also marine-engine manufacturers to tackle some of the biggest challenges head on when it comes to these regulations. Chris is here to help explain in plain English, thankfully, what you all need to know and certainly what I need to know more myself. So Chris, thanks so much for joining us today. And welcome to Megayacht News Radio.
Chris Swanhart 01:54
Thanks for having me, Diane, appreciate being here.
Diane Byrne 01:56
Yeah, this is great. You know, Tier III is so confusing for so many people. And you really want to kind of lay it out and make it a lot more understandable. So let’s just cut straight to the chase, in layman’s terms: Can you explain what Tier III is going to require?
Chris Swanhart 02:19
Sure, sure. And I agree with you, when we when we were starting to look at some of these new requirements about to kick in, we found it a little confusing as well. And there’s still some questions that have not been answered fully. So it is a little gray. And so hopefully this will help some people understand. So coming January 1, 2021, Tier III IMO will kick in. And the whole point of those is to reduce diesel emissions on recreational vessels. So that’s the big change; you know, up to now for many years, these types of requirements and emission requirements have been in place on work boats and commercial vessels. Now they’re going to start applying to boats of certain lengths that are recreational vessels. So, you know, large yachts and large sportfishing yachts and anything over certain sizes are going to be impacted by these new IMO requirements. So the whole goal of them is to reduce nitrogen-oxide levels in the design–I’m sorry, in the exhaust down to a certain percentage of what they are now with current engines. It’s not really power-specific as much as is length-specific. And so you know, it won’t apply to everything, but you know, medium to larger-size yachts it absolutely will impact.
Diane Byrne 03:48
Okay, so when you say medium- to large-sized yachts: I know that Tier III has already been in place for some of these larger yachts for like a year or so, correct?
Chris Swanhart 04:02
Yeah, so so what this will apply to is being defined as any any vessel with a loadline length of 24 meters or greater. So what that generally means: Loadline length can be defined a few different ways, and that’s part of the confusion, I think. One of the basic definitions is the the length from the rudders to the forward stem where the waterline crosses the hull. That’s the basic definition of loadline length. So let’s just use that one; there’s a couple others that could come into play, but that kind of defines it. So if that length on any recreational vessel is 24 meters or greater, then the new requirements apply to that new build. What that means in terms of length overall, a 24-meter loadline length is about 78 to 79 feet, and LOA, or length overall, would be about 27 and a half meters, or about 90 feet. So the bottom line is any new construction of a yacht 90 feet LOA or greater, these new requirements will take hold. Now, it doesn’t sound like that big of a deal. But it really impacts cost. It impacts the amount of systems on the boat, it’s a completely new system on a lot of these boats that just never had to be there in the past. It impacts the layouts and the arrangements. And then the materials needed for the systems to work are also in question; that’s actually a pretty big question. Where are those going to be? And how are people going to get ahold of those? So there’s a lot of big impacts because of it. And like we said, It kicks in as January 1 of the new year. So you know, there are some some folks that are trying to get builds started before that deadline so that these new requirements don’t apply to them.
Diane Byrne 05:59
Right, right. I know some of the semi-custom builders were trying to get some of their newer projects that are about that 90 feet LOA measurement–to either side of it, really–started and underway. So they can at least get say, two or three hulls out and done before the regulations kick in. And I do want to actually go into the materials and the impact on cost and the overall design and the insurance of the boat in a minute. But before we jump into that, there’s there’s also a misimpression that I even had. I didn’t realize until just recent weeks that Tier III was limited exclusively to new builds, and some refits it sounds like are actually going to be impacted. So can you talk about that a little bit, too?
Chris Swanhart 06:49
Sure. sure. That’s a great question. Because I think most people are thinking new build, you’re right. Most people are thinking new builds. And as the different rules are stated, it does impact refit. So typically on repowers, let’s say an older vessel will be getting new engines. And normally those engines, usually you’re seeing those engine being increased in power. I mean, that’s pretty typical. Any refit that occurs and again, it has to be over the length limit. So we’re talking like overall 90 feet or more. If they are getting repowered with engines that are not identical to the engines that were originally installed, then it could fall under the requirements for the new exhaust system, so that it’s a little gray. Again, it’s another area that’s a bit gray, there are more kind of other rules that allow people to kind of get out of it, depending on the end and availability and size of the engine. But generally speaking, it does apply to repowers. And so people need to be pretty careful with that, at least be aware that it could apply to them. And like I said, there are some more kind of rules involved in the repowers that allow some boats not to fall under the requirement.
Diane Byrne 08:19
So it sounds like it’s probably not unlike a lot of regulations: This is something that is evolving and will continue to evolve as the real-world application starts rolling out in terms of what boats might not have to adhere to the regulation. Is it going to be a case-by-case basis where, say, a project manager or someone of that sort would work with the flag state to file a an exemption? Or do they have to go through some other process? Do you know yet? Or is it still being worked out?
Chris Swanhart 08:55
So that that I think a lot of that is still being worked out. But I think that is kind of the starting point, you know, to find out early if you fall under one of the exemptions, and to work with the flag state and you know, in this country, I don’t know how much the US Coast Guard were to get involved. But that’s a starting point. And that is one of the questions that we had, when we were doing a lot of you know, the searching for information on this, that we couldn’t really get a straight answer. We’re not really 100% sure. I think you’re right, I think it’s kind of being developed. But it is important to remember that it’s not necessarily just going bigger engines, which is what I said, you know, the typical repower. If you decide to go smaller engines, and you’re still over that length limit, it could still apply. So, you know, repowers are a big challenge. It’s tougher to to make these things fit in the existing space than it is to say design around them to begin with.
Diane Byrne 09:57
Right, right, and that’s something that we’re going to definitely dig into into some more detail on in a second. When it comes to adhering to this emission standard, it sounds like, at least right now the best solution that will work is something called SCR. So again, in layman’s terms, can you explain what it is and also address some of the concerns that are around sourcing it and in the travels and things like that?
Chris Swanhart 10:30
Sure, so a couple other just, I’ll just mention then a couple other possible solutions that exist, and that are in place in other types of industries and other types of applications. One is exhaust gas recirculation, which is a non-engine change, you know, that requires a pretty major engine redesign. LNG or liquefied natural gas is another, a much cleaner-burning fuel. And that could be an option. But both of those while they’re being used in other places, they would require major changes to engines, and those just are not realistic in the short term for for a solution here. So SCR is the solution that just about all the engine manufacturers are going with. And that stands for selective catalytic reduction. And what that is, is a, it’s an exhaust treatment that occurs downstream from the engine. So it doesn’t really require much modification to existing engines. Very, very little, in fact, and that treatment occurs downstream in the exhaust. The existing exhaust leaves the engines, there’s a couple small parts of the system and then what’s called a diesel exhaust fluid, which in the case of these systems is mostly going to be urea, that is introduced to the exhaust stream through a dosing unit. And that mixture is then fed into a catalyst. And that’s where a chemical reaction occurs, and the exhaust is broken down. And using the ammonia from the urea, the nitrogen oxides are reduced to nitrogen gas and CO2 and water, which are much cleaner for the environment. And so it’s a very effective system. And it really requires very little change to existing engines. And that’s why it’s a great solution, especially short term, but even long term, the NOx levels can be reduced by up to 90%, which is quite significant. So, all the engine manufacturers are looking at a type of SCR system, you know, with slight changes in approaches, of course, but that’s pretty much the accepted solution to the requirements.
Diane Byrne 12:50
Right now, are there any concerns about having enough of this urea? And in supply? Because I heard some chatter about that, but I wasn’t sure if that was actually correct.
Chris Swanhart 13:04
So that’s a big question, urea; you can’t just pull up anywhere at a dock and say ‘fill my urea tank.’ Right? It’s not like diesel fuel. So that is a big question, is the infrastructure to supply the urea needed for these systems? Where people will get it and how to get that infrastructure put in place? So that is a big question that keeps coming up with clients that I deal with, you know, and nobody really knows the answers. The expected amount of urea, just to give people an idea, is roughly up to 5% of your fuel capacity. So that kind of gives you a feel for how much urea you would expect to be onboard relative to your total fuel capacity that you have onboard right now as well. So that’s the big question, is where it’s going to come from.
Diane Byrne 14:04
I was going to ask if you didn’t address that, and I’m glad you did. And you know, how much of a capacity are these boats going to have to have urea? Because that’s obviously another question. ‘Everything’s okay. Well, I got a 10,000 gallon fuel tank’ or what have you, you know, ‘what else am I gonna have to have onboard? Am I gonna have to have thousands of gallons? Am I gonna have to have a few hundred gallons?’ Either way, it’s still a concern, because the engine room is already pretty tight. But it at least gives people an idea of what they’re going to have onboard. But when it comes to the consumption of this, let’s say it’s a few hundred gallons that somebody is going to have had to have on board. Is there a concept of how much of that is going to be consumed? It’s hard to say an average, because every yard is different, but is there even an idea of a low use to high use consumption on this? Is it something that’s going to have to be added every couple of months? Once a year?
Chris Swanhart 15:06
Sure, it’ll get burned at that percentage of your fuel burn. So if you’re burning, let’s say, on a, I’ll speak to, you know, sportfishing, sportfishing out for a day, let’s say they burn, I’m going to pick a round number, let’s say they burn 300 gallons of fuel, they’re going to burn more now say 500 gallons of fuel. And then then you’re going to use 5% of that 500 gallons of urea for that day. So that number, that percentage is how much urea you’ll be using, based on your fuel consumption. So that is something to consider; you don’t necessarily have to have 5% of your total fuel capacity if regular use of the vessel is not using that fuel capacity, right? So you just have to make sure that you can fill up your urea tanks before burning more fuel than what you have urea capacity for.
Diane Byrne 16:04
Okay, that makes sense. That makes sense. Definitely. Okay, so it sounds like in a sense, the good news is that there is a solution available, which is the SCR system. But in essence, the bad news is that it poses some pretty significant challenges, like you were hinting a few minutes ago, in terms of the cost and in terms of space utilization and design. So can you address how your team at DLBA Naval Architects has been working with some of your clients, and other industry stakeholders too, to try to solve these puzzles?
Chris Swanhart 16:46
One of the first things we did was went back and identified, you know, which types of vessels are impacted. And like we said, it’s pretty much any boat over 90 feet. So there’s a big impact, we do a lot of sportfishing out design here. And those engine rooms are ridiculously tight. I mean, there’s no existing space not used for something else already. Now, on motoryachts, you might have a little more space and a little more height above the engine. So that affords you a little more freedom. Even on motoryachts, you know, it’s a well designed engine space, accessible when you can move around and service equipment, but there’s really not too much unused space. So that’s a big challenge, and that’s why it’s a big, especially big impact on repowers and refits because that space doesn’t exist. In terms of new designs, we looked at typical sportfish engine rooms on 90- to 95-footers. And depending on the solution, you know, we were looking at MTU engines on this example. And Andrew Border was very helpful with us from MTU. He provided some information on their systems, and they’re providing a couple different options. But it really is a volume question, you know, generally speaking, you’re going to have to either get taller in your engine room to fit the system above the engine, or you’re going to have to add length to the engine room. So let’s say the owners, if they want 100 foot or 110- or 120-footer, they’re not probably going to be willing to give up accomodation space, they’re not going to want to give up fuel onboard, they won’t really want to give up anything that they would normally have on an existing 100-footer, let’s say. So to fit the new system in, we might be talking about that 100=footer becoming a 106-footer, all in the equipment space so that we can fit the new system and the new components and the new urea tanks, which might not want to go in the engine room, they might need a different space. So they keep cool a little more than what the engine room is. And so it really does have implications on the design and finding a home for these new things. The some other impacts of it in terms of the design and the building costs and things that there is a weight impact. Probably on the order on these boats and engines of this size, you’re talking a few 1000 pounds of weight impact. So on slower boats, that’s that’s not too big of a deal. But on high performance yachts that are going you know high speed that’s absolutely an impact on their performance and and fuel burn and things like that. So that’s something to consider the cost impact is absolutely not insignificant. So we’ve been told the cost impact could be a third to a half of the total engine cost for these boats. So that’s a lot of money I mean that’s on on larger 16 cylinder and to use, you know We’re talking for a package over a million dollars. And so even a third of that is, is a lot more money up front for this added system. And then one of the other things we already kind of mentioned is the urea capacity and finding how much you need, and being able to refill your urea tanks. As well, as you know where they go that the urea doesn’t like to get too hot. And so we don’t want we want to keep it as cool as we can. And these engine rooms get pretty warm. So you might need to actually find someplace else for the tanks themselves, or insulate them heavily. That’s one other, that’s one other thing to consider, these systems get super hot, so there’s a lot of insulation that’s required around the around the SCR components, they put off a lot of heat, a lot of added heat that goes right into the engine space. So a lot of insulation is required around the systems which take up that much more volume even. So those are some of the the direct impacts. And really, from a design standpoint, the biggest one is, is the space needed, you have to either get taller and or longer just to fit the system in.
Diane Byrne 21:13
Right, that the the issue of the space, it was making me wonder, in terms of saying the owner doesn’t want to go longer. I was thinking in a few years. In a few cases a few years ago, there were some larger yachts, I would say yes around that 500 gross time, volume, ballpark 150 feet or so where they had a raised area on the main ask deck called almost like a mini mezzanine, if you will, for a dining area or seating area is visit something along those lines, whether it be slightly elevated, are we talking something like two feet extra space,
Chris Swanhart 21:57
Where I think on the on the motoryachts, it’s not as much of an impact in terms of height on some of the sportfishing yachts, you know, they really try to keep the deck above the salon deck above the engines as low as possible. Now on boats the size, they’re not as low as they’re not as close to the engines as some of the somewhat smaller boats, but they’re probably not tall enough to fit the on on top of the engine option in there. So, you know, I don’t think it’s, you’re probably not talking that much of a height difference. But it will impact the look of the boat for sure. And if you want to go the other option, you know that that’s just one option from one manufacturer, everybody’s doing it a little differently. If you’re not going on top of the engine, then then you have to, there’s going to need to be more length in there, which is what we found several several feet of length added without losing accommodation space or, or fuel space or, you know, giving up something else, which which most owners won’t be willing to do. And so like a lot of rules, you know, there’s ways around it and one way around, it will be not designing a boat that big, you know, designing it to be just under the requirement. Hopefully people will look past that, and we’ll see some boats still, you know, near the i think i think the larger boats, they’re larger anyway, and they’ll continue to happen. But you might start seeing some new builds that fall right in under that 24 meter, load line length limit. And so they won’t have to deal with with this type of system at all. Right?
Diane Byrne 23:39
The next few months, I think will be you know, the proof of the pudding so to speak well, we’ll see what consumers view is and their reaction and their their tolerance really for what they’re going to have to do or, or what they can do and see how the industry can, you know can accommodate them for the owners who are willing to go ahead and make the the space changes, you know, once we can see the designs and once we can walk around the boats and see the solutions that will also perhaps change a few attitudes and and, you know, six months to a year from now we’ll see what happens is well, who knows, it might be some other solution that comes along. But it’s it’s great that you were able to really explain so much of this so clearly because it’s been so confusing for so many people, even people in the industry who I’ve talked with I’ve said Okay, can you explain this to me I understand the basics of what the goal is the emissions reduction, but how how is this going to work? How is it going to impact design and even just a few months ago, some people said to me, You know what, we just haven’t figured it out yet. So it definitely is something that is a work in progress from from what I can tell and I know you guys at DLBA have been working really hard with the sportfish builders and the other stakeholders. So I really appreciate the time that you took today to come and explain all this and educate everybody. It’s very much needed.
Chris Swanhart 25:04
Well, yeah, thank you, it was my pleasure, I think, you know, I think it’s a, it’s a good thing in the end with a cleaner, cleaner exhaust means cleaner water means cleaner environment, and all of those things are important. It’s easy to look at it as a negative, but I think in the in the long run, it’s a, it’s a good thing. You know, cars used to not have things like catalytic converters on them, which are exhaust control systems. And, and now we don’t even think twice about those, every car has one. And so this is I think, just the next step in in terms of trying to better our environment. And I try to look at it as a positive. So hopefully, more and more people will look at it that way. And we’ll work through it.
Diane Byrne 25:50
Right? Absolutely. And like you mentioned before, there are some other solutions like LNG, even though it’s not really in the recreational world. It’s definitely proven. It’s been used in the commercial world for a while. So as technology evolves, as our own learning evolves, you know, who knows, maybe within a few years that will start trickling down into yachting. And, you know, we might look back at one point and say, ‘Oh, yeah, remember the days when we only had diesel fuel and, you know, LNG or something at that point.’ So, you know, evolution for sure.
Chris Swanhart 26:29
Yeah, absolutely. I mean, there’s, there’s the potential for something like that there’s, you know, electric, there’s all kinds of things that will, over time, I think, start start being used more and more and become more commonplace. But the SCR system is a good, you know, short term and could be a long term solution. It allows us to move forward, almost right away, and and then we’ll see how things evolve into the next steps from there.
Diane Byrne 26:56
Right. Right at the starting point, for sure. Well, thanks again, Chris. Really appreciate it. Everyone, if you want to get in touch with Chris and the team at DLBA Naval Architects, you can visit their website, which is dlba-lnc.com. That wraps up this episode of Megayacht News Radio. Thanks so much for listening. If you like what you hear, please share the word on social media. Plus, subscribe to our feed automatically. You can do so on Apple Podcasts, Spotify, IHeartRadio, or Google Play Music. And of course, if you’d like to learn more about what’s going on in the world of large yacht cruising, new construction and design, you can check out our daily updated website, which is megayachtnews.com. Until next time, I’m Diane Byrne.