Euronav Warns that Scrubbers Could Mask Non-Compliance
On Tuesday, tanker operator Euronav voiced new concerns about the use of SOx scrubbers to comply with the IMO's impending 0.5 percent fuel sulfur content cap, citing low return on investment, the potential impact of flushing stack emission contents into the ocean via wash water - and the potential for scrubber users to avoid compliance.
After March 1, 2020, only vessels equipped with SOx scrubbers will be permitted to carry non-compliant heavy fuel oil for use on board. Current estimates predict that about five percent of the world's fleet will be scrubber-equipped by 2020. In order to aid enforcement, all other ships will only be permitted to carry low sulfur fuel oil, MGO, LNG or another compliant fuel in their bunker tanks. Euronav warns that this provision could leave a loophole for scrubber-equipped operators on the high seas: they will have HFO on board, and they might choose to burn it without using the scrubber. "Weak regulatory oversight means non-compliance in the open sea, whether through breakdown or malfeasance, cannot be effectively controlled," Euronav said in a statement. "Refiners and oil producers have increasingly made clear that sufficient compliant fuel will be available. Scrubbers are therefore a loophole which makes enforcement of the sulphur ban extremely complex, difficult to enforce and likely to facilitate non-compliance."
The potential for non-compliance extends beyond scrubber-equipped vessels, and independent estimates indicate it may be a larger issue for vessels without this equipment. OPEC predicts that about 25 percent of the world's fleet will continue burning non-compliant fuel in 2020, without installing scrubbers. Goldman Sachs estimates that the initial non-compliance rate will be slightly lower at about 20 percent.
Euronav also noted that open loop scrubbers will discharge some exhaust gas constituents into the water. "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,” Euronav asserted. Scrubber manufacturers argue that treated washwater is safe to discharge into the sea.
Euronav also believes that the business case for scrubbers may not be as strong as some believe. OPEC predicts broad uptake of scrubber technology, driven by a wide price spread between low sulfur fuel oil (LSFO) and HFO - but Euronav expects that the future price of compliant fuel will be much less than predicted. “Promoters of scrubbers have used marine gas oil (MGO) as a proxy for the price of compliant fuel. Some refiners including Sinochem have recently confirmed that they will sell clean compliant fuel at a price likely to be half the difference between dirty HFO and MGO," the tanker operator said. "So the investment case now has half the returns being promoted."