Belgian tanker operator Euronav has added its voice to the anti-scrubber stance recently taken by Intertanko and the Union of Greek Shipowners.
In its Q3 financial report, which showed a $58Mn pre tax loss for the three months bringing the total loss for the year to date to $110Mn, Euronav took the opportunity to strongly criticise scrubbers as a means to meet the 2020 cap.
Listing three areas of concern – cost, pollution risk and lack of enforcement – Euronav says that it continues to investigate, the report further expanded on each of them.
On cost, the company says scrubbers require an upfront capital investment of $5m per VLCC with very low visibility on returns. Then adds ‘Promoters of scrubbers have used 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. So the investment case now has half the returns being promoted and it is still 14 months before implementation and nothing suggests this price gap will not further narrow in that time.
It is on the remaining two points that Euronav has the strongest reservations. It says that waste water from open-loop scrubbers contains a toxic cocktail of sulphuric acid constituents, polycyclic aromatic hydrocarbons and heavy metals which are pumped into the open ocean, essentially transferring pollution from air to sea. However, it concedes that cheaper fuel will incentivize owners to speed up the use of open loop scrubbers.
Euronav also says that the risk of action by states roused by negative public attitude towards scrubbers is a strong possibility. On enforcement, it says breaches of current emissions standards are on the rise in their existing environmental control zones (ECA). So far flag states appear ill-equipped to ensure regulatory compliance. Installing a scrubber enables regulatory compliance with the continued use of non-compliant high sulphur fuel. But weak regulatory oversight means non-compliance in the open sea, whether through breakdown or malfeasance, cannot be effectively controlled.
In conclusion the report says, “Euronav wholeheartedly embraces the IMO 2020 regulations – we want to adopt the directive properly, universally and without delay. Refiners and oil producers have increasingly made clear that sufficient compliant fuel will be available. Scrubbers are therefore a loop hole which makes enforcement of the sulphur ban extremely complex, difficult to enforce and likely to facilitate non-compliance”.