Euronav stated it has 3 areas of concern when considering scrubber installation on its fleet. These concern the capital investment, the risk of pollution and the implementation and enforcement regime.
Risk of pollution
According to Euronav, open-loop scrubbers (OLS) use seawater brought on board to remove sulphur from exhaust gases, but the wastewater produced has a toxic cocktail of sulphuric acid constituents, polycyclic aromatic hydrocarbons and heavy metals which then enter into the open ocean, transferring pollution from air to sea.
The risks that Euronav is considering are the following:
Pollution risks
- Putting sulphur back into the sea reduces its natural buffering capacity;
- Unknown cumulative impact of increasing sulphur content in world’s oceans;
- Likely increase in ocean acidity over time;
- OLS use increases CO2 emissions, cheaper fuel will incentivize owners to speed up the use of OLS.
Operational risks
- Additional capex and opex costs of operation;
- Unproven application of this technology in a large volume tanker environment;
- Known risk of corrosion;
- Attention needed to mitigate safety/operational risks which are still quite uncertain.
Lack of scrutiny over technology
- Scrubber waste water disposal never been systematically investigated;
- No valid or long term data available;
- Cumulative impact on sensitive or congested sea lanes unknown.
Future regulatory risks
- Court of public opinion yet to be fully tested on OLS;
- Risk of action by Port or Flag states;
- Increasing application of rising CSR standards by investors & fuel producers.
The company continues by saying that promoters of this technology argue that the open oceans dilute waste water, making it harmless. However, like plastic contamination over the years, there is the problem of the cumulative effect of this waste water and how it will interact with existing seaborne pollutants.
Implementation and enforcement regime
Scrubbers enable regulatory compliance with the 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. Scrubbers are therefore a loop hole which makes enforcement of the sulphur ban extremely complex, difficult to enforce and likely to facilitate non-compliance.
Euronav stated.
Capital investment
As for the capital required to install scrubbers, this technology requires an upfront capital investment with virtually no visibility of a return on capital.
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In fact, promoters of scrubbers have used MGO as a proxy for the price of compliant fuel, with some refiners having confirmed that they will sell clean compliant fuel at a price about half the difference between dirty HFO and MGO.
Thus, the company notes that 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.’
