Every person’s life is a story. Movies originally were about a story. Being involved with shipping can be the subject of many stories to tell.
Here is one: Scrubbers.
It all started with Marpol Annex VI adopted in 1997. What followed reminded me of a South African film I saw in 1980, which inspired the title of this letter.
We should all care about protecting the environment, and the shipping community at large does. We have adapted to requirements like double hulls for tankers, inert gas system installations, oily water separators and ballast water treatment, without sparing money to do so.
However, the SOx emissions reduction is a whole different story.
So-called regulators should have imposed the 0.5% sulphur content limit on oil companies and refineries that produce fuel. They did not.
Regulators should also have pressured engine manufacturers into producing engines that can safely use gasoil or fuel oil below 0.5% sulphur content.
Instead, regulators opted for the alternative solution of an exemption through the use of scrubbers, which their manufacturers lobbied for.
The Union of Greek Shipowners (UGS) advocated that the SOx reduction be done at source. However, this would have required oil refiners to make large investments.
The UGS adopted its position in 2007 — a bit too late. It’s unfortunate that current UGS president Theodore Veniamis was not at its helm back then.
UGS leadership now lobbies intensively to use 0.5% sulphur fuel oil only. This position is rationally correct but will only throw oil on the fire that is dividing the shipping community between those in favour and those against the use of scrubbers.
What went wrong?
Adopting new regulations requires good planning. Take the Oil Pollution Act of 1990, following the grounding and resulting pollution of the Exxon Valdez in 1989, and the 25-year deadline initially adopted for the transition from single-hull to double-hull tankers. The IMO should have followed a similar timeline scenario in the transition to the use of low-sulphur fuel oil in marine engines.
This is where the gods went crazy.
Optional use
Instead, we got the optional use of scrubbers, which may create an economic advantage for those who will use them and ignited feuds between those in favour and those against them. A lot of time and money is spent lobbying for and against scrubbers, and confusion reigns in different countries and organisations as they try to regulate their use.
To personally follow all of these developments up close was a saddening experience, so I decided to lighten up by re-watching a movie that made me laugh my socks off when I first saw it in 1978: “La Cage Aux Folles”.
Back to reality: The Economou shipping group decided about nine months ago to place scrubbers on all but two of our vessels. We tried to take the right decision with information at hand at the time. This will cost our group more than $350m, allowing for the cost of down time at operating expense and not at foregone charter income.
Moreover, we have refrained from ordering newbuildings other than LNG carriers — a position initiated by my son, Christos.
A lot was said and written about the damage to marine life resulting from the treated water that enters the seas. Studies were mostly influenced by bodies representing the majority of shipowners who could not have fitted scrubbers — even if they wanted and could afford to — because of capacity constraints.
So-called regulators should have imposed the 0.5% sulphur content limit on oil companies and refineries that produce fuel. They did not
Most studies lack adequate data and time elapsed to yield conclusive results.
Japan’s Ministry of Land, Infrastructure, Transport and Tourism recently published a study after a three-year monitoring period good enough for the results to have merit.
I have aligned myself with the Japanese conclusions, having been close to the Japanese culture and modus operandi for more than 50 years.
The past is the past, water under the bridge as the saying goes.
What is important is what decisions the IMO committee will take in May, when it meets on the matter for the last time this year.
Care should be taken not to intensify the division in the shipping community. Care should also be taken not to penalise prudent, early adopters of the scrubber route by acting like the “Spanish Inquisition”, as my former partner Petros Pappas recently said.
I have also heard that powerful groups are seriously thinking of pursuing legal routes to protect their interests, should they suffer huge financial losses.
I hope reason will prevail.
