Dear reader, please find attached a background article illustrating the difficult situation of oil recycling initiatives in the EU.
In Europe ca 2,000,000 tons of oily water mixtures are collected from seagoing ships. Almost 1,500,000 tons are collected by EUROSHORE members. As a result EUROSHORE represents approx. 75% of the market. The collected oil water mixtures are dewatered and further processed. This results in an annual production of about 500,000 tons of processed oil (sometimes called dry oil). This oil is still considered as a waste, can be delivered to specific refinery installations to produce a fuel with a product status. However, the European capacity of such installations is very limited and the product status is not existing at European level, but only in a few Member States. Consequently, the majority of the dry oil is delivered to licensed companies that have a permit to burn this oil as a secondary waste fuel. Well known clients are cement kilns, metallurgy etc.
These companies are allowed to co-incinerate up to 40% of the recycled oil within their emission standards. In case they would burn more recycled oil, they should follow the stricter emission standards for burning of “waste”.
The last solution is to send this dry oil as just a waste to incinerators. These installations are generally not designed to burn high calorific waste and, therefore, have limited capacities and no competitive conditions.
EUROSHORE members collect oily water mixtures with trucks or barges, in most cases in a 24/7 operation. After collection, oil water mixtures are stored in a settlement tank and treated (dewater the oil mixtures and remove some pollutants). The processed oil is stored again and transported to licensed facilities to be incinerated or to be burned as an additional fuel. This complete process is capital and labour intensive and, as a result, the cost of the recycled oil is rather high and almost close to the price of “new oil”.
In Europe, only a few installations have a permit to produce (marine) fuels out of these residues. Today, common practice is that it is not allowed in most EU countries. Consequently, we see that import and export of processed oil takes place between several EU countries. Even if all administrative procedures are followed, waste transport between countries due to the difference in legislation or standards is not desirable.
Due to the high storage and treatment cost, several EUROSHORE members today are facing severe problems as oil prices are extremely low. When all costs for the production of processed oil (collection, transport, storage, treatment) are taken into account we come close to a price of 100 €/ton.
At the time of high oil prices, >300 €/ton for HFO, certain licensed sectors were interested to buy this processed oil as an alternative fuel for co-incineration. However, today, the HFO price is around 100 €/ton! This leads to the result that PRF’s cannot sell their processed oil to the cement industry, incinerators, metallurgy etc. at a positive price; the sale sometimes is but possible at a zero price or even a negative one. The processed oil is substituted by good oil or alternative energy products, such as brown coal, as used in German metallurgy.
Due to the decreasing sales market, PRF’s are confronted with higher storage and/or transportation costs. Some customers, like the metallurgy that absorbed almost the complete processed oil of West European countries, have reduced their volumes (of > 200,000 tons of processed oil) with 90%. This means that PRF’s are obliged to go after new potential customers abroad. This time consuming process, together with the required permits, results in longer storage period, which means extra storage capacity is needed outside the company (being also an extra cost).
In some other European countries, PRF’s have binding multi annual contracts with ports for the collection of ship generated oily waste from seagoing vessels and are obliged to respect their contracts. But, today, instead of earning money as in the periods when the oil price was significant higher, these PRF’s are losing money on providing their services. However, according to the EU Directive 2000/59/EC, waste management plans should be reviewed at least every three years or when a significant change takes place. For these port authorities it seems the precarious situation of PRF’s is not relevant enough to justify a review of waste management plans.
The combination of all these factors results in a difficult position of the PRF’s and a broader spectrum of solutions is needed!
1. We think about measures that could generate a higher demand for processed oil.
- Some industries are limited in taking in processed oil, up till a maximum of 40%. If these volumes would be unlimited, this would result in a higher demand.
- In some countries the production of fuels with a product status is forbidden by law. If the production of fuels would be allowed, the PRF could get access to a broader outlet market and consequently obtain better financial conditions (depending upon the technology used).
- In some cases, the internal use of processed oil in the treatment process could also be a potential outlet for the recycled oil. Today, this practice is also forbidden in most countries.
2. Another solution could be an tariffs increase.
- In order to compensate the reduced sales price of processed oil, some PRF’s did already increase the tariffs for collecting and processing oily mixtures. As a result, we saw a significant drop in collected volumes, up to 30%! The use of low sulphur fuels in the ECA’s with reduced volumes of sludge as a consequence, can only justify a drop in the volumes of probably approx. 5%.
- If these volumes are not absorbed in other EU ports, this could mean more illegal dis-charges and more volumes collected and processed in ports outside the EU without the same guarantees and standard procedures as within Europe.
- In certain countries/ports the tariffs for the use of PRF’s are set for several years. In some ports they cannot be reviewed and as a result, the PRF’s will go bankrupt if nothing is changing.
Special circumstances call for special measures.
We believe that an urgent review of fees is required. To avoid that part of the waste will be illegally dumped, we ask the competent authorities for a stricter enforcement regime.
We also insist that port waste management plans should be reviewed more frequently, especially taken into account the very volatile oil market. In such a review, tariffs should be rather linked to the oil prices.
The shipping industry and relevant authorities expect that the waste sector will provide adequate solutions for new challenges, such as wash waters from scrubbers, or for the collection and treatment of ballast water which is not compliant.
However, these new types of waste demand new investments in equipment and treatment in order to provide professional services. Moreover, within three years, the collectors must also use expensive double-hull ships for the collection of sludge and bilge waters
In a climate where the PRF sector is facing serious difficulties, this could result in the situation in which certain services will no longer be provided. This would lead first, to a degradation of PRF’s high standard that our members have worked very hard for to establish and second, to the fact that adequate reception facilities may not be available to the same extent as before. Therefore, we need urgent solutions in the short term as well as a long term perspective for a continuous investment in waste solutions.
Guido Van Meel, secretary general
Mob. +32 475 52 24 64
Baudouin Ska, chairman
Mob. +32 473 23 65 00
Nuno Matos, vice chairman