1. Leading the way; Making a difference Green Shipping - Key driving forces OECD WP6 Paris 25 November 2014 Erik.Ranheim@INTERTANKO.com Senior Manager Research and Projects

2. Leading the way; Making a difference CHAMPION speaking on behalf of and representing independent tanker owners. FORUM for sharing information and ideas ADVISOR on regulations and other tanker issues CONSCIENCE for Members striving for continuous improvement INTERTANKO The International Association of Independent Tanker Owners Oslo London Brussels Singapore Washington Founded in Oslo 1970 220 Members with 300 tankers 240 Associate Members involved in tanker related issues Represented in 40 countries

3. Leading the way; making a difference 80% of world trade are carried by Energy Finished goods Foodstuffs Commodities Safe, secure and environmentally friendly transport system Shipping a precondition for economic growth and global welfare World trade by commodity t-m

4. Leading the way; making a difference Economics Profit & loss Cost saving Terms and conditions Trade growth World society/humanity Free market and trade Economy and welfare Rules and regulations Law and politics Sustainable shipping Safety and environment Oil pollution GHG emission Other emission to air Ballast water Balancing Profitability & efficiency versus safety and pollution prevention Administering Natural resources Stewardship Free competition/ Fair trade

5. Leading the way; Making a difference Environmental challenges from shipping Life cycle Building to Decommissioning/ recycling ODS = Ozone Depleting Substances (cooling medium) NOx, SOx, PM Annex VI Sewage Garbage Accidental oil pollution Ballast water Toxic Antifouling CO2/GHG emission VOC = Volatile Organic Compounds

6. Leading the way; making a difference Key Driving Forces for GREEN shipping Industry Minimum standards Technical innovation Charterers $ Ticket to trade Differentiation? Insurers Better conditions Lower fees For the greater good Level GREEN playing field more important than actual cost level Public reactions political initiatives Authorities Regulations Punishment Criminalisation Fees

7. Leading the way; making a difference MARPOL - The International Convention for the Prevention of Pollution from Ships Regulate almost 98% of world tonnage adopted 1973 Financed by shipping nations Largest PA 19%, LI 8% and BS 5% IMO – global regulations needed 1914 ––First SOLAS Convention adopted(Titanic 1912) Liability and compensation CLC and IOPC Fund 166 Member States and IGOs and NGOs More than 40 conventions +hundreds of code and guidelines Implementation by Flag States Sets the GREEN driving forces in a workable framework and contributes to a level playing field

8. Leading the way; Making a difference Started with oil spill from tankers

9. Leading the way; making a difference Tanker accidents Key driving forces 1967 Torrey Canyon – MARPOL / liability 1973 ARGO MERCHANT- SBT/protective located/COW 1978 AMOCO CADIZ – speeding up MARPOL 78 1989 EXXON VALDEZ – OPA 90/DH/response organisations 1999 ERIKA – accelerating phase out SH/ age discrimination 2002 PRESTIGE reduced trust in Class bn tonne m 100 ts pol Tankers spills and trade

10. Leading the way; making a difference Estimated Oil Spillage from Oil Tankers in US Waters Strong reduction in spills before regulations enforced

11. Leading the way; Making a difference Charterers/oil companies – ships owners Source: FT500 $m Market value world largest companies and world largest shipping companies

12. Leading the way; Making a difference Complex challenges

13. Leading the way; making a difference Oil price and freight rates 1970-2014 $ per barrel Key Driving Forces for GREEN shipping

14. Leading the way; making a difference Key Driving Forces for GREEN shipping

15. Leading the way; making a difference GHG reduction

16. Leading the way; making a difference GHG reduction

17. Leading the way; Making a difference CO2 from International Shipping Source: IMO 3rd GHG study 2014

18. Leading the way; making a difference Each convention – different challenges Ballast Water Management When will sufficient no. of countries ratify convention? Inadequate type approval process US - robust type approval process but no systems approved Sulphur Scrubber with waste and fuel sludge challenges, or expensive lighter fuel? Will 2020 or 2025 be enforcement date? GHG Selecting the best of the multitude of solutions to save fuel Measuring/comparing fuel efficiency in different environments Optimum speed Shipping is the only global industry with firm commitment for CO2 reduction

19. Leading the way; making a difference Political & Social Will Regulation Differentiation - Industry Best Practice Implementation - Quality Management 1.Charterers 2.Insurance 3.Cost savings Entry to industry / Minimum standard Market ComplianceFinancial INTERTANKO’s interaction on all levels and phases

20. Leading the way; Making a difference End thoughts

21. Leading the way; making a difference Key Driving Forces for GREEN shipping Global solutions necessary but often time- consuming and complex Only sustainable solutions are long term Industry green performance is continuously improving Forces at many levels Strong and comprehensive interaction and co-operation between industry stakeholders Market forces and technological solutions essential Small steps in an international context are large steps

22. Leading the way; Making a difference Cypriot oil tanker "Haven" burning in the Gulf of Genoa The sea get sick, but it never dies Healing is a matter of time, But also of opportunity Greek proverbs Thank you

23. Leading the way; Making a difference Sustainability The Brundtland Commission's report defined sustainable development in 1987 as "development which meets the needs of current generations without compromising the ability of future generations to meet their own needs". The concept supports strong economic and social development, in particular for people with a low standard of living. At the same time it underlines the importance of protecting the natural resource base and the environment. Economic and social well-being cannot be improved with measures that destroy the environment. Sustainability creates and maintains the conditions under which humans and nature can exist in productive harmony, that permit fulfilling the social, economic and other requirements of present and future generations.

24. Leading the way; Making a difference Regulatory uncertainty Operational uncertainty Compliance SAMPLING and TESTING The Ballast Water Challenge Complex technological and implementation challenges

25. Leading the way; Making a difference Phase 0 1 Jan 2013end 2014 base line Phase 1 1 Jan 2011end 2019 10% reduction Phase 2 1 Jan 2020end 2024 20% reduction Phase 3 1 Jan 2025onwards30% reduction New ships will be more energy efficient Shipping is the only global industry with firm commitment for CO2 reduction The EEDI* will, as new ships are built, gradually reduce the emissions from the world fleet SEEMP** will, as new ships are built, gradually reduce the emissions from the world fleet *EEDI Energy Efficiency Design Index (EEDI) for new ships **SEEMP Ship Energy Efficiency Management for existing ships

26. Leading the way; Making a difference Fuel Oil Requirements US Annex VI, Reg. 14 - Fuel Oil Sulfur Content Limits North American ECA Sulfur Content Cap Effective DateSulfur Limit %m/m (ppm) On and after JULY 20101.0% (10,000) On and after JAN 20150.1% (1,000) Global Sulfur Content Cap Effective DateSulfur Limit %m/m (ppm) On and after JAN 20123.5% (35,000) On and after JAN 20200.5% (5,000) Annex VI, Reg. 14 and 18: SOx & Particulate Matter (PM) & Fuel Oil Availability and Quality Shipboard Requirements Fuel Oil : Sulfur Content Caps Fuel Quality Standards Operations: Bunker Notes & Samples Fuel Oil change-over procedures Fuel Oil change-over log-book entries

27. Leading the way; making a difference Ballast Water Management - State of Affairs US Requirements Implementation Schedule for Approved Ballast Water Management Methods Vessel’s ballast water capacity (in cubic meters) Date constructedVessel’s compliance date New vesselsAll On or after Dec. 1, 2013 On Delivery Existing vessel Less than 1,500 Before Dec. 1, 2013 First scheduled drydocking* after Jan. 1, 2016 1,500-5,000Before Dec. 1, 2013 First scheduled drydocking* after Jan. 1, 2014 Greater than 5,000 Before Dec. 1, 2013 First scheduled drydocking* after Jan. 1, 2016 * Drydocking means hauling out of a vessel or placing a vessel in a drydock or slipway for an examination of all accessible parts of the vessel's underwater body and all through-hull fittings.