1. Air Emissions from Ships: The Changing Landscape Bryan Wood-Thomas EEB Clean Air Seminar World Shipping Council 20 November 2008

2. Overview World trade Annex VI – how did it happen? Climate – where doe s the debate go?

3. 3 1948-2004 Growth in World Trade 1948-2004 Source: WT0, 2006 Years

4. 4 Rapid Growth of Global Shipping Source: UNEP - http://maps.grida.no/go/graphic/the-boom-in-shipping-trade

5. Growth in Container Trade

6. Our Understanding Changes The significance of air emissions to air quality problems becomes a priority in the U.S. and Europe. Strength of the data / knowledge of the technology and the markets Key Industry players play a constructive role

7. Inventory Overview of NOx U.S. Mobile Source NOx Inventory

8. Inventory Overview of PM U.S. Mobile Source PM 2.5 Inventory

9. Inventory Overview of SOx U.S. Mobile Source SOx Inventory

10. The New Annex VI Standards - How did the treaty come into force? -Years of planning / coordination between the US and key European States - Engine manufacturers - Intertanko changes the sulphur debate - Political will in key countries to go beyond the original annex - Strong science - Key industry groups see stringent standards in their best interest How did the IMO break with its past?

11. Anatomy of the Deal NOx Comes First. - packaging Tier II & III -Existing engines MAN & punitive measures The sulphur & PM debate –NGOs help –The Oil Majors game plan –Reaching out …

12. Where Can We Expect New Emission Control Areas? North America: West, Gulf, and East Coasts as well as the St. Lawrence / Great Lakes. –How soon? - 2012 – California requirements: 2009 / 2012 Other Candidates: -Mediterranean -Tokyo Bay -Hong Kong -Eastern Atlantic?

13. Effects of the New Annex VI Standards They will be significant, but uniform across competitors. New engine technologies will drive a departure from the usual trade-off between NOx and CO2. Requirements to burn cleaner distillate fuel will more than double when compared to residual fuel bills, but cost per good and CO2 per TEU or ton mile will remain very low

14. The Global Fuels Market Demand for lighter fuels is increasing … Cost, refinery upgrades, & profit Asia, Latin America, & where does the new capacity go? Scrubbers – are they an option?

15. The GHG Debate Ships account for about 2-3.5% of GHG Most energy efficient mode of transport Development of a legally binding IMO treaty is under debate What system is to be employed? –Fuel tax –Mandatory efficiency stnds –Trading scheme –Cargo-based scheme with assignment to national inventories UNFCCC

16. Shipping’s Influence on Climate Warming Effects –CO2 –O3 from NOx –Black Carbon (soot) Cooling Effects –Cloud formation –Atmospheric residence time and long-term effects

17. CO2 Generation in the Global Supply Chain -Marine transportation accounts for some 2-4% of total anthropogenic CO2 emissions worldwide. - Generation in the transoceanic leg is tremendously low when compared to rail and truck - What does this suggest about future trends in a changing economy?

18. Freight Costs What are trans-oceanic transportation costs? - Rates are typically value based (i.e. higher value cargoes generate higher rates) -Some examples: -electronics ( $700 DVD player)$1.50 -shoes ($80 sneakers).07 -beer($28 case).24 -coffee (1 kg $15).15 -crude oil (litre).005

19. Questions Bryan Wood-Thomas, Vice-President World Shipping Council bwoodthomas@worldshipping.org