1. EEDI/EEOI/SEEMP Initiatives for driving down CO2 emissions reduction of from world shipping Insert Customer Name Insert Date

2. Presentation Outline Background
Introduction to Energy Efficiency Design Index
Introduction to Energy Efficiency Operational Index
Introduction to Market Based Measures
Overview of Implications to the Industry   

3. Background
Despite its unmatched efficiency as a mode of transport, shipping is a large emitter of greenhouse-gases (GHGs), mainly carbon dioxide.
Ships account for over 1 billion tons of CO2 annually, or around 3% of global emissions,
According to the International Maritime Organisation (IMO), CO2 emissions from ships will reach 18% of all man made GHG emissions by 2050 under “business as usual”.
The IMO GHG Study 2009 estimates that eco-efficiency technologies could reduce CO2 emissions from shipping by between 25% and 75%
Global pressure for IMO to increase energy efficiency and thus reduce CO2 emissions from shipping   

4. IMO Measure to reduce emissions  
If the shipping industry was to do nothing to tackle CO2 emissions then emissions would continue to grow in parallel with the growth in the maritime fleet.
Do nothing
Introduction of EEDI
Introduction of EEOI
Market based measures
Maritime Fleet
CO2 Emissions
1st Stage – Legislative approach
Energy Efficiency Design Index(EEDI) targets reduction of CO2 emissions from NB vessels through promoting technical measures for new ships. Only impacts on NB vessels after an agreed date.
Energy Efficiency Operations Index(EEOI) is a voluntary initiative which forms part of the Ship Efficiency Management Plan SEEMP and promotes CO2 efficiency operational methods for new/existing ships.
2nd Stage – Polluters pays approach
To have the greatest impact on CO2 reductions there has to be an incentive for all existing vessels. Market based measures for existing ships targets the continuous polluters

5. Introduction to Energy Efficiency Design Index

6. EEDI – Energy Efficiency Design Index
This MAPOL Amendment would require all new construction of ships of 400 gross tonnage and above with a building contract as early as from 1st Jan 2013 are designed to meet a minimum EEDI in an attempt to reduce CO2 emissions.
The purpose of IMO’s EEDI:
To set a minimum energy efficiency level for new ships;
To stimulate continued technical development of all the components influencing the fuel efficiency of a ship;
Waiver for developing countries
Five countries (China, Chile, Brazil, Kuwait and Saudi Arabia) manage to secure a commitment to a waiver period on the provision of technical assistance to enable them to meet the EEDI requirements,
Which effectively means that new ships flagged in developing countries need only be EEDI compliant 6.5 years after the expected 1st Jan 2013 date (i.e. 2019).
*Tankers, bulk carriers, gas tankers, container ships, general cargo ships and refrigerated cargo carriers   

7. EEDI – Proposed phased approach
IMO proposed reduction factors relative to the EEDI reference line   
Source: MEPC61/WP.10 Annex 1 Page 3; Draft Regulations on Energy Efficiency for Ships

8. Energy Efficiency Design Index Calculation  
Co2 emission from additional shaft motors minus reduced power requirements from waste heat recovery system
Capacity:
deadweight
For cargo carriers, tankers, gas
tankers, container ships, ro-ro
cargo and passenger ships and
general cargo ships,
gross tonnage
•For passenger ships,
Vref ship speed measured in
nautical miles per hour (knot)
installed power (MCR) for
each main engine (j)
Co2 emission from auxiliary
engine power
CO2 emission credit from
innovative energy efficient technology
Minimizing the ratio of installed power
x Specific Fuel Consumption
x Carbon content of fuel
EEDI =
(CO2 output per cargo tonne-mile)
Capacity x Speed
fW is a non-dimensional
coefficient indicating the
decrease of speed in
representative sea conditions
Source: MEPC61/WP.10 Annex 1 Page 3; Draft Regulations on Energy Efficiency for Ships

9. EEDI - Baseline calculation (VLCC worked example)
VLCC = 301,653 dwt
Attained EEDI
x 301,
= 2.32g/tonne-nm
Baseline EEDI calculated using10 year historical data from Lloyds Register Fairplay Database
Baseline Value = a x Capacity-c (Where a and c are constants derived from the regression line)
Therefore for a VLCC with a deadweight of = 301,653 dwt
Attained EEDI = x 301,
VLCC EEDI = 2.32g/tonne-nm
Source: MEPC61/WP.10 Annex 1 Page 3; Draft Regulations on Energy Efficiency for Ships

10. EEDI – VLCC Worked Example
The baseline denotes the maximum allowable EEDI for newly constructed vessels during the applicable phase. A new ship shall be X% more efficient than the average existing ships of the same type and size in order to be issued with an International Energy Efficiency Certificate.
Attained index < Required index, where the “Required Index” is;
Required design CO2 - index = (1 − X ) x Baseline value
100
VLCC = 301,653 dwt
Attained EEDI
x 301,
= 2.32g/tonne-nm
10% reduction
Required EEDI
2.32* 0.1 – Attained EEDI
= 2.088g/tonne-nm
An illustration of the IMO approach for attained EEDI values

11. EEDI Survey and Certification Process
Two stages: Preliminary verification at the design stage, and the final verification at the sea trial
Preliminary verification
Final verification
Source: MEPC61/WP.10 Annex 1 Page 3; Draft Regulations on Energy Efficiency for Ships

12. EEDI – Energy Efficiency Design Index
Certificate Duration
The EEDI verified based upon the technical file and certificate released by class.
Technical File will include;
The EEDI certificate will be valid through out the lifetime of the ship unless the ship has been withdrawn from service of if a new certificate is issued following major conversion.
Current regulations do not apply;
To ships solely engaged in voyages within waters subject to sovereignty
To ships which have diesel - electric/Turbine/Hybrid propulsion system until a
method of calculation is established.
Ship’s capacity
Deadweight or gross tonnage
Shaft power
Main and auxiliary engines
Ship speed
At maximum design loaded conditions at 75% main engine MCR
Specific fuel consumption
At 75% of main engine MCR, 50% of auxiliary engine MCR
Power curves
Under fully loaded and sea trial conditions
Principal particulars
Propulsion system and electricity supply
Innovation
Description of energy saving equipment
Index figure
Calculated value of EEDI

13. Introduction to Energy Efficiency Operational Index

14. EEOI – Energy Efficiency Operational Index

15. SEEMP – Ship Energy Efficiency Management Plan
SEEMP sets out best practices for the fuel efficient operation of new and existing ships, which works with the EEOI to enable operators to measure the fuel efficiency in grams CO2 per tonne mile of a ship.
Forms part of the proposed IMO EEDI regulation for new vessels
Each new vessel will be required to keep a SEEMP plan
•Possible implementation of new standards will require such
document to be onboard each ship:
–European standard EN16001: “Energy Management
Systems”
–International standard ISO50001: “Energy Management
SEEMP, although voluntary, is being used by ship owners to help reduce their energy consumption.
Source: MEPC1/Circ 683 Annex 1 Page 11; Ship Efficiency Management Plan

16. SEEMP – Ship Energy Efficiency Management Plan
The SEEMP is specific to each ship and is a living document designed to be routinely reviewed and updated
Documentation of ship specific best practices for fuel efficiency
What is included in the SEEMP:
• Voyage planning (weather routing, just in time, speed
optimization,)
• Optimized ship handling (trim, ballasting, use of rudder etc...)
• Hull maintenance/husbandry
• Use of engines and waste heat recovery
• Energy reduction management and reporting
Source: MEPC1/Circ 683 Annex 1 Page 11; Ship Efficiency Management Plan

17. EEOI – Energy Efficiency Operational Index
EEOI – Voluntary Operational Measurement Tool:
• Devised to encourage ongoing evaluation of operational performance by owners, operators or charterers
Ultimate goal to improve fuel efficiency over time and reduce CO2 emissions
Provides a measure of energy-efficiency of each voyage for individual ships
Creates a CO2 emissions indicator for individual ships
EEOI =
Fuel x CO2 Conversion Factor
Cargo quantity x Distance
(tonnes CO2)
(nautical miles)
(Tonnes, TEU, Persons, …)
Tonnes CO2/(tonne . nautical miles)

18. = 17.9584 tonnes CO2/tonne nautical miles
EEOI – Worked example
Voyage No.
∑HFO Cons
∑LFO Cons
∑MDO Cons
∑Loaded Dist
∑ Ballast Dist.
Total B/L
Factor
CO2 Index
Tonnes
N. Miles
N.Miles
Tonne - Miles 1
250 50
560
96,000
53,760,000 2
500 60 80
1,400
1,605
134,400,000 3
400 65
770
1,500
73,920,000
Sel. Period
1,150
160
195
2,730
3,665
288,000
262,080,000
Fuel consumption
Fuel Type
LFO x CO2 conversion factor
Fuel consumption
Fuel Type
HFO x CO2 conversion factor
EEOI = (3.114*1,150)+(160+(3.186*195)
262,080,000)*
= tonnes CO2/tonne nautical miles
Cargo quantity
X distance travel (multiple journeys)
Source; Amendment to Intertanko adaptation of MEPC Circ 471 Equation (rev rd March 2009)

19. Introduction to Market Based Measures

20. Market Based Measures (MBM)
Once adopted the EEDI would become the worlds first mandatory climate instrument for shipping
As EEDI only applies to newbuildings, Increased focus on implementing market based measures is essential to help reduce GHG emissions from the existing fleet.
An expert group has been set up to look at possible market based measures (report to be submitted at MEPC 62 July 2011)
Do nothing
Introduction of EEDI
Introduction of EEOI
Market based measures
Maritime Fleet
CO2 Emissions

21. Potential Market Based Measures (MBM)
Some of the potential MBM being considered;
A cap-and-trade system for maritime transport emissions
Under this scheme, ship-owners are required to report emissions and surrender allowances for emissions emitted on voyages:   
In a cap-and-trade system the emissions are capped and the price of allowances provides an incentive to reduce emissions.
A baseline-and-credit system based on an efficiency index
Under this scheme, efficient ships generate credits while inefficient ships surrender credits.
The owner of an efficient ship can sell credits to the owner of an inefficient ship.
Credits are generated or surrendered in proportion to the difference of a ship’s EEDI with the baseline value for that ship. The traded unit is based on the EEDI.

22. EEDI/EEOI and MBM Potential Timeline
 July 2011   
IMO MEPC meeting, London:
- GHG market mechanisms debate - EEDI mandatory application vote
- Possible move to apply global GHG emissions cap to shipping and aviation
 Early 2012 
EU plan to regulate GHG emissions in international shipping expected
 Jan 2013
Probable start date for EU market-based GHG regulation
Jan
Proposed start date for EEDI regulation Phase 0
   
Possible start for global bunker levy or emissions trading scheme on GHG emissions.
Jan
Proposed start date for EEDI regulation phase 1
Source: Adapted from Carbon Positive

23. General Implications of the Proposed Measures

24. What are the general implications for;
Ship-owners and Managers - Energy efficiency expected to become an integral part of each of the ship’s owner business
Pro
Cons
The EEDI will facilitate ship-owners to purchase the most fuel efficient ships for their fleets and charterers and cargo owners in choosing the most energy-efficient ships for their operation
Benefits : –
Reduce fuel consumption,
Save money,
Decrease the environmental impacts
from shipping.
Without introduction of market based measures it leaves newbuildings at a potential competitive disadvantage
Results in slower vessels with less flexibility to changing market needs
Requirements of new skill sets/training for employees as the energy efficiency must be monitored and understood to manage environmental impacts of transportation activities during the lifetime of the vessel.
Raises concerns about under powered vessels and insufficient sea margins
Costs incurred for market based measures

25. What are the general implications for;
Shipbuilders - Build and convert ships to the highest standards of energy efficiency in anticipation of high and volatile fuel prices and demands for low-carbon performance
Pro
Cons
The EEDI is a non-prescriptive, performance-based mechanism that leaves the choice of technologies to use in a specific ship design to the industry.
Ship designers and builders would be free to use the most cost-efficient solutions for the ship to comply with the regulations. 
In a heavily cost competitive market the EEDI allows for differentiation for some shipbuilders' by switching to low-carbon, energy-saving and other green technologies
Potentially a greater demand for more environmentally friendlier larger vessels
Increase in paperwork, time and costs for certification
Increase in R&D spends
Additional design challenges for cost, safety, reliability, manoeuvrability and heavy weather performance

26. What are the general implications for;
Paint Companies- CO2 emission reduction from innovative energy efficient technology
Pro
Cons
Opportunity to promote/develop/deliver energy efficient products and services
Industry has recognised “smooth” Hull coatings has a positive impact on energy efficiency indexes
Joint venture opportunities with design houses/shipyards etc..
Customer focus on alternative innovative green technologies
Training opportunities on;
Coatings technologies
Monitoring of coatings performance
Increase in R&D spends
Need reliable information on environmental performance of vessels
Need a standard, credible, and efficient approach for sharing environmental data

27. Means of Reducing CO2 Emissions  
IMO 2009 GHG emissions report estimated that CO2 emissions could be reduced as much as 25%-75% using known technology and operational practices, including but not limited to;
Speed Reduction
Reduced time in Port
Smoother Hull
Environmental Energy
Larger vessels
Waste Heat Recovery

28. What can International Paint do:
We have an array of products
available which can have a positive
impact on improving energy efficiency
Independent testimony of energy savings
Work in close collaboration with ship owners to analyse and interpret coatings in-service ship performance data
Coatings technical experts who can assist with planning for regulatory change
Coatings training packages to suit your needs

29. Closing notes
Shipping is likely to face increased analysis of its social and environmental performance,
Volatile and rising oil prices will push up fuel costs significantly while climate change is increasing pressure on shipping to reduce greenhouse gas emissions.
The onus is on ship owners, charterers and others in the industry to stay on top of regulatory, technological and operational developments
Find out how our customers have improved their operational productivity, reduced their fuel costs and enhanced their environmental profile contact your local International Paint representative