1. NAMEPA 2014 Annual Conference New York City Canada and North American Emission Control Area RDIMS # 10059439

2. Overview The case for the Emission Control Area Stakeholder concerns Domestic implementation Regulations for the Great Lakes Alternative compliance Results so far Next steps 2

3. Making the case for an Emission Control Area (ECA) 2006 agreement with US at head of state level Follow criteria of Appendix III, Annex IV to MARPOL Environment Canada carried out modeling of emissions and their deposition over Canada Health Canada carried out assessment of public health impacts based on above modeling 3 An ECA requires an amendment to Annex VI of the International Convention for the Prevention of Pollution from Ships (MARPOL)

4. Impacts of sulphur oxides 4 Influence of marine emissions on summertime ozone levels (top) and sulphur deposition levels (bottom) in Canada Marine emissions contribute to smog levels (O 3 and PM 2.5 ) in all Canadian provinces where there is commercial marine activities (BC, Ontario, Quebec, Maritimes) Large portions of the Canadian population and ecosystems are affected by air pollution associated with marine transportation.

5. The North American Emission Control Area 5

6. Stakeholder views 6 International sector Accept the ECA, concern for fuel availability  TC worked with US on policies for fuel availability Domestic sector Operate in the Great Lakes System; concern for fuel costs  TC negotiated alternative regime to address concerns Ports and Port Communities Generally support ECA, concern for competition between ports for trade corridors and cruise destinations  Compliance alternatives for cruise sector available to others Cruise sector Continuously operate in ECA; concern for fuel costs  TC worked with US on alternative compliance regime

7. Domestic implementation Amendments to the Vessel pollution and dangerous chemicals regulations published May 8, 2013 Consultations with stakeholders were key and identify concerns related to fuel costs and availability Fleet averaging addressed domestic marine operators in Great Lakes and Seaway system Alternative compliance addressed ocean going vessels and cruise sector 7

8. Regulations for the Great Lakes System 8 Canadian fleet undergoing renewal The Regulations include significant flexibility based on discussions held with industry associations and individual firms operating domestic vessels in Canada Compliance is assessed based on the average sulphur content in fuel used by a firm’s fleet rather than on an individual vessel basis. Vessels built after December 31, 2008 get a 10% efficiency credit and vessels built after August 1, 2012, get a 20% credit. Additional flexibility is provided to shipowners through the Marine Technical Review Board process. Fleet targets for fuel sulphur content for domestic “laker” vessels compared to ECA Flexible timeframe

9. Alternative compliance options MARPOL Annex VI provides options to flag States under Regulations 3 and 4 for research into new technology and equivalent performance Canada, the US and France are of the view flag States need to consult with ECA states prior to approving a measure under Regulation 3 or 4 Flag States prefer to work with ECA states to ensure smooth implementation of such measures 9

10. Results so far: Domestic Five firms participating in Great Lakes regulations option Canadian Great Lakes bulk carrier fleet to receive 15 new builds before January 1, 2016 Other new builds planned for ferry fleet, over 25 new builds into 2020 Scrubbers and LNG in the mix of options for compliance LNG now has lower price than HFO bunkers on the west coast 10

11. Results so far: International Canada received to date some 30 fuel oil non-availability reports (FONAR) on Atlantic coast and 15 on the Pacific coast. Expected for the 1.0% standard, not foreseen for 0.1% Alternative compliance Scrubbers : cruise sector 57 vessels –plus 38 vessels not under Regulation 3 exemptions LNG: two vessels under permit, several planned Shore power: three ports Vancouver, Prince Rupert, Halifax Cruise sector has led the way Other sectors trading North American coasts now working on alternative options 11

12. Timeline for IMO Air Emissions Standards 12 2011 Global sulphur standard 4.5% European Emission Control Areas at 1% New engines need to meet Tier II standards for NOx 2012 January, global sulphur standard reduced to 3.5% August, North American ECA comes into force (1%) NOx technology study begins 2013 EEDI required for new ships No EEDI reduction target SEEMP required for all ships NOx technology study due 2015 All ECAs set to 0.1% sulphur EEDI target set to 10% 2016 All new ships operating in an North American ECA must meet Tier III NOx (If confirmed by study) 2018 Study of supply of low sulphur fuels to be completed 2020 Based on fuel study, global standard for sulphur reduced to 0.5% EEDI target set to 20% 2025 Based on fuel study, global standard for sulphur reduced to 0.5% EEDI target set to 30%

13. Next steps Sulphur oxides 0.1 percent sulphur comes into effect January 1, 2015 Fuel expected to be available -distillates Compliance promotion, enforcement, detection, penalties Trident alliance, informal discussions among ECA states Deterrence measures need to be equal or greater than savings of using non-compliant fuel Managing scrubbers and LNG emerging, Shore power program continuing Alternative fuels still to be developed January 1, 2020 global sulphur content standard of 0.5%? Study under preparation, due Jan 1, 2018 13

14. Next steps Nitrogen oxides Tier III NOx standards for North American and US Caribbean Sea ECAs enter into effect January 1, 2016 New builds, re-powering, major conversions affected IMO concluded SCR available LNG emerging Health monitoring Health Canada to examine public health data to verify benefits 14

15. Questions Paul Topping Manager, Environmental Protection Transport Canada Marine Safety and Security paul.topping@tc.gc.ca THANK YOU! 15