1. Peter M. Swift MD INTERTANKO 26 November 2010 Paris
North and Baltic Sea Seminar 2010 Program “Air Emissions from Shipping: Regulations and Challenges”
Peter M. Swift
MD INTERTANKO
26 November 2010
Paris

2. 300 + associate members: INTERTANKO Today
250 + members operating ca. 3,100 ships
> 75% of the independent oil tanker fleet and > 85% of the chemical carrier fleet
300 + associate members:
in oil and chemical tanker related businesses
[With strict membership criteria]
15 Committees – 5 Regional Panels
Principal Offices – London and Oslo
Representative Offices in US, Asia and Brussels
Observer Status at IMO, IOPC, UNFCCC, OECD and UNCTAD
International Association of Independent Tanker Owners
“The Voice of the Tanker Industry”

3. INTERTANKO’s Strategic Objectives
To develop and promote best practices in all sectors of the tanker industry, with owners and operators setting the example.
To be a positive and proactive influence with key stakeholders, developing policies and positions, harmonising a united industry voice, and engaging with policy and decision makers.
To profile and promote the tanker industry, communicating its role, strategic importance and social value.
To provide key services to Members, with customised advice, assistance and access to information, and enabling contact and communication between Members and with other stakeholders.

4. TANKERS US
“Я”

5. Seafarer Concerns Today
Criminalisation & Fair Treatment
Piracy
Bureaucracy, including:
- excessive paperwork
- too many inspections
More consideration should be given to the ramifications for the seafarer of new regulations and legislation at IMO and elsewhere
– e.g. ballast water, multi-fuels, emission abatement technologies, etc.

6. Air Emissions from Shipping
Toxic emissions – SOx, NOx, PM – covered by IMO MARPOL Annex VI, EU and other regional regulations
VOCs (Tankers) – covered by MARPOL
Ozone Depleting Substances – covered by MARPOL
Greenhouse gases (principally CO2) – under debate at UNFCCC and IMO
SOx = Oxides of Sulphur, NOx = Oxides of Nitrogen, PM = Particulate Matter
VOCs = Volatile Organic Compounds,
UNFCCC= United Nations Framework Convention on Climate Change
IMO = International Maritime Organisation .

7. “ Toxic Emissions from Shipping - SOx and NOx ”
The Challenges Today

8. SOx and NOx Regulations
SOx emissions regulated via Bunkers
- with alternative methodologies accepted as Equivalent Measures
NOx emissions regulated through engine design / limits

9. Maximum Sulphur Limits - IMO MARPOL Annex VI
limits the sulphur content in marine fuels
different sulphur limits in open sea and in ECAs
requires quality criteria for the marine fuels
IMO Global S limit:
Currently %
1 July %
1 January 2020 / (2025) 0.5% / (if not available in 2020)
IMO ECA limit:
Initially %
1 July %
1 July %
ECA = Emission Control Area

10. IMO MARPOL Annex VI: Baltic and North Sea ECAs
MAY
2006
NOV. 2007

11. IMO MARPOL Annex VI: North American ECA
Entry into force 1 August 2012
Challenges:
Extent
Fuel availability
Ship bunker capacity
200 nm
200 nm
Caribs?

12. Regional Regulations on Bunkers
EU Sulphur Directive (presently being amended)
basically as per MARPOL Annex VI sulphur provisions
but with additional provision: use of 0.10% sulphur content fuel when ships ”at berth” (since 1 Janaury 2010)
& MGO/MDO on the EU market should have < 0.1% S content (since 1 January 2010)
California Air Resource Board (CARB)
use marine distillates within 24nm of the shore
sulphur content in marine distillates:
before 1 January 2012 – MDO < 0.50% ; MGO <1.50%
after 1 January MDO/MGO< 0.10%

13. Sulphur in Bunkers: Application Dates and Limits
HFO
MGO
LSFO
MDO/MGO
MDO
MGO

14. NOx Emission Regulations - IMO MARPOL Annex VI
IMO MARPOL Annex VI sets limits in 3 Tiers
Generally on ships built pre 2000 and engine not modified - No limits
Engines on ships built post 2000 mostly comply with Tier I limits
Engines on ships built after 1 January 2011 must comply with Tier II standards
Emission reductions related to Tier I limits:
15.5% reduction (engines with n<130 rpm) (i.e g/kWh)
reductions between 15.5% and 21.8% depending on the engine’s rpm (engines with 130 rpm < n < 2000 rpm)
21.8% reduction (engines n > 2000 rpm) (i.e g/kWh)

15. NOx Emissions-Tier III (new engines)
Tier III limits – 80% emission reductions from Tier I limits
Tier III limits apply to engines:
installed on ships constructed after 1 Jan 2016
power output of > 750 kW
(130 kW – 750 kW may be exempted by the Administration)
Tier III limits apply in ECAs only
Emission levels for Tier III are as follows:
3.40 g/kWh (engines with n<130 rpm)
9*n(-0.2) g/kWh (engines with 130 rpm < n < 2000 rpm)
1.96 g/kWh (engines n > 2000 rpm

16. Fuel Challenges for Ships
Availability of Low S bunkers globally
Quality issues (incl. measurement and verification)
Requirements for multi-fuels
Fuel switching – safety concerns (main engines and auxiliaries)
Onboard storage & segregation capacity

17. “ Volatile Organic Compounds Emissions ”
Challenges mostly met

18. VOC Control Measures
Reductions during loading and on passage
e.g. using INTERTANKO VOCON procedure
plus Absorption, Condensation and other measures

19. “ Greenhouse Gas Emissions ”
The Coming Challenges

20. Climate Change Challenges
For shipping:
Protection of the Marine Environment includes Atmospheric Environment
GHG emissions – principally CO2 emissions

21. Shipping is energy efficient
- environmentally responsible, reliable and cost efficient
Source: Danish Shipowners Association

22. Shipping is energy efficient, BUT…
CO2 emissions by country (2007)
CO2 emissions from shipping 2.7% of global total (2007)
and predicted to grow as trade expands

23. Reducing GHG Emissions from Shipping
Regulatory Processes & Timetables
UNFCCC Programme
IMO Programme
Industry Initiatives

24. The Regulatory Processes
UNFCCC 1992
IMO since 1997
Kyoto Protocol, adopted 1997 entered into force 2005
Copenhagen Accord 2009
UNFCCC = United Nations Framework Convention on Climate Change

25. Kyoto Protocol
Established under UN Framework Convention on Climate Change (UNFCCC) – adopted in 1997
Ratified by 181 countries – not the USA
Categorises Annex 1 (Developed) Countries and Non-Annex 1 (Developing) Countries
Annex 1 Countries are committed to make GHG reductions with set targets, but also flexible mechanisms
Runs through to 2012, - Conference of Parties endeavouring to develop a successor
Kyoto recognises “common but differentiated responsibilities”, i.e. developed countries produce more GHGs and should be more “responsible” for reductions
Kyoto looks to IMO to address Shipping and ICAO to address Aviation, and as such these emissions are currently excluded from Kyoto targets

26. Recent and future timetable Selected Key Dates
12/2009 UNFCCC COP15 Meeting, Copenhagen
3/2010 IMO MEPC 60
IMO MEPC MBM-Expert Group
IMO MEPC Intersessional (EEDI)
2010 UNFCC Intersessional meetings
9/2010 IMO MEPC 61
11/ UNFCCC COP16 Meeting, Cancun
7/2011 IMO MEPC 62
11/2011 UNFCCC COP17 Meeting, South Africa
12/ EU Deadline for IMO/International Agreement
2012 Kyoto Protocol expires

27. IMO – UNFCCC Conflicting principles - a major issue
IMO Principle:
“No More Favourable Treatment”
Versus
Kyoto Protocol principle:
“Common But Differentiated Responsibility”

28. UNFCCC - COP15 The outcome: BUT subsequently: NO targets
NO resolution of Kyoto/IMO Treaty conflict
NO direct reference to international shipping in the non-binding Copenhagen Accord
BUT subsequently:
International Aviation and Shipping should be regulated via UNFCCC and have targets as per other industries (EU Parliament)
Shipping should make its “contribution” to Climate Change measures with $$$$ (UN Advisory Group)
ICAO and IATA agree a package of reduction measures

29. IMO Programme
IMO (MEPC) developing:
Technical Measure (EEDI for new ships)
Operational Measure (SEEMP & EEOI for new and existing ships)
Market Based Measure (if needed)

30. Technical Measures
Energy Efficiency Design Index (EEDI)
Environmental cost = Emission of CO2
Benefit = Cargo capacity transported a certain distance
measures energy efficiency of new ships
encourages design and technical developments

31. Energy Efficiency Design Index (EEDI)
Technical Measures
Energy Efficiency Design Index (EEDI)
CO2 factor x SFC[FOC] (g/kW h) x Engine Power (kW)
EEDI =
(g/tonne mile) Capacity (tonne) x Speed (mile/h)
Initially only the calculation of the Attained EEDI was planned to be mandatory, but the drive is to establish a mandated requirement, such that the Attained EEDI < Required EEDI

32. EEDI Required [ Tankers>20,000 DWT ]
Reference Line = Phase 0 = no reduction (2013 & 2014)
EEDI
Attained EEDI < Required EEDI
10%
Phase 1
20%
Phase 2
30%
Phase 3
on and after 2025
DWT

33. Operational Measures Ship Energy Efficiency Managment Plan (SEEMP)
encourages improvement energy efficiency of ships in operation
best measurable practices on operational procedures setting goals
plan implementation strategy
monitoring – Energy Efficiency Operational Indicator (EEOI)
procedures for self-evaluation and improvement towards set goals
Energy Efficiency Operational Indicator (EEOI) =
CO2 emitted per unit of transport work
CO2 emitted measured from fuel consumption
Transport work = cargo mass x distance (nm)
EEOI is “voluntary” – a management tool

34. Energy Efficiency Operational Indicator (EEOI)
Operational Measures
Energy Efficiency Operational Indicator (EEOI)
CO2 factor x [FOC] (g)
EEOI (g/tonne mile) =
Cargo Mass (tonne) x Sailed Distance (mile) )

35. MBMs under review at MEPC Emissions Trading Schemes
Market Based Measures
MBMs under review at MEPC
Emissions Trading Schemes
GHG Fund and Leveraged Incentive Schemes
Ship Efficiency & Credit Trading
and Vessel Efficiency System
Rebate Mechanism
Some would require all ships to pay a contribution
Some provide rewards to more energy efficient ships
Most include a support mechanism to developing countries

36. Why are MBMs Proposed ?
Ships have a long life – EEDI takes time / operational measures not readily quantifiable; further “incentives” may be needed
International trade and shipping will continue to grow
A deemed “need” to fund offsetting in other sectors
or ETS
or other MBM

37. Future Means of Reducing GHG Emissions from Shipping
Industry activities and initiatives

38. Means of Reducing GHG Emissions from Shipping
Industry initiatives:
Work on EEDI – formula and reference line (workshops)
Developing and assessing additional GHG reduction measures for new and existing ships (workshops)
Developing Marginal Abatement Cost Curves
- to determine what is achievable (study groups)
Developing and implementing operational measures, such as “Optimal speed” (Liners) and “Virtual Arrival” (Tankers and Bulkers)
Developing industry SEEMPs, such as INTERTANKO’s TEEMP – Tanker Energy Efficiency Management Plan
plus
Active participation in MBM Expert Group

39. Technical and Operational Mitigation Measures

40. Technical and Operational Mitigation Measures

41. Marginal Abatement Cost Curves
PRELIMINARY
DRAFT,
Not for circulation
Developed in conjunction with DNV

42. Virtual Arrival OCIMF / INTERTANKO project
THE CONCEPT:
Virtual arrival is about identifying delays at discharging ports, then managing the vessel’s arrival time at that port/terminal through well managed passage speed, resulting in reduced emissions but not reducing capacity.
It is NOT not about blanket speed reduction to match current market conditions.
Virtual Arrival is all about managing time and managing speed.

43. Virtual Arrival OCIMF / INTERTANKO project
THE MECHANICS:
Cooperation agreement between Charterer (Terminal Operator) and Owner
Speed is “optimised” when ship’s estimated arrival is before the terminal is ready
Owners and Charterers agree a speed adjustment
May use an independent 3rd party to calculate / audit adjustment
Owners retain demurrage, while fuel savings and any carbon credits are split between parties

44. Virtual Arrival - additional benefits
In addition to directly reduced emissions, other benefits include:
Reduced congestion & toxic emissions in the port area
Improved reliability/safety
Potentially increased use of weather routing
Important pre-conditions:
  The safety of the vessel remains paramount
The authority of the vessel’s Master remains unchanged
The basic terms of trade remain the same
It is inherently wasteful to steam at full speed to a discharge port where known delays to the vessels cargo discharge have been flagged. The vessel then spends time at anchor off the port awaiting a berthing slot, or tank space, polluting the surrounding area with unnecessary emissions.
Virtual arrival seeks to build a win-win between owners and charterers, by reducing emissions from vessel propulsion, capturing savings, reduce on board fatigue, increasing safety and reducing risk.
Charterers may be able to offset their demurrage liability, owners may be able to reduce their bunker costs, ports may be able to reduce emissions in their local area, and there are potentially carbon savings through reduced fuel usage.
An additional benefit is the enhanced communications throughout the voyage between all parties. 44

45. Is an MBM needed for Shipping ?
With bunker costs frequently % of total operating costs, does shipping need any further market incentive to reduce GHG emissions ?
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MDO/MGO*
HFO
Bunker prices 2000 – 2010 [USD/tonne] HFO 380 cst / MDO / MGO*, Fujairah
USD/tonne
*MGO since Dec 2008
Source: Bunkerworld

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GOOD LUCK and Thank you.

47. IMO MARPOL Annex VI: North Sea ECA
4˚W
57˚44.8’ N
5˚W
48˚30’N

48. One - third of bunkers are supplied in ECA ports
Global Bunkering
One - third of bunkers are supplied in ECA ports
Marine distillates on EU must have < 0.10% sulphur content
Source: Poten & Partners

49. Challenges for ships
Switching between at least 3 grades of fuel
Calling at EU ports, ships need to use:
Deep sea fuel (HFO)
ECA fuel (LSFO)
EU - ”at berth”/”at anchor” fuel (MGO)
Onboard storage & segregation capacity
Increase risk of fuel incompatibility
Increases the risks of boiler incidents
Safety requires upgrading/modifications
Viscosity, lubricity, flash point temp.

50. Quality Problems with Marine Fuel Oils
HIGH ABRASIVE FUELS
HIGH ASH
LOW FLASH POINT
HIGH SEDIMENTS
HIGH DENSITY
FUELS CONTAINING USED LUBE OILS
POLYETHYLENE CONTAMINATION
POLYSTYRENE CONTAMINATION
HIGH CALCIUM & HIGH SODIUM
HIGH WATER CONTENT
CONTAMINATED FUELS
INCOMPATIBILITY OF BLENDS
FATTY ACIDE METHYL ESTER (FAME)

51. EEDI / EEOI CO2 factor x SFC[FOC] (g/kW h) x Engine Power (kW)
EEDI (g/tonne mile) =
Capacity (tonne) x Speed (mile/h)
CO2 factor x [FOC] (g)
EEOI (g/tonne mile) =
Cargo Mass (tonne) x Sailed Distance (mile)