1. Leading the way; making a difference INTERTANKO Council November 15, 2012 UPDATE ON GHG MARKET BASED MEASURES JOSEPH ANGELO DEPUTY MANAGING DIRECTOR

2. Leading the way; making a difference INTERTANKO Policy on MBMs (Nov 2011) MBM is not justified at this time If a MBM should be required, then this should: 1. be implemented through an international regime 2. be simple to enforce and to monitor 3. provide sufficient transparency to maintain the current level playing field 4. not result in a disproportionate financial or operational impact on the industry GHG Fund seems to be the simplest and most transparent from a shipowner point of view Not in favour of an emissions trading scheme

3. Leading the way; making a difference MEPC 64 (October 2012) Further details submitted on MBM proposals However, all discussion on MBM proposals was deferred to MEPC 65 (May 2013) Three main focuses of MBM proposals 1. Emission Trading Schemes (ETS) 2. GHG Fund 3. Operational Efficiency

4. Leading the way; making a difference With no discussion of MBMs at MEPC 64 and MEPC 65 scheduled for May 2013, Timing provides INTERTANKO Council with perfect opportunity to review MBM policy and amend, as necessary, to prepare for/influence MEPC 65 discussions

5. Leading the way; making a difference OPERATIONAL EFFICIENCY – Three phases 1. 1.Data collection to determine the baseline Fuel consumption Cargo mass Voyage info, i.e. distance, sea state, weather, etc. 2. 2.Trial period to establish practical rating system Establish and verify baseline Adjust baseline, as necessary 3. 3.Required operational efficiency scheme Mandate through amendments to MARPOL

6. Leading the way; making a difference EUROPEAN COMMISSION APPROACH 1. 1.Introduce new requirements to monitor shipping emissions next year as part of a wider bid to accelerate a global deal on maritime emissions reductions that will avoid costly and disruptive regional legislation. 2. 2.Develop details of “monitoring, reporting and verification (MRV) system” early next year. 3. 3.Finalize obligatory measuring, reporting and verifying of maritime CO2 emissions after 2013 NOTE 1: MRV system is essentially the same as Phase 1 and part of Phase 2 of Operational Efficiency NOTE 2: EC Stakeholders meeting on December 5

7. Leading the way; making a difference OPERATIONAL EFFICIENCY – PROS Correct data on ships’ fuel consumption versus the current assessments Focuses on actually reducing GHG emissions Play proactive role to positively influence regulators Influence the development of the methodology to assess efficiency of ships in operations to include the logistic chain Be part of the final decisions on (1) setting the level of required efficiency and (2) the type of measures to be applied, if any

8. Leading the way; making a difference OPERATIONAL EFFICIENCY – CONS Details of the intent of regulator not entirely clear What if ship does not meet required operational efficiency scheme? (Flexibility measures) Ships in operations cannot be fairly measured against each other Most of the fuel consumption is the result of commercial decisions in response to the market demand/supply for transportation and in many instances, the decision is taken by charterers

9. Leading the way; making a difference EXCOM Recommendation 1. 1.Request EXCOM, with assistance from ISTEC, to further investigate the details of Operational Efficiency/MRV with the objective of proactively influencing its suitable development 2. 2.Agree that the Secretariat should participate in the EC Stakeholders meeting on December 5 and report the outcome to the EXCOM meeting in February 2013 3. 3.Request the EXCOM to review the outcome of the EC stakeholders meeting, determine the appropriate course of action and report to the Council at its next meeting

10. Leading the way; making a difference THANK YOU!!WWW.INTERTANKO.COM