1. BAHAMAS INTERNATIONAL MARITIME CONFERENCE FEBRUARY 11, 2010 INTERTANKO’S APPROACH TO THE ENVIRONMENTAL CHALLENGES JOSEPH ANGELO DEPUTY MANAGING DIRECTOR

2. CHALLENGES What are the environmental challenges for shipping? Unilateral action by countries or regions Criminal sanctions for accidental pollution Continually increasing workload on crew Technical compliance

3. INTERTANKO AIR EMISSIONS GREENHOUSE GAS BALLAST WATER RECYCLING OF SHIPS

4. INTERTANKO INTERNATIONAL ASSOCIATION OF INDEPENDENT TANKER OWNERS MISSION Provide Leadership to the Tanker Industry in serving the World with the safe, environmentally sound and efficient seaborne transportation of oil, gas and chemical products

5. INTERTANKO PRIMARY GOAL Lead the continuous improvement of the Tanker Industry’s Performance in striving to achieve the Goals of: Zero fatalities Zero pollution Zero detentions

6. INTERTANKO Members/million dwtNo. of tankers

7. AIR EMISSIONS INTERTANKO submission to IMO in 2006 Distillate fuels with sulphur cap: - From [2010], maximum of 1% sulphur - For engines installed after [2015], maximum of 0.5% sulphur Global sulphur emission control area

8. AIR EMISSIONS Why distillate fuels? Root cause of air pollution from ships is the use of residual fuels. Solution should focus on the root cause of the problem, not the effect of cleaning up the air pollution on the ship after it is created With no other measure, immediately reduces: – SOx emissions by 80% to 90% – PM emissions by 90% – NOx emissions by 10% to 15% Negates the need for abatement technology, associated wastes and disposal of such wastes

9. AIR EMISSIONS IMO adopts amendments to Annex VI with entry into force on July 1, 2010 Open sea4.50%Prior to Jan 1, 2012 3.50%Jan 1, 2012 0.50%Jan 1, 2020* (*Review of 0.50% standard to be conducted by 2018 to determine availability of fuel. If not possible, then date becomes Jan 1, 2025) SECAs1.50%Prior to Mar 1, 2010 1.00%Jan 1, 2012 0.10%Jan 1, 2015 Equivalency measures allowed if they are “at least as effective in terms of emissions reductions”

10. AIR EMISSIONS RELATED ISSUES California Air Resources Board (CARB) air emission regulations - Requires use of fuel with sulphur content of 0.5% or less (0.1% in 2012) when within 24 miles of California coast if calling at a California port - Engine failures and reduced power resulting from fuel switching and use of low sulphur fuel EU sulphur directive - Requires use of fuel with sulphur content of 0.1% or less when at berth in port of EU member - Risk of explosions in auxiliary boilers

11. AIR EMISSIONS INTERTANKO ACTIONS Supported CARB intent, but recommended two step phase in of fuel standard (adopted) Developed recommendations for members to avoid power loss when entering California waters Working to revise viscosity level in ISO standard to reduce power losses Established joint campaign with OCIMF to explain safety problem to EC, resulting in EMSA workshop Provided guidance to members to implement EC safety recommendation

12. GREENHOUSE GAS July 2009 IMO agreed on Interim Guidelines on the method of calculation of the Energy Efficiency Design Index (EEDI) for new ships Interim Guidelines on voluntary verification of the EEDI Guidelines for voluntary use of the ship Energy Efficiency Operations Index (EEOI) Guidelines for Ship Energy Efficiency Management Plan (SEEMP) Workplan for further consideration of Market Based Instruments (MBIs)

13. GREENHOUSE GAS Market Based Instruments GHG Compensation Fund (Denmark/Japan) Emission Trading Scheme (ETS) (Norway, Germany & France) US alternative – based upon EEDI World Shipping Council (WSC) – modified USA alternative Are MBIs necessary?? MBI – a political decision Meaningful GHG reductions or a “cash cow”?

14. GREENHOUSE GAS COP 15 meeting in Copenhagen provides little answers for shipping Copenhagen Accord refers to “new and additional funding shall be provided for developing countries” Will this come from shipping?? If so, could result in a double tax for shipping if MBIs are introduced IMO MEPC meeting in March should shed some light on this

15. GREENHOUSE GAS Kyoto Protocol remains in place Article 2.2 of the Kyoto Protocol – Parties included in Annex 1 shall pursue reduction of GHG emissions from marine bunker fuels working through IMO - “common but differentiated responsibilities” (CBDR) CBDR Concept is embedded in the Copenhagen accord Impact on IMO negotiations in March remains to be seen

16. GREENHOUSE GAS INTERTANKO ACTIONS Members are applying EEDI guidelines - feedback provided to IMO Issued Guide for a Tanker Energy Efficiency Management Plan to proactively implement SEEMP Proposed that IMO set GHG emission reduction targets Established comprehensive policy statement Working with OCIMF to develop Virtual Arrival concept

17. VIRTUAL ARRIVAL Cooperation between Charterer (Terminal Operator) and Tanker Operator Speed is “optimised” when ship’s estimated arrival is before the terminal is ready Operator and Charterers agree a speed adjustment Uses independent 3 rd party to calculate/audit adjustment Operators retain demurrage, while fuel savings and any carbon credits are split between parties OCIMF-INTERTANKO have established Virtual Arrival project: - Monitoring trial voyages - Guidance for development of Charter Parties clauses - Criteria for certifying 3 rd parties

18. BALLAST WATER International Convention for the Control and Management of Ship’s Ballast Water adopted in 2004 - Entry in Force – 30 countries representing 35% of the world’s gross tonnage - Current ratifications – 21 countries representing 22.63% of world’s gross tonnage (Bahamas??)

19. BALLAST WATER TREATY REQUIREMENTS Ballast Water Management Plan Ballast Water Record Book Ballast Water Management Certificate and surveys to verify compliance Mandates ships to conduct ballast water exchange until equipment is approved to meet ballast water standard

20. BALLAST WATER DATES 2009 - Ship constructed in 2009 with a ballast water capacity below 5000m3 must meet the D-2 standard by its 2nd Annual Survey, but not later than 31 December 2011. 2010/2011 - Ships constructed in 2010 or 2011 with a ballast water capacity below 5000m3 must meet the D-2 standard when built. 2012 - Ships constructed in or after 2012 must meet the D-2 standard. 2014 - Ships constructed before 2009 with a ballast water capacity between 1500m3 and 5000m3 must meet the D-2 standard at first drydocking after January 1, 2014. 2016 - Ships constructed in or after 2009 with a ballast water capacity of 5000m3 or above must meet the D-2 standard when built. Ships constructed before 2009 with a ballast water capacity below 1500m3 and above 5000m3) must meet the D-2 standard at first drydocking after January 1, 2016.

21. BALLAST WATER Countries that have taken national action Australia Argentina Brazil Canada Chile Georgia Israel Lithuania New Zealand Panama Peru Russia Ukraine USA To see the details of their requirements, go to www.intertanko.com – Environment – Ballast Water – Ballast Water Legislation www.intertanko.com

22. BALLAST WATER INTERTANKO ACTIONS Developed Model Ballast Water Management Plan in 1997 - now an accepted industry standard Support ratification and promote implementation of the IMO Convention over national/regional legislation Provide guidance to members on national requirements Advise members on compliance with IMO Convention requirements for new buildings Currently gathering data on existing treatment systems using Decision Matrix for (New and Existing) Tankers – to assist in overcoming manufacturers claims

23. SHIP RECYCLING International Convention for the Safe and Environmentally Sound Recycling of Ships adopted in May 2009 to regulate: - Design, construction, operation and preparation of ships for environmentally sound recycling - Operation of recycling facilities in safe, environmentally sound manner - Appropriate enforcement of both through certification and reporting

24. SHIP RECYCLING MAJOR ELEMENTS OF TREATY (SHIP) Control of ship’s hazardous material (prohibit or restrict its use) Ship inventory of hazardous materials Ship recycling plan Preparation for ship recycling Ship survey and certification Reporting (Notify of intent)

25. SHIP RECYCLING MAJOR ELEMENTS (FACILITY) Standards for facility design/operations Document of authorization Recycling Management Plan Safe and environmentally sound operational procedures Emergency preparedness/response plan Worker safety and training Reporting (Intent and upon completion)

26. SHIP RECYCLING ENTRY INTO FORCE CONDITIONS 15 countries Representing 40% of the world’s gross tonnage; AND Combined maximum annual recycling volume during the preceding 10 years constitutes not less than 3% of the gross tonnage of these countries

27. SHIP RECYCLING Complicating Factor Australia proposed to include provisions in treaty that allows ships to be recycled in non-party states (free trade issue) Conference rejects proposal because it could encourage recycling states not to ratify treaty Problem is that flag states may not ratify treaty until major recycling states do so

28. SHIP RECYCLING INTERTANKO ACTIONS Adopted “Best Practice” recommendation in 2003 for all members to obtain Inventory of Hazardous Materials for all new-buildings Adopted Interim Strategy in 2004 for members to proactively prepare for ship recycling prior to mandatory requirements Interim Strategy was used a basis for development of joint industry interim measures which has become industry Transitional Measures Members are sharing information on facilities to ensure ships are recycled properly

29. SUMMARY INTERTANKO APPROACH Address environmental issues proactively, rather than reactively Engage with regulatory bodies in positive, constructive manner to ensure meaningful environmental requirements Provide guidance and direction to members to assist in environmental compliance Work with regulatory bodies to resolve implementation issues

30. THANKYOU!!WWW.INTERTANKO.COM