NORTH AMERICAN PANEL OCTOBER 22, 2007 REDUCING AIR EMISSIONS FROM SHIPS JOSEPH ANGELO DEPUTY MANAGING DIRECTOR

AIR EMISSIONS - IMO SEPT 1997 – IMO ADOPTS ANNEX VI TO MARPOL, REGS FOR THE PREVENTION OF AIR POLLUTION FROM SHIPSSEPT 1997 – IMO ADOPTS ANNEX VI TO MARPOL, REGS FOR THE PREVENTION OF AIR POLLUTION FROM SHIPS MAY 2005 – ANNEX VI ENTERS INTO FOR INTERNATIONALLY (US AND CANADA CURRENTLY NOT PARTY)MAY 2005 – ANNEX VI ENTERS INTO FOR INTERNATIONALLY (US AND CANADA CURRENTLY NOT PARTY) JULY 2005 – MEPC 53 DECIDES ANNEX VI SHOULD BE REVISED TO REDUCE AIR EMISSIONS FROM SHIPSJULY 2005 – MEPC 53 DECIDES ANNEX VI SHOULD BE REVISED TO REDUCE AIR EMISSIONS FROM SHIPS

AIR EMISSIONS IMO ANNEX VI REVISION TIMETABLE MEPC 54 (March 2006) – Proposals for revision. The work is delegated to BLG Sub-CommitteeMEPC 54 (March 2006) – Proposals for revision. The work is delegated to BLG Sub-Committee BLG 10 (April 2006) – Initial review of the proposals and documents (over 30 documents)BLG 10 (April 2006) – Initial review of the proposals and documents (over 30 documents) Two correspondence groups (April – October 2006)Two correspondence groups (April – October 2006) INTERSESSIONAL MEETING OSLO (November 2006)INTERSESSIONAL MEETING OSLO (November 2006) BLG 11 (April 2007) – consider draft proposals for revised Annex VI, the NOx Code and GuidelinesBLG 11 (April 2007) – consider draft proposals for revised Annex VI, the NOx Code and Guidelines MEPC 56 (July 2007), BLG 12 (Feb 2008) & MEPC 57 (March 2008) – final rounds for approvalMEPC 56 (July 2007), BLG 12 (Feb 2008) & MEPC 57 (March 2008) – final rounds for approval

AIR EMISSIONS COVERED BY ANNEX VICOVERED BY ANNEX VI –Oxides of Nitrogen (NOx) – create Ozone –Sulphur Oxides (SOx) – create acidification –Hydrocarbons (HC) – gas, soot and some particulates –Volatile Organic Compounds (VOC) –Refrigerant Gases NOT COVERED (CURRENTLY) BY ANNEX VINOT COVERED (CURRENTLY) BY ANNEX VI –Particulate Matter –Carbon Dioxide (CO 2 ) –Carbon Monoxide (CO)

AIR EMISSIONS PROPOSALS FOR AMENDMENTS - Lower limits for SOx & NOx emissions - SECAs with lower S cap (1.0% or 0.5%) - NOx emission limitation on existing engines - NECAs – NOx controlled areas - Restrict Particulate Matters (PM) emissions - Restrict on VOC emissions from cargo oil tanks - Restriction on CO 2 emissions

AIR EMISSIONS INTERTANKO EXECUTIVE COMMITTEE GUIDING PRINCIPLES – ENSURE A SOLID PLATFORM OF REQUIREMENTSENSURE A SOLID PLATFORM OF REQUIREMENTS BE REALISTIC AND FEASIBLEBE REALISTIC AND FEASIBLE SEEK POSITIVE REDUCTION IN AIR EMISSIONS FROM SHIPSSEEK POSITIVE REDUCTION IN AIR EMISSIONS FROM SHIPS CONTRIBUTE TO A LONG TERM AND PREDICTABLE REGULATORY REGIMECONTRIBUTE TO A LONG TERM AND PREDICTABLE REGULATORY REGIME PREVENT UNILATERAL/REGIONAL REGULATIONS – IMO STANDARDSPREVENT UNILATERAL/REGIONAL REGULATIONS – IMO STANDARDS

AIR EMISSIONS INITIAL PROPOSALS FOCUSED ON AIR EMISSIONS STANDARDS AND ABATEMENT EQUIPMENTINITIAL PROPOSALS FOCUSED ON AIR EMISSIONS STANDARDS AND ABATEMENT EQUIPMENT FUEL STANDARD WAS NOT BEING CONSIDEREDFUEL STANDARD WAS NOT BEING CONSIDERED MAIN PURPOSE OF INTERTANKO SUBMISSION WAS TO “PRESENT ISSUES THAT MERIT FURTHER DISCUSSION BY IMO WORKING GROUP WHEN CONSIDERING REVSION OF ANNEX VI OF MARPOL”MAIN PURPOSE OF INTERTANKO SUBMISSION WAS TO “PRESENT ISSUES THAT MERIT FURTHER DISCUSSION BY IMO WORKING GROUP WHEN CONSIDERING REVSION OF ANNEX VI OF MARPOL”

AIR EMISSIONS INTERTANKO SUBMISSION DISTILLATE FUELS WITH SULPHUR CAP: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 AREAGLOBAL SULPHUR EMISSION CONTROL AREA REVISION OF CHECKING AND MONITORING OF COMPLIANCEREVISION OF CHECKING AND MONITORING OF COMPLIANCE

AIR EMISSIONS IMO WORKING GROUP PROPOSALS – SOX A. Status Quo - No change B. Sulphur Emissions Control Area (SECA): –A global sulphur cap (unchanged or lower value) –SECA sulphur cap lowered in two tiers: 1.0% in [2010]1.0% in [2010] 0.5% in [2015]0.5% in [2015] C1. Change to distillate fuels (ref. INTERTANKO): –Use of distillate fuels for all ships –A global sulphur cap in two tiers: 1.0% in [2012]1.0% in [2012] 0.5% in [2015] 0.5% in [2015] –Include in MARPOL Annex VI the specification for the distillate fuel to be used by ships C2. Global cap – As C1 but allows use of residual fuel + scrubbers

AIR EMISSIONS IMO BULK LIQUID & GASES (BLG) SUBCOMMITTEE MET APRIL TO CONSIDER THE OUTCOME OF ITS NOVEMBER WG MEETINGIMO BULK LIQUID & GASES (BLG) SUBCOMMITTEE MET APRIL TO CONSIDER THE OUTCOME OF ITS NOVEMBER WG MEETING ADDITIONAL SUBMISSIONS MADE BY THE US, NORWAY, SWEDEN, ICS, OCIMF, BIMCO, FOEI AND OTHERSADDITIONAL SUBMISSIONS MADE BY THE US, NORWAY, SWEDEN, ICS, OCIMF, BIMCO, FOEI AND OTHERS

AIR EMISSIONS USA PROPOSAL SOx & PM – GLOBALLY, CONSIDER INTERTANKO PROPOSAL FOR MDO [BUT WITH 0.5% S CAP]SOx & PM – GLOBALLY, CONSIDER INTERTANKO PROPOSAL FOR MDO [BUT WITH 0.5% S CAP] SOx & PM – EMISSION LIMITS AT [200] NM FROM SHORE STARTING 2011 [0.1% S cap]SOx & PM – EMISSION LIMITS AT [200] NM FROM SHORE STARTING 2011 [0.1% S cap] NOx STANDARDS FOR EXISTING (pre-2000) ENGINES - 20% REDUCTIONNOx STANDARDS FOR EXISTING (pre-2000) ENGINES - 20% REDUCTION NOx FOR NEW ENGINES:NOx FOR NEW ENGINES: –Tier II - 15% – 25% as from 2011 –Tier III- 80% only in defined areas (NECAs) as from 2016

AIR EMISSIONS BIMCO PROPOSAL RETAIN THE CURRENT ANNEX VI STRUCTURE, BUT LOWER EMISSION LIMITS GLOBALLY AND IN SECAs GLOBALLY - 3% SULPHUR CAP IN % SULPHUR CAP IN USE TREATMENT TECHNOLOGIES IN SECAs SHIPS SHOULD USE MDO ONLY - 1% SULPHUR CAP IN % SULPHUR CAP IN ALSO USE TREATMENT TECHNOLOGIES

AIR EMISSIONS OUTCOME FROM BLG MEETING: RETAIN 6 OPTIONS, 4 FROM WG MTG PLUS US AND BIMCO OPTIONS; ANDRETAIN 6 OPTIONS, 4 FROM WG MTG PLUS US AND BIMCO OPTIONS; AND IMO SG WILL PROPOSE STUDY TO DETERMINE THE EFFECTS OF THE OPTIONSIMO SG WILL PROPOSE STUDY TO DETERMINE THE EFFECTS OF THE OPTIONS

AIR EMISSIONS MEPC 56 MET IN JULY 9 – 13 “NOTES” OUTCOME OF BLG 11 “NOTES” OUTCOME OF BLG 11 NEXT STEPS AT IMO: IMO SG INITIATES STUDYIMO SG INITIATES STUDY BLG WORKING GROUP MEETING IN OCTOBER IN GERMANYBLG WORKING GROUP MEETING IN OCTOBER IN GERMANY BLG MEETS FEBRUARY 2008BLG MEETS FEBRUARY 2008 MEPC 57 MEETS MARCH/APRIL 2008MEPC 57 MEETS MARCH/APRIL 2008

FINAL THOUGHTS WHO SHOULD BE RESPONSIBLE FOR VERIFICATION AND COMPLIANCE? SHIPOWNERSHIPOWNER for: –Cost and installation of technology –Combustion process –Exhaust gas emission standards –Disposal of by-productsOR FUEL PRODUCERFUEL PRODUCER for: –Quality of fuel supplied AND ENGINE MANUFACTURERSENGINE MANUFACTURERS –Facilitate engine design that copes with a predictable rule development on lowering emissions

FINAL THOUGHTS Marine Diesel Oil ADDRESSES THE ROOT CAUSE OF THE ROOT CAUSE OF AIR POLLUTION FROM SHIPS AIR POLLUTION FROM SHIPS RATHER THAN THE EFFECTS OF RATHER THAN THE EFFECTS OF CLEANING UP THE AIR POLLUTION CLEANING UP THE AIR POLLUTION ON THE SHIP AFTER IT HAS BEEN CREATED AFTER IT HAS BEEN CREATED

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