RECENT DEVELOPMENTS AND CURRENT ENVIRONMENTAL CHALLENGES FOR IMO Dachang Du Senior Deputy Director Marine Environment Division International Maritime Organization St. Petersburg, October 2009

PREVENTION OF AIR POLLUTION FROM SHIPS MARPOL Annex VI adopted in 1997 Prohibits ODS in line with the Montreal Protocol Regulates exhaust gas emissions: NOx - a reduction of 6-10% as compared with un-regulated engines SOx – Global cap – 4.5% SECA cap – 1.5% Greenhouse gases not covered

Ship emissions growing and becoming more conspicuous As land-based sources of emissions were abated and stringently regulated, e.g. power plants & road transport, ship emissions were growing continuously – percentage-wise As land based sources were targeted intensely in many areas of the world and shipping activities continued growing together with the global economy, contribution of ship emissions to air quality problems in many parts of the world was growing percentage wise and becoming more conspicuous. For exposed coastal areas of both Europe and the United States, shipping would if the trend continue unabated, in 10 to 15 years time become the biggest single source of nitrogen-oxide, sulphur and particulate emissions. At this slide you can see the estimate on SOx and NOx from the European Commission.

Estimate from Port of Los Angeles And here is an estimate from California showing the same trend for PM emissions, ships will be a major contributor as land based sources are reducing their emissions.

Revision of Annex VI - Process MEPC 53 (July 2005): decided to undertake the review MEPC 54 ⇨ MEPC 55 ⇨ MEPC 56 ⇨ MEPC 57 MEPC 58 (October 2008): Adopted the revised text by consensus .

TACIT ACCEPTANCE PROCEDURE The revised MARPOL Annex VI shall be deemed to have been accepted on 1 January 2010, and shall enter into force on 1 July 2010.

NOx requirements under the revised Annex VI Nitrogen oxides (NOx) Tier I is the current NOx limits, implemented by the industry since 2000 Tier II NOx standard for new engines installed on ships constructed on or after 1 January 2011 – (a reduction of 15.5 – 21.8% from Tier I levels) Tier III NOx standard for new engines installed on ships constructed on or after 1 January 2016 - (a reduction of 80% from Tier I levels) Existing engines installed between 1990 and 1999 with a power rating of 5000 kW and a 90 litre per cylinder volume will have to comply with Tier I .

SOx requirements under the revised Annex VI Sulphur oxides (SOx) & Particulate matter (PM) PM is included in the scope of the amended Annex VI, but no explicit PM limits introduced, as PM will be reduced as a function of reduced sulphur Globally: Prior to 1 January 2012 – sulphur limit – 4.50% From 1 January 2012 - sulphur limit - 3.50 % From 1 January 2020 - sulphur limit - 0.50 % The 0.50 % sulphur limit will be subject to a review to be completed in 2018 and in the event the review is unsuccessful, the 0.50 % limit will default to 1 January 2025 .

ECAs under the revised Annex VI In Emission Control Areas (ECAs) Prior to 1 July 2010 – sulphur limit : 1.50% From 1 July 2010 - sulphur limit : 1.00 % From 1 January 2015 - sulphur limit : 0.10 % Equivalents The use of exhaust gas cleaning systems as well as other alternative technologies or fuels may be used to meet the sulphur limits. .

TWO EXISTING ECAs The Baltic Sea The North Sea A NEW ECA? MEPC 59 (July 2009) approved the North American Emission Control Area, which is expected to be adopted at MEPC 60 (March 2010)

THE CLIMATE CHANGE ISSUE UNFCCC, adopted in New York in 1992, in force from 1994 Kyoto Protocol, adopted in 1997, in force from 2005. Article 2.2: “The Parties included in Annex I shall pursue limitation or reduction of emissions of greenhouse gases not controlled by the Montreal Protocol from … marine bunkers fuels, working through … the International Maritime Organization, …”

Distribution of the world fleet March 2008 ships above 400 GT Number of ships GT DW Annex I flag States 20,872 (33.42%) 209,015,681 (26.08%) 263,820,104 (22.82%) Non-Annex I flag States 41,119 (66.58%) 593,330,359 (73.92%) 892,384,249 (77.18%) Total 61,862 801,346,040 1,156,204,353 Lloyd’s Register Fairplay

Flag States and ownership of the world fleet 2007 Largest flag States Largest ship-owning countries Flag State 1,000 DWT Panama 232,148 Liberia 105,227 Bahamas 55,238 Greece 55,145 Marshall Islands 54,644 Hong Kong, China 54,341 Singapore 51,043 Malta 40,201 China 34,924 Cyprus 29,627 Country of owner 1,000 DWT Greece 170,181 Japan 147,507 Germany 85,043 China 70,390 Norway 48,697 United States 48,261 Hong Kong, China 45,053 Republic of Korea 32,287 United Kingdom 26,757 Singapore 25,723 Source: UNCTAD, 2007.

IMO’s Work on Reduction of GHG from Ships Air Pollution Conference in September 1997 Resolution 8 on “CO2 emissions from ships”, invites IMO to: co-operate with UNFCCC undertake a study on GHG emissions consider feasible GHG reduction strategies With a view to addressing the issue of greenhouse gas emissions from international shipping, the 1997 MARPOL Conference, the IMO conference that adopted MARPOL Annex VI, also adopted Resolution 8 on “CO2 emissions from ships”, inviting the IMO to - co-operate with UNFCCC in the exchange of information on GHG issues, - to undertake a study of GHG emissions from ships, and, - to consider feasible GHG emissions reduction strategies.

2000 IMO GHG study: Summary of conclusions Significant potential for reduction from operational measures - some operational measures will require participation of others than shipowners Technical measures easier to implement through regulations - new ships more feasible than retrofitting existing ships - Measures related to hull, engines and propeller are general measures for energy savings Limited potential to prevent growth in the total emissions from ships if the increase in demand for sea-transport continues GHG emissions from ships: 1.8% of the world’s total Significant potential for reduction of emissions from shipping based on operational measures were identified. However, a wide range of operational measures are not possible to introduce by the shipowners alone without participation from other players. This would include improved port infrastructure to speed up cargo operations and to avoid congestion and waiting time. Involvement by the cargo owners and charterers are also required in order to provide the ship operator with the incentives needed to fully employ the potential identified. An example in this connection could be a ship on a voyage charter; steaming full speed in order to present the ship ready for loading in a port where already 10 other ships are anchored in the roadsted. Technical measures can be easier to implement and enforce through international standards than operational measures, and implementing these measures primarily through new vessels are more feasible for the industry than retrofitting existing ships. The Study indicated that technical and operational measures have a limited potential for contributing to reduced emissions from ships if the increase in demand for shipping services and the requirement for increased speed and availability continues. Last but not least - Shipping was confirmed to be a significant contributor in the development of environmental sustainable transport.

THE MEPC CONTINUED WORKING… MEPC 53 (July 2005) ⇨ MEPC 54 MEPC 55 ⇨ MEPC 56 ⇨ MEPC 57 ⇨ MEPC 58 ⇨ MEPC 59 (July 2009)

2007 CO2 emissions from ships CO2 emissions – Million tons Total inventory 1019 Domestic / fishing (*) - 176 International shipping = 843 High estimate: 1052 Low estimata: 682 Assessed uncertainty > +/- 20% May improve with better activity data (*) Forcast based on IEA 2005 data

Comparison with other modes (2005) Data: International Shipping: This study. Other IEA. Reference year: 2005

Share of Global Emissions Data: International Shipping: This study. Other IEA. Reference year: 2005

Outcome of MEPC 59 and operation measure MEPC 59 agreed on a package of technical and operation measure MEPC 59 agreed on a work plan to continue developing market-based mechanisms After COP 15: Regulatory action to be considered by MEPC 60 (March 2010) and MEPC 61 (October 2010) MEPC 59 benefited from the Second IMO GHG Study (2009) As per slide.

Summary of the Second IMO GHG Study (2009) Carbon dioxide is the most important GHG emitted by ships Shipping emits: 3.3% of the global anthropogenic CO2 International shipping: 2.7% of the global anthropogenic CO2 If no regulations, ship emissions may grow significantly as a result of growth in shipping 21

Summary of the Second IMO GHG Study (2009) There is a significant potential for reduction of GHG through technical and operational measures Market-based instruments are the most environmentally effective and cost-effective instruments A mandatory EEDI is a cost-effective measure to improve the efficiency of new ships 22

Assessment of Emissions Reduction Potential DESIGN (New ships) Saving of CO2/tonne-mile Combined Concept, speed & capability 2% to 50% 10% to 50% 25% to 75% Hull and superstructure 2% to 20% Power and propulsion systems 5% to 15% Low-carbon fuels Renewable energy 1% to 10% Exhaust gas CO2 reduction 0% OPERATION (All ships) Fleet management, logistics & incentives 5% to 50% Voyage optimization Energy management 23

MEPC 59 type of legal instrument and application MEPC 59 agreed to defer the debate on the type of legal instrument and application issues to MEPC 60, where the issues should be discussed in light of the outcome of COP 15 MEPC 59 agreed that any regulatory scheme applied to GHG emissions from international shipping should be developed and enacted by IMO as the most competent international body As per slide.

MEPC 59 reduction levels for a potential market-based There was a general agreement that the reduction levels for a potential market-based instrument should be revisited at MEPC 60 MEPC 59 noted that it was a general preference that the greater part of any funds generated by a market-based instrument under the auspices of IMO should be used for climate change purposes in developing countries through existing or new funding mechanisms under the UNFCCC or other internatonal organizations Market-based measures: Fuel oil levy or emission trading?) As per slide.

MEPC 59 agreed to circulate: the interim Guidelines on the EEDI for new ships the interim Guidelines for voluntary verification of the EEDI the Guidance on the SEEMP for all ships (new and existing) the Guidelines for voluntary use of the EEOI MEPC 59 noted the discussion on ships and propulsion systems not fully compatible with the current EEDI and invited comments to MEPC 60 As per slide.

Energy Efficiency Design Index Cost: Emissions of CO2 Benefit: Cargo capacity & transport work Complex formula to accommodate most ship types and sizes The Energy Efficiency Design Index (EEDI) provides a figure, expressed in grams of CO2 per tonne mile, that measures the attainable energy efficiency of a specific ship design. It enables the designer to optimize the various parameters at his disposal and provides an energy rating for the ship before it is built. The Index will, therefore, stimulate technical development of all the components influencing fuel efficiency. Through the application of this Index, ships in the near future will have to be designed and constructed intrinsically energy-efficient. The formulation of the Index is rather complex, in that it tries to accommodate a wide range of ship types and sizes. The formula, which I cannot show in the slide because of size and complex structure, may still suffer some modifications before it is agreed by the MEPC in July.

Ship Energy Efficiency Management Plan Onboard management tool to include: Improved voyage planning (Weather routeing/Just in time) Speed and power optimization Optimized ship handling (ballast/use of rudder and autopilot) Improved fleet management Improved cargo handling Energy management The Ship Energy Efficiency Management Plan is being developed, with invaluable input from the shipping industry, as a practical tool to increase the energy efficiency of ships in operation. The Plan’s purpose is to encourage the ship operator to apply the many fuel-saving practices currently available, often referred to as “low hanging fruit”, ready for picking. The most obvious include: - Improved voyage planning (Weather routeing/Just in time); - Speed and power optimization; - Optimized ship handling (ballast/use of rudder and autopilot); - Improved fleet management; - Improved cargo handling; and - Onboard energy management (e.g. engine heat recovery), to name but a few.

Energy Efficiency Operational Indicator An efficiency indicator for all ships (new and existing) obtained from fuel consumption, voyage (miles) and cargo data (tonnes) Cargo Onboard x (Distance traveled) Fuel Consumption in Operation = Actual Fuel Consumption Index The Energy Efficiency Operational Indicator (EEOI) enables operators to measure the fuel efficiency of a ship in operation. Expressed in grams of CO2 per tonne mile, the indicator enables comparison between individual ships and thereby facilitates adoption of appropriate measures to reduce energy consumption. More importantly, the Indicator makes it possible for operators and crews to monitor the effectiveness of any new measures applied in accordance with the Ship Energy Management Plan. The Energy Efficiency Operational Indicator has been implemented on a trial basis since 2005 and the outcome and experience obtained from hundreds of trials will enable the MEPC in July to adopt a mature and robust tool to gage the operational efficiency of individual ships.

COP 15 Outcome Three main IMO objectives: IMO continues to be entrusted to develop and enact global regulations to limit or reduce GHG emissions from ships engaged in international trade The regulations are applied to ships according to the non-discriminatory principle on which the IMO regulatory framework is based The interests of developing countries are fully taken into account In the best interests of the environment, shipping and the Organization as a whole, IMO Member States and the shipping industry should be seeking in Copenhagen three main objectives: That IMO continues to be entrusted with the development and enacting of global regulations to limit or reduce GHG emissions from ships engaged in international trade, in accordance with the package of measures developed by the Organization; That the regulations, where appropriate, are applied to international shipping according to the non-discriminatory principle on which all the IMO international treaty instruments are based; and That the interests of developing countries are fully taken into account, preferably through the application of the market-based mechanism to be developed. And with these noble pursuits…

Thank you for your attention! I thank you for your attention. For more information please see: www.imo.org