Leading the way; making a difference EXPONAVAL – TRANSPORT 2014 December 3, 2014 Environmental Regulatory Challenges Facing the Maritime Industry JOSEPH ANGELO DEPUTY MANAGING DIRECTOR

Leading the way; making a difference INTERTANKO BALLAST WATER MANAGEMENT AIR EMISSIONS GREENHOUSE GAS

Leading the way; making a difference INTERNATIONAL ASSOCIATION OF INDEPENDENT TANKER OWNERS Non-profit organization whose aims are: to work for safety at sea and the protection of the marine environment to further the interests of independent tanker owners to promote a free and competitive tanker market

Leading the way; making a difference INTERTANKO 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

Leading the way; making a difference MEMBERSHIP is open to independent tanker owners and operators of oil and chemical tankers (i.e. non-oil companies and non- state controlled tanker owners) who meet the membership criteria ASSOCIATE MEMBERSHIP is available to any entity with an interest in the shipping of oil and chemicals

Leading the way; making a difference MEMBERSHIP 210+ Members 3,000+ Tankers 270+ Million DWT Members in 40+ countries (including Chile!) 300+ Associate Members

Leading the way; making a difference IMO Ballast Water Management Convention Adopted in 2004 Entry into force requires ratification by 30 countries, 35% world’s grt Currently, 43 countries, 32.54% grt Bahamas, China, Cyprus, Greece, Malta, Panama, Singapore or UK, each alone could bring the convention into force Ballast Water Management

Leading the way; making a difference Major industry concerns 1. 1.Guidelines for approval of ballast water management systems (G8) are not robust enough to ensure reliable or dependable equipment 2. 2.Availability of Ballast Water Management Systems (BWMS) and implementation schedule to install BWMS are not realistic 3. 3.Procedures for port state control are more onerous than requirements for type approval INTERTANKO (etal) submit proposals to IMO Marine Environment Protection Committee (MEPC) to address these issues in 2012 Ballast Water Management

Leading the way; making a difference Port State Control – MEPC 65 (May 2013) Trial Period (initially for 3 years) following entry into force To trial sampling and testing procedures During this period, port states will ‘refrain from detaining a ship or initiating criminals sanctions in the event a BWMS does not meet the discharge standard’ (USA reserves its position) MEPC 67 (Oct 2014) adopts Guidelines for PSC with four stage approach Ballast Water Management

Leading the way; making a difference IMO Guidelines for PSC Stage 1 – Initial inspection. Focus on documentation and crew training to operate BWMS If there are “clear grounds” Stage 2 – More detailed inspection. Check to ensure that BWMS operates properly Stage 3 – Indicative sampling. Without unduly delaying ship, an indicative analysis of ballast water Stage 4 – Detailed analysis. If indicative sampling exceeds D2 standard by a certain threshold, a detailed analysis of ballast water can be taken Ballast Water Management

Leading the way; making a difference Implementation schedule (availability of BWMS) IMO Assembly Resolution (A.1088(28)) adopted, Dec 4, 2013 recommends that governments: implement the Convention based on the entry into force date of the Convention consider ALL vessels constructed before entry into force as existing vessels allow existing vessels to install a BWMS at the first renewal survey (IOPP Certificate under Annex I of MARPOL) after entry into force of the Convention Ballast Water Management

Leading the way; making a difference BWMS Type Approvals INTERTANKO (etal) make three submissions to IMO to revise G8 BWMS approval guidelines 1. MEPC 64 (Oct 2012) – Rejected, but agree to guidelines to improve transparency of equipment operational limits 2. MEPC 66 (April 2014) – Rejected, but agree to study on the implementation of the BWMS performance standard 3. MEPC 67 (Oct 2014) – Cautiously optimistic Success!! Ballast Water Management

Leading the way; making a difference BWMS Type Approvals Outcome of MEPC 67, October 2014 Adopts an MEPC Resolution which agrees 1. To immediately begin a comprehensive review of G8 guidelines (and Plan of Action to do so) 2. Shipowners that have installed BWMS approved to existing G8 guidelines “should not be penalized” 3. Port States should refrain from applying criminal sanctions or detaining the ship, based on sampling during the trial period (US reserves its position) Agrees that proposals to implement decision to not penalize shipowners should be submitted to MEPC 68 Ballast Water Management

Leading the way; making a difference Complicating Factor!! US not party to IMO BWM treaty. USCG has issued national BWM regulations Allow use of Alternate Management System (AMS) for five years After five years, require installation of USCG approved BWMS Currently no BWMS is USCG approved (expected to occur sometime (?) in 2015 Ship operator must make decision to install AMS (and hope it gets USCG approval!) or wait until there is a USCG approved BWMS Ballast Water Management

Leading the way; making a difference AIR EMISSIONS - SOX Globally (MARPOL Annex VI) Currently – 3.50% After Jan 1, 2020 (or 2025) – 0.50% ECA (North America, Baltic Sea, North Sea) Currently – 1.00% After Jan 1, 2015 – 0.10% European Union Directive Follows IMO except: Currently – 0.10% “at berth” After Jan 1, 2020 – 0.50% in EU waters California After Jan 1, 2014 – 0.10% (24 miles) Non-compliance fee in lieu

Leading the way; making a difference Major industry concerns 1. 1.Availability of fuel with sulphur content of less that 0.1% 2. 2.Operational aspects (fuel switching, fuel segregation, low viscosity, low lubricity, to name a few) 3. 3.Fuel oil quality 4. 4.Port State Control enforcement which ensures a “level playing field” AIR EMISSIONS

Leading the way; making a difference FUEL OIL QUALITY Norway and INTERTANKO collected data from two fuel testing laboratories which together had more that 50% of all bunker deliveries worldwide Out of over 100,000 bunker samples, the receiving vessels have reported that on 1,468 occasions they have had machinery problems as a result of using the fuels as supplied. These were events resulting in machinery damage and black out events

Leading the way; making a difference FUEL OIL QUALITY Fuel oil quality for ships is regulated under Regulations 14 and 18 of MARPOL Annex VI However, the requirements are placed upon the ship to ensure that the fuel used on board the ship complies with these standards If the ship is found to be using fuel oil that is not in compliance with these standards, it is the ship and the ship operator that suffers the consequences of port state control action and penalties under national laws There are no requirements on the fuel supplier to ensure they provide the ship with fuel that meets the Annex VI requirements

Leading the way; making a difference FUEL OIL QUALITY INTERTANKO (etal) submission to MEPC 67 proposing amendments to Annex VI for Parties to: 1. Require that local bunker suppliers have procedures to confirm that fuel supplied to vessels is in compliance with IMO requirements 2. Make registries of locally recognised bunker suppliers available to IMO 3. Audit/inspect the local suppliers and report the investigation results and follow-up actions in response to any Note of Protest from ships that received non- compliant fuel

Leading the way; making a difference FUEL OIL QUALITY OUTCOME of MEPC 67 Agreement to develop guidelines for member states to use to ensure fuel quality compliance with MARPOL Annex VI Agreement to also consider the adequacy of the current legal framework for assuring fuel quality INTERTANKO supports outcome as the “beginning” of the process for our members to have confidence that fuels they receive are at or above the mandated standards

Leading the way; making a difference GREENHOUSE GAS Mandatory Energy Efficiency Design Index (EEDI) for new buildings (1 January 2013) Mandatory Ship Energy Efficiency Management Plan (SEEMP) for all ships (does not set a target for GHG emissions reduction of ship in operations) IMO considering Market Based Measures (MBMs) for shipping, but thus far, no agreement Alternative: Amendments to MARPOL Annex VI for Operational Energy Efficiency standards for international shipping

Leading the way; making a difference GREENHOUSE GAS OPERATIONAL EFFICIENCY STANDARDS FOR INTERNATIONAL SHIPPING What does this mean? In principle, ships in operation would be expected to meet legally binding operational effeciency requirements OR Limit ships’ annual fuel consumption!!

Leading the way; making a difference Shipping industry fully supports EEDI and SEEPM requirements Major industry concerns 1. 1.Market Based Measures (MBM) have not been justified 2. 2.Question the feasibility of legally binding operational efficiency standards for shipping 3. 3.Fuel efficiency standards for entire transportation sectors applied at design stage (IMO adopted EEDI) 4. 4.No other transportation sector subjected to operational efficiency standards GREENHOUSE GAS

Leading the way; making a difference INT. SHIPPING CONTRIBUTIONS TO GLOBAL CO 2 Source: IMO 3 rd GHG Study (2014) Ships reduce GHG emissions at a higher rate than land

Leading the way; making a difference INTERTANKO (etal) submission to MEPC 67 Operational efficiency standards account for many and complex criteria: not practical as a regulatory standard Costs of fuels, costs for compliance with ECA and global sulphur limits are already great incentives to ship operators for fuel emissions reductions List of key questions that IMO should answer before deciding, including: - if operational efficiency standards are adopted, can it be done to avoid de-facto slow-steaming "speed limit“? - how to account for the fact that fuel is consumed on board many vessels for purposes other than propulsion? GREENHOUSE GAS

Leading the way; making a difference OUTCOME of MEPC 67 No clear way forward on the need for an operational energy efficiency standard for ships Member Governments and international organizations should submit comments and proposals addressing the industry questions to next session (May 2015) There was a clear agreement, in principle, to develop a data collection system for fuel consumption, but different views on how it should be done Work should focus on the development of the details of a data collection system for fuel consumption only GREENHOUSE GAS

Leading the way; making a difference INTERTANKO supports realistic, pragmatic and achievable measures to protect the marine environment INTERTANKO will work through IMO with member states and other stakeholders to develop practical international environmental regulations for shipping CONCLUSIONS

Leading the way; making a difference MUCHAS GRACIAS!