Improving Air Quality at the Port of New York and New Jersey Clean Vessel Incentive Program Update December 16, 2015

CVI Update  In November, Board approved a amended CVI program that builds on the success of the current program  The amended CVI is funded from Jan 1, 2016 through December 31, 2018  Amended CVI continues to utilize the Environmental Ship Index (ESI), Vessel Speed Reduction (VSR), and Engine Tier incentives  Takes into account the full implementation of the Emissions Control Area (ECA)

Current CVI  The ship component of the Port Authority’s Clean Air Strategy  Three year participation rates  16 Vessel companies 1,900 qualifying Vessel Calls, $3.7 million incentives paid  2013 CVI Emissions Reduction Estimates 49 tons PM45 tons DPM36 tons PM tons NOx217 tons SOx6,422 tons CO 2 $1,093 per weighted ton reduced  2014 CVI Emissions Reduction Estimates 64 tons PM58 tons DPM47.8 tons PM tons NOx317 tons SOx7,174 tons CO 2 $834 per weighted ton reduced

CVI Changes  Modified scoring system to increase participation & increase emission reductions  More opportunities to get incentives through expanded VSR options  Three incentive Tiers – takes into account ECA effects on sulfur content & ESI’s new scoring  Maintains incentive for Tier 2 & Tier 3 engines  New Terms & Conditions  Expanded audits

CVI Score 35 to 44 per Call $1,000 CVI Score 20 to 34 per Call Port Authority Clean Vessel Incentive Program $1,500 ESI & VSR Based Incentive Opportunities CVI Score ≥45 per Call $2,500 CVI Score = ESI Score + VSR Points

Additional Engine Tier Incentive Opportunities Vessels with IMO Tier 3 ALL Engines per Call Vessels with IMO Tier 2 ALL Engines per Call Port Authority Clean Vessel Incentive Program $1,000 $2,000

+10 points Additional CVI Points Opportunities - VSR Vessels compliant with Vessel Speed Reduction - Weighted average 10 knots or less inbound or outbound transits in participation zone - From 20 nm from center COLREGS line to Verrazano Bridge - Vessels will be tracked & verified by AIS data on a per call-basis - Points will be automatically added to ESI score for participating vessels Vessels compliant with Vessel Speed Reduction - Weighted average 10 knots or less inbound or outbound transits in participation zone - From 20 nm from center COLREGS line to Verrazano Bridge - Vessels will be tracked & verified by AIS data on a per call-basis - Points will be automatically added to ESI score for participating vessels Cruise ships can sign up for an Alternative Compliance Plan Port Authority Clean Vessel Incentive Program

+20 points Additional CVI Points Opportunities - VSR Vessels compliant with Vessel Speed Reduction - Weighted average 10 knots or less inbound AND outbound transits in participation zone - From 20 nm from center COLREGS line to Verrazano Bridge - Vessels will be tracked & verified by AIS data on a per call-basis - Points will be automatically added to ESI score for participating vessels Vessels compliant with Vessel Speed Reduction - Weighted average 10 knots or less inbound AND outbound transits in participation zone - From 20 nm from center COLREGS line to Verrazano Bridge - Vessels will be tracked & verified by AIS data on a per call-basis - Points will be automatically added to ESI score for participating vessels Cruise ships can sign up for an Alternative Compliance Plan Port Authority Clean Vessel Incentive Program

VSR Zone Port Authority Clean Vessel Incentive Program

CVI Audits  Port Authority will be conducting more audits  Company representatives will facilitate access their ships  Audit reports sent to ESI Administrator  Audit findings made available to all incentive providers  Audit findings that increase scores  Audit findings that reduce scores

Existing CVI Participant Requirements  For existing shipping lines & vessels in the current CVI program: Must sign the new Terms & Conditions Vessels in current CVI automatically enrolled into amended CVI New vessels need to be enrolled

New Company Enrollment Requirements  Register & enroll ships in ESI program to obtain scores  Complete Port Authority Operator Enrollment Package  Company Enrollment Form  Vessel Enrollment Form  Tax ID Forms  Sign Terms & Conditions All forms can be found at the Port Authority website:

Reimbursement Process  Port Authority collects & verifies quarterly information (Qualified calls, ESI scores, VSR compliance, etc.)  Port Authority generates participation report & draft invoice & send to vessel operators  Vessel operators review report & mail back final invoice with remittance information on company letterhead via /post/ground/air  Port Authority issues incentive payments quarterly

Examples ESI score 16 Tier 0 Comply with VSR both ways, 20 pts, CVI score = 36 Port Authority ESI + VSR Incentive = $1,500 ESI score 26 Tier 1 Comply with VSR both ways, 20 pts, CVI score = 46 Port Authority ESI + VSR Incentive = $2,500 ESI Score 33 Tier 2 Comply with VSR one way, 10 pts, CVI score = 43 Port Authority ESI + VSR Incentive = $1,500 Port Authority Tier Incentive = $1,000

Thank you Any Questions?