1. 1 Marco Polo Accompanying Measure, Lot 4 Provision of Support Services in the Field of IWT Technical Assistance Emission Reduction of the Inland Waterway Transport fleet Study overview and preliminary findings NAIADES Implementation meeting Greening the Inland Waterway Fleet Brussels 18 December 2012

2. 2 Lot 4: Contribute to IA of measures for reducing emissions Main tasks in the study: Identify and analyse feasible options for implementation and enforcement of the measures; Making detailed quantitative calculations of the impact of options to reduce emissions of IWT; Inform stakeholders of progress made & receive feedback; Analyse legal implications of the identified options.

3. 3 Policy Option: BAU Baseline scenario takes into account: Continued implementation of voluntary measures at current level to promote fuel efficiency and emission reduction; Current situation in terms of emission standards (NRMM Stage 3A, CCNR 2); Access regime port of Rotterdam in 2025: NRMM Stage IIIA engines allowed only; Fleet development: Dutch green deal initiative: 50 LNG vessels deployed in The Netherlands by 2015 Scrapping of single hull tankers in period 2012 - 2019 Poor economic situation: low rate of newbuilding and engine renewal rate

4. 4 Options evaluated in Study to reduce emissions of IWT and compared with business as usual scenario 1. Reinforcing voluntary measures: “Smart Steaming” in Europe: Expanding current awareness and support programme for fuel efficient operation (training courses, communication campaigns, fuel efficiency competition, support to voluntary installation of ‘econometers’) on EU level Development of an index for environmental performance of new ships Promotion of the wider applicability of differentiated port dues and charges in Europe, e.g. by means of discounts based on a certification scheme (e.g. Green Award) 2. Revision of emission standards New engines Existing engines 3. Mandatory econometers

5. 5 Technical options for standards for new engines, option 2a (next stage in NRMM Directive) Note: with LNG dual fuel also 20% saving on external costs of CO2 Policy option NOx gram/kWh PM miligram/kWh Technology options BAU6200 Stage IIIA Level 12.1/1.8110/45 SCR fuel efficiency optimisedLNG Level 20.8110/45 SCR NOx reduction optimisedLNG+SCR Level 31.810 SCR + DPFLNG Level 40.810 SCR + DPFLNG + SCR Level 50.410 NOx reduction optimised base engine + SCR + DPFLNG + SCR

6. 6 Options for mandatory upgrade of existing fleet/engines by the year 2028: Retrofitting (options for Directive 2006/87) Retrofit options evaluated: NOx gram/kWh PM miligram/kWh Selective Catalyst Reduction (SCR) equipment -80% Diesel Particle Filter (DPF) -90% SCR + DPF -80%-90% Retrofit to dual fuel Liquid Natural Gas (LNG) 1.810 Retrofit LNG + SCR 0.410 Repowering with NRMM Stage 3A engine 6200 Retrofit with Water Fuel Emulsification unit -25%-80% With LNG dual fuel also 20% saving on external costs of CO2

7. 7 Cost-benefit assessments Net present value (NPV): Net present benefits - Net present costs (costs are considered as negative benefits) NPV total external cost baseline: 53 bln euro for EU 27 NPV external costs: NPV of emission savings (marginal, always ≥ 0) NPV IWT industry: NPV of investments + NPV of operational impacts such as differences in fuel costs, consumption of urea, maintenance costs (marginal costs compared to baseline) NPV society = NPV external costs + NPV IWT industry

8. 8 Efficiency and effectiveness definition Efficiency: result attained per € invested in measure. Formula: NPV society / -NPV IWT Industry Effectiveness: contribution to social benefits attained by a measure. Indicator is the proportion of the total external costs in the baseline. Formula: NPV society of a measure / NPV total external cost baseline IWT Aim is a maximum reduction of external costs while also taking into account the net impact for the transport industry.

9. 9 NPV overview, total impact

10. 10 NPV Comparison, total impact NPV Industry vs NPV External cost savings

11. 11 Further analysis on effectiveness and efficiency per vessel category, share in total external costs in baseline scenario EU27 81% by larger vessels and pushboats CEMT V, VI 19% by motor vessels below 86 metres CEMT 0, I, II, III, IV

12. 12 NPV External cost savings per vessel category

13. 13 NPV IWT Industry (compliance costs) per vessel category

14. 14 NPV Society: NPV external cost savings + NPV IWT industry

15. 15 NPV society per vessel type per option / NPV total external cost baseline EU 27

16. 16 Efficiency for society of technology scenarios (Benefit/Cost ratio): NPV society / - NPV IWT industry

17. 17 Efficiency for society of technology scenarios (Benefit/Cost ratio): NPV society / - NPV IWT industry, zoom:

18. 18 Step 1: Filtering and ranking options by dimensions: A) Efficiency B) Effectiveness C) Level of investment needed Step 2: Multi Criteria analyses taking into account possible other impacts and barriers Evaluation approach

19. 19 NPV Comparison vessels ≥ 110 meter, NPV Industry vs NPV External cost savings

20. 20 NPV Comparison vessel class 67, 70, 85 meter NPV Industry vs NPV External cost savings

21. 21 NPV Comparison vessels <55 meter NPV Industry vs NPV External cost savings

22. 22 For larger vessels LNG as technical solution can reach level 3 or level 5 (Euro VI alike) standards providing also a positive impact for ship-owners: LNG ≥ 110 metres is a “win-win” for new vessels and also retrofit of 135 metre vessels and push boats Addressing the larger vessels (>110 metres) with emission standards is most effective and efficient based on LNG technology application Fall back option: Retrofit with SCR and DPF Preliminary conclusions

23. 23 For 67- 86 metre vessels most relevant options are: –Retrofit with SCR + DPF –Retrofit with SCR –More strict emission standards for new engines For smallest category vessels: –Retrofit with SCR + DPF –Retrofit with SCR –Retrofit with Fuel Water Emulsion (FWE) –Repowering stage IIIA engine FWE because of possible technical difficulties to mount SCR and DPF on older engines Preliminary conclusions

24. Socio economic impact of LNG at vessels 110 meter, 135 metre, push boats NPV external cost savings (euro) Share external cost reduced of total EU 27 IWT external costs NPV IWT industry (cost reduction, euro) NPV for society (euro) New engines LEVEL3 LNG 16.2532% 0.57 16.81 New engines LEVEL 5 LNG + SCR 19.4037% 0.19 19.59 Retrofit LEVEL 3 LNG 17.5834% 0.57 18.15 Retrofit LEVEL 5 LNG + SCR 22.0742% 0.19 22.26 32 – 42% reduction of external costs. Does retrofit of LNG for the larger vessel types already close the gap with road in 2020: 1.8 g NOx and 0.01 g PM per KwH?

25. 32 to 37% reduction of external costs Impact of LNG option (Level 3) for larger vessels in comparison with road haulage and IWT business as usual Gap in 2020: 0.40 euro, 3.4%

26. 34 to 42% reduction of external costs Impact of LNG+SCR option (Level 5) for larger vessels in comparison with road haulage and IWT BAU business as usual Gap in 2020: 0.12 euro, 1.1%

27. 27 Equal standards in IWT or a differentiated approach for vessel categories? Multi Criteria Analyses: –Economic evaluation: efficiency, effectiveness, compliance costs –Financial feasibility –Technical feasibility, risks –Legal barriers and enforcement –Administrative burden –Adverse effects (distortion of competition, reversed modal shift,..…) “No Go” issues for implementation of LNG and can they be tackled? –Financing hurdle: large investments, need for loans –Preparation of the legal framework –Fuel infrastructure –Safety => Balancing the efficiency, effectiveness and compliance costs as well as a number of qualitative criteria Further issues for evaluation