1. INTERTANKO Seminar 27 April 2010 Singapore
Peter M. Swift

2. Greenhouse Gas Emissions
Key Dates
Outcome of COP15
IMO (MEPC) Programme
“Virtual Arrival”
Industry study/TEEMP/Other
Low Sulphur Fuel Issues

3. Shipping’s GHG Emissions
Selected Key Dates
12/2009 UNFCCC COP15 Meeting, Copenhagen
3/ IMO MEPC 60
5/ INTERTANKO Council
5-6/ UNFCCC, Bonn
5 to 8 /2010 IMO MBM-Expert Group
6-7/ IMO MEPC Intersessional
9-10/2010 IMO MEPC 61
10/2010 INTERTANKO Council
10-11/ UNFCCC COP16 Meeting, Cancun
7/ IMO MEPC 62
12/ EU Deadline for IMO/International Agreement

4. MEPC Challenge remains !
IMO Principle:
“No More Favourable Treatment”
Versus
Kyoto Protocol principle:
“Common But Differentiated Responsibility”

5. ? What was the outcome COP15 No change yet ! NO targets
NO resolution of Kyoto/IMO Treaty conflict
NO direct reference to international shipping in Copenhagen Accord
No change yet !

6. IMO Programme To develop: EEDI for new ships
SEEMP & EEOI for all ships
and, if possible/needed:
Market Based Measure (Instrument) for shipping

7. Intersessional Working Group
To improve the text for mandatory requirements of EEDI and SEEMP in terms of:
coverage of ship types and ship sizes for the EEDI;
establishment of EEDI baseline(s);
frequency of reducing the mandatory value of EEDI (reduction in 3 phases);
reduction rate from the baseline for the phases for the EEDI;
To develop various guidelines:
on the method of calculation of EEDI;
for the calculation of baselines for attained EEDI;
to support the regulatory framework for verification of the EEDI

8. MBM – Expert Group
Group of MBM schemes which would require all ships to pay a contribution:
1. International Fund for Greenhouse Gas emissions from ships – suggested by Denmark and supported and complemented by some other Administrations such as Cyprus, Marshall Islands and Nigeria.
2. Global Emission Trading System for International Shipping, as proposed by Norway, France and Germany; and a Global Emissions Trading System for GHG Emissions from International Shipping, as proposed by UK.
Group of MBM schemes which provide rewards to more energy efficient ships:
3. Leveraged Incentive Scheme based on the International GHG Fund - proposed by Japan.
4. Trading with Efficiency Credits based on Efficiency Standards for All Ships - proposed by the USA.
5. Vessel Efficiency System - proposed by the World Shipping Council.

9. Virtual Arrival OCIMF /INTERTANKO project
Virtual Arrival is all about managing time and managing speed.
It’s not about blanket speed reduction to match current market conditions.
Virtual arrival is about identifying delays at discharging ports, then managing the vessel’s arrival time at that port/terminal through well managed passage speed, resulting in reduced emissions but not reducing capacity.
It is inherently wasteful to steam at full speed to a discharge port where known delays to the vessels cargo discharge have been flagged. The vessel then spends time at anchor off the port awaiting a berthing slot, or tank space, polluting the surrounding area with unnecessary emissions.
Virtual arrival seeks to build a win-win between owners and charterers, by reducing emissions from vessel propulsion, capturing savings, reduce on board fatigue, increasing safety and reducing risk.
Charterers may be able to offset their demurrage liability, owners may be able to reduce their bunker costs, ports may be able to reduce emissions in their local area, and there are potentially carbon savings through reduced fuel usage.
An additional benefit is the enhanced communications throughout the voyage between all parties. 9

10. Virtual Arrival - Summary
Cooperation between Charterer (Terminal Operator) and Owner
Speed is “optimised” when ship’s estimated arrival is before the terminal is ready
Owners and Charterers agree a speed adjustment
May use an independent 3rd party to calculate / audit adjustment
Owners retain demurrage, while fuel savings and any carbon credits are split between parties
Next Steps:
OCIMF-INTERTANKO running joint workshops
Charter Parties being reviewed (INTERTANKO/BIMCO/BP/Chevron) – indemnity and liability issues, including bills of lading
Individual oil majors and owners “trialling” system
Bulk carrier sector examining feasibility

11. GHG emissions - OTHER TEEMP – Tanker Energy Efficiency Management Plan
Industry Study – RT, OCIMF, WSC:
Achievable targets ?
Cooperation with others – e.g. Carbon War Room ?

12. Industry Study

13. Low Sulphur Fuel Issues
EU Sulphur Directive
- 0.1% at berth requirement
- Revision timetable
- Finnish concerns & Annex VI Revision
CARB requirements – legal challenge
North American ECA

14. For more information, please visit:
Thank you
For more information, please visit:
London, Oslo. Washington, Singapore and Brussels

15. Kyoto Protocol
Established under UN Framework Convention on Climate Change (UNFCCC) and adopted in 1997
Ratified by 181 countries – not the USA
Categorises Annex 1 (Developed) Countries and Non-Annex 1 (Developing) Countries
Annex 1 Countries are committed to make GHG reductions with set targets, but also flexible mechanisms
Runs through to 2012, with Conference of Parties (COP15) to meet in Copenhagen in Dec 2009 to develop successor
Kyoto recognises “common but differentiated responsibilities”, i.e. developed countries produce more GHGs and should be “responsible” for reductions
Kyoto looks to IMO to address Shipping and ICAO to address Aviation, and as such these emissions are currently excluded from Kyoto targets

16. IMO Principles
Effective in contributing to the reduction of total global GHG emissions
Binding & equally applicable to all flag States
Cost-effective
Able to limit or effectively minimize competitive distortion
Based on sustainable environmental development without penalizing global trade and growth
Based on a goal-based approach and not prescribe specific methods
Supportive of promoting and facilitating technical innovation and R&D in the entire shipping sector
Accommodating to leading technologies in the field of energy efficiency
Practical, transparent, fraud free and easy to administer

17. Possible Outcomes for Shipping at COP15
Stalemate
- no agreement / deferred to COP16
- status quo maintained
Shipping is included in national targets/commitments of (All parties) (Annex 1 parties)
IMO encouraged to continue without delay to develop policies and measures to reduce GHG emissions, within framework of UNFCCC general agreement
UNFCCC establishes “global targets” for shipping and “directs” parties to work through IMO to achieve these
Parties agree to establish a UNFCCC global agreement to address maritime emissions, (taking into account work done by IMO?) to be concluded by [2011]

18. Virtual Arrival - a way to reduce emissions
Background
Potential emission reduction for existing shipping said to be up to 15% (at no cost?)
Fuel represents 60-80% of operation/running costs for owners
What drives/restricts emission reduction?
It is recognised that commercial and practical restrictions sometimes apply
Virtual Arrival is a project that involves several stakeholders
Virtual Arrival implies co-operation and removing commercial restrictions
It is inherently wasteful to steam at full speed to a discharge port where known delays to the vessels cargo discharge have been flagged. The vessel then spends time at anchor off the port awaiting a berthing slot, or tank space, polluting the surrounding area with unnecessary emissions.
Virtual arrival seeks to build a win-win between owners and charterers, by reducing emissions from vessel propulsion, capturing savings, reduce on board fatigue, increasing safety and reducing risk.
Charterers may be able to offset their demurrage liability, owners may be able to reduce their bunker costs, ports may be able to reduce emissions in their local area, and there are potentially carbon savings through reduced fuel usage.
An additional benefit is the enhanced communications throughout the voyage between all parties. 18

19. Virtual Arrival - a way to reduce emissions
by taking advantage of known inefficiencies in the supply chain and
reducing speed when the terminal is not ready to discharge the cargo
In addition to directly reduced emissions, other benefits are:
Reduced congestion and emissions in the port area
Improved safety
Reduced use of fuels
Potentially increased use of weather routing
Important pre-conditions:
  The safety of the vessel remains paramount
The authority of the vessel’s Master remains unchanged
The basic terms of trade remain the same
It is inherently wasteful to steam at full speed to a discharge port where known delays to the vessels cargo discharge have been flagged. The vessel then spends time at anchor off the port awaiting a berthing slot, or tank space, polluting the surrounding area with unnecessary emissions.
Virtual arrival seeks to build a win-win between owners and charterers, by reducing emissions from vessel propulsion, capturing savings, reduce on board fatigue, increasing safety and reducing risk.
Charterers may be able to offset their demurrage liability, owners may be able to reduce their bunker costs, ports may be able to reduce emissions in their local area, and there are potentially carbon savings through reduced fuel usage.
An additional benefit is the enhanced communications throughout the voyage between all parties. 19

20. What is needed to do to make Virtual Arrival work?
A known delay at the discharge port
A mutual agreement between two (or more) parties to adapt the ship’s arrival time to take advantage of the delay
An agreed Charter Party clause that establishes the terms for reducing the speed to adapt to the new arrival time
An agreement on how to calculate and report the Virtual Arrival and the performance of the vessel
This may involve a Weather Analysis Provider (WAP)
OCIMF/INTERTANKO and class are producing transparent standards for verification of WAPs
But mainly it’s a win–win situation for all, based on trust and transparency
On achieving a common industry view for points three to six, then all that is needed to make each VA a success is the willing participants and an identified known delay at disport. 20

21. Possible measures

22. Possible measures

23. Industry Study

24. Possible Abatement Measures
Gas fuelled engines
Electronic engine control
Waste heat recovery
Air cavity lubrication
Contra-rotating propeller
Fuels cells as auxiliary engines
Frequency converters
Exhaust gas boilers on auxiliary engines
Energy efficient light systems
Wing generator
Wind power – kite
Wind power – fixed sails or wings
Solar panels
Solar panels
Trim/draft optimising
Weather routing
Voyage execution
Steam plant operational improvements
Speed reduction due to port efficiency
Propeller condition
Speed reduction due to fleet increase
Hull condition
Propulsion efficiency devices
Cold ironing
Engine monitoring
Reduced auxiliary power usage