1. MARPOL ANNEX VI AMEDMENTS PRACTICAL CONSEQUENCES INTERTANKO Latin American Panel Cancun October 28/29, 2008

2. AMENDMENTS TO MARPOL Annex VI GLOBAL S cap ECA S cap Tier IITier III ECA only 20104.50%1.00% - - - - - 2011 yes - - - - - 20123.50%- - - - - 20150.10% - - - - - 2016yes 2020/20250.50%

3. AMEDMENTS New regulation on SOx and PM Primary compliance through fuel Alternative methodologies (e.g. scrubbers) accepted as Equivalent Measures (first to be approved by Administrations) Marine fuel oil quality to be further improved No measures on ships that do not receive adequate supply if BDN data is challenged by PSC or test results - Guidelines how to assess compliance NOx Tier I on large engines from the 1990s NOx Tier II and Tier III on new engines

4. GENERAL ASSESSMENT OF THE AMENDMENTS Positive but not perfect Positive: – contributes to a long-term and predictable global regulatory regime –ensures a solid platform of requirements –is realistic and feasible –achieves a global, long-term and positive reduction of air emissions from ships BUT practical consequences need to be carefully assessed

5. IMO & CARB SULPHUR REQUIREMENTS

6. Regional Requirements - Still a potential problem   Planned new ECA for 2013   Could be extended to entire N. A.   Up to 200 nm on the West Coast   Plan to require 0.1% or 0.2% S fuels

7. PRACTICAL CONSEQUENCES Need to use 2/3 fuels per voyage for few more years Need for greater and diversified (segregation) of bunker tanks and pipelines able to receive 3 different grades of bunkers If not = loss of expensive grade bunkers during fuel change over periods Need for two differing cylinder lube oil systems (one for HSFO and one for LSFO/Distillate) Back to simple and safe uni-fuel operation when MDO will be used on world wide basis (2020)

8. PRACTICAL CONSEQUENCES FUEL CHANGE OVER Risk of incompatibility between differing grades of bunker during change over periods (sludging problem) Increased average density Increased of average cat fines level (Al+Si) Fuels with reduced ignition/combustion quality Increased problems with chemical waste (liquid waste with low/no sulphur used as blend to “make” the LSFO) Switch from HFO to MDO in boilers (EU and California) = Risk of human error poses safety risks and cross contamination

9. LOW-SULPHUR FUEL OPERATION Al - Si Source: DNVPS database of 1,012 analysis results (from 1 October – 10 November 2007) A reduction of the low-sulphur content in HFO has seen a corresponding increase in the abrasives content

10. LOW SULPHUR OPERATION

11. ENFORCEMENT (PSC & Flag) (today’s practice) Most PSC target controls on: –Bunker Delivery Note (BDN) –Availability of the MARPOL fuel sample –fuel change-over recordings in log books (ships need written fuel change-over procedures) Some PSC: – requires to see commercial fuel test reports and make a decision –take fuel samples from service tanks ADVICE: only the MARPOL fuel sample is to be used to test sulphur level

12. Test of 2 sub-samples at accredited lab. If Δ of two results ≦ 0.07, S content is the average of the two results If average is ≥ 1.58%, then non-compliant If average is ≦ 1.58%, then 2 nd lab does similar tests However compliance is only proved if the average of the 4 results is ≦ 1.50% MARPOL Sample verification test procedure

13. ENFORCEMENT (PSC & Flag) (today’s practice) Many Flags do not respond to ship Notifications on non-compliant fuel delivery Not unified interpretation for sulphur content limit, e.g.: 1.50%, 1.54%, 1.58%.... BUT some good news.... Ships not liable if strictly keep records & evidence on Fuel Availability

14. Revised Regulation 18 Authorities shall take all reasonable steps to promote the availability of fuel oils to comply with Annex VI If compliant fuel not available, ships not required to delay departure or deviate from the planned voyage The ship will have to notify its Administration and the relevant port of call each time it cannot find the compliant fuel The ship should present evidence/record it attempted to buy the compliant fuel in accordance with the voyage plan If evidence is provided, there should be no measures against the ship

15. PRACTICAL CONSEQUENCES Evidence/records/actions taken by ships: (a) (a) Bunker quotation/correspondence (b) (b) Voyage plan (c) (c) Bunker Delivery Note (BDN) (d) (d) Fuel Quality Test report (e) (e) Notification to Flag, Port Authority & PSC (f) (f) Report/indication that obtaining compliant fuel will cause deviation/or undue delay IMO Circular encouraging earlier application of new Regulation 18

16. FUEL OIL QUALITY IMO Secretariat invited ISO to consider a revision of a marine fuel oil specification (ISO 8217) addressing : -air quality, -ship safety, -engine performance, -crew health

17. possible PRACTICAL CONSEQUENCES Fuel Quality better defined IMO may regulate quality of marine fuels Ship operators could share expereince with Flags and demand assistance May accellerate the transit to better & uni-fuel usage New Guidelines to test MARPOL fuel sample complaince

18. Regulation 4 – Equivalent measures An Administration may allow any alternative method only if this is at least as effective in terms of emissions reductions as the emission reductions by using LSFO This means the Administration (and not the ship) have to acknowledge that alternative methods: –have equivalent efficiency in terms of SOx, PM & NOx –do not harm the environment –operate within the requirements of the IMO guidelines

19. PRACTICAL CONSEQUENCES Positive outcome for ship operators Adminstrations and not ships responsible to asses the efficiency and the reliability of the alternative measures Adminstrations and not the ships responsible that certified alternatives do not harm the environment

20. NOx emissions – Pre-2000 engines ”Upgrade Methodology” Retroactive measures on engines: –installed onboard ships constructed between 1 Jan 1990 and 31 Dec 1999 –power output > 5,000 kW; and –per cylinder displacement at or > 90 litres NOx emissions at Tier I level If the engine already meets Tier I NOx emission limits, simple certification is sufficient

21. NOx emissions – Pre-2000 engines Upgrade Methodology If the engine does not meet the Tier I NOx emission limitations, it is subject to measures: –ONLY if there is an upgrading system certified by a Party to MARPOL Annex VI –ONLY if it certifies that such a system reduces the emissions of that particular engine to Tier I limits –the upgrading system is considered commercially available 12 months after a Party to MARPOL Annex VI deposits the notification on certification to IMO –upgrade at the ship’s first renewal survey after the upgrading system becomes commercially available –in case the upgrading system is not available at the time of completion of the renewal survey (ship owner has to document that), the flag would give an extension until the next Annual Survey

22. NOx emissions – Pre-2000 engines The upgrading system should not –decrease the engine rating by more than 1%, –increase fuel consumption by more than 2% –have other adverse effect on the durability or reliability of the engine Upgrading to an acceptable cost/benefit Cost of approved method x 10**6 C e = ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ P(kW) x 0.768 x 6000 hr/yr x 5 years x Δ NOx (g/kWh) C e < 375 SDR/metric ton of NOx reduction; SDR = Special Drawing Rights; 1 SDR = US$ 0.632 Ce < $237/metric ton of NOx reduction

23. NOx Kits – Example for IMO max. retrifitting costs (US$) Power ( kW) Re duction 10%20%30%40%50% (g/kWh) 1.73.45.16.88.5 5,00046,41492,828139,242185,656232,070 8,00074,263148,525222,788297,050371,313 12,000111,394222,788334,181445,575556,969 15,000139,242278,484417,727556,969696,211

24. NOx Kits – IMO Max. Costs (US$)

25. NOx emissions – Tier II (new engines) Tier II standards (emission reductions related to Tier I limits): –15.5% reduction (engines with n<130 rpm) (i.e. 14.36 g/kWh) – reductions between 15.5% and 21.8% depending on the engine’s rpm (engines with 130 rpm < n < 2000 rpm) –21.8% reduction (engines n > 2000 rpm) (i.e. 7.66 g/kWh) Applies to engines installed on ships constructed on and after 1 January 2011

26. NOx emissions-Tier III (new engines) Tier III standards – 80% reductions from Tier I limits, applicable when ships in ECA only Tier III limits apply to engines: –installed on ships constructed on & after 1 Jan 2016 –power output of > 130 kW (but engines between 130 kW – 750 kW may be exempted by the Administration) Outside ECAs - Tier II limits only Emission levels for Tier III are as follows: –3.40 g/kWh (engines with n<130 rpm) –9*n(-0.2) g/kWh (engines with 130 rpm < n < 2000 rpm) –1.96 g/kWh (engines n > 2000 rpm

27. PRACTICAL CONSEQUENCES Not a responsibility for ship operators Tier III compliance with SCRs (latest news – possible solution through in engine technology) If compliance through SCR only –existing SCR technology not efficient at low engine loads –compliance might not be achieved in ECAs (close to port, through estuaries and straits ships slow down) because the engine runs at a lowwe load Engine manufacturers to demonstrate compliance Class/Administration to certify BUT, in the long run, how would be Tier II compliant ships (delivered between 2011 and 2016) be treated in ECAs? Good advice: if possible, plan for Tier III compliant ships as from 2011

28. Regulation 15 Volatile Organic Compounds All tankers carrying crude oil shall have on board an approved VOC-Management Plan describing all the procedures the ship is applying in order to minimize the emissions of VOC Apart from that, there is no requirement for equipment or technical installations to limit the emissions INTERTANKO works with DNV to a draft VOC Management Plan model to be submitted to IMO

29. OUTCOME ON MARPOL ANNEX VI THANK YOU VERY MUCH