1. Environmental Regulatory Challenges Facing the Maritime Industry
NMEA Conference June 30 , 2015
Environmental Regulatory Challenges Facing the Maritime Industry
JOSEPH ANGELO
DEPUTY MANAGING DIRECTOR

2. INTERTANKO
BALLAST WATER
MANAGEMENT
AIR EMISSIONS
GREENHOUSE GAS

3. 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

4. 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

5. Major Goal
Lead the continuous improvement of the Tanker Industry’s performance in striving to achieve the goals of
- Zero fatalities
- Zero pollution
- Zero detentions

6. 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, i.e. oil companies, marine suppliers, educational bodies, etc.

7. MEMBERSHIP
204 Members
3,000+ Tankers
270+ Million DWT
Members in 42 countries
287 Associate Members

8. Resources
Secretariat of 20 people located in four offices in London (11), Oslo (7), Singapore (1) and the United States (1)
Supplemented by a Member supported network of 10 committees and five regional panels

9. International Involvement
Observer Status at
International Maritime Organization (IMO)
International Oil Pollution Compensation (IOPC) Funds
United Nations Framework Convention on Climate Change (UNFCCC)
Organization for Economic Cooperation and Development (OECD)
United Nations Conference on Trade and Development (UNCTAD)

10. International Maritime Organization(IMO)
United Nations specialized agency responsible for the safety and security of shipping and the prevention of marine pollution by ships, located in London, UK
Currently 170 member states, 3 associate members, 51 Inter-Governmental Organizations and 72 Non-Governmental Organizations in Consultative Status
Establishes international standards for maritime safety, maritime security and protection of the marine environment through the development of international conventions/ protocols (50+), codes, and recommendations
Conducts work through 5 committees (safety, environment, legal, facilitation and technical cooperation) and 7 supporting subcommittees

11. Ballast Water Management
Why is Ballast Water Management a major issue for the shipping industry?
INTERNATIONALLY – IMO Ballast Water Management Convention was adopted in 2004 as a “prospective” treaty, i.e. It mandated standards that were not achievable when the treaty was adopted with ambitious implementation dates.
2. NATIONALLY IN THE US – US Congress passed two separate laws giving two separate federal government agencies, the US Coast Guard and the US Environmental Protection Agency (EPA), authority to regulate ballast water management and their requirements vary from each other and IMO

12. Ballast Water Management
INTERTANKO’s Five Year Strategic Plan
Desired Outcome for Ballast Water Management:
Tanker industry is able to achieve compliance with current and future discharge standards (both regionally and internationally)
Focus:
Installation and Operation of appropriate and adequate ballast water management systems
Compliance and enforcement – need strong, well defined and realistic international regulations

13. Ballast Water Management – IMO
IMO Ballast Water Management Convention
Adopted in 2004
Entry into force requires ratification by 30 countries, 35% world’s grt
Currently, 44 countries, 32.86% grt
Bahamas, China, Greece, Malta, Panama, Singapore or UK, each alone could bring the convention into force
Argentina, India, Indonesia and Italy in the process
COMMENT: IMO SG committed to brining the Convention into force as soon as possible and has written to all key flag administrations urging them to ratify. Stats updated 4th Feb.

14. Ballast Water Management – IMO
Main INTERTANKO Concerns with IMO Ballast Water Management Convention
Guidelines for approval of ballast water management systems (G8) – not robust enough to provide reliable equipment
2. Availability of Ballast Water Management Systems (BWMS) to meet convention implementation schedule – unrealistic
Procedures for port State control – more onerous than type approval
COMMENT: IMO SG committed to brining the Convention into force as soon as possible and has written to all key flag administrations urging them to ratify. Stats updated 4th Feb.

15. Ballast Water Management – IMO
INTERTANKO (etal) made submission to MEPC 64 (October 2012) to address these issues
Port State Control should not be more rigorous than BWMS Type Approval testing procedures
IMO Assembly resolution should be developed with a realistic schedule for the installation of BWMS when treaty enters into force
G8 guidelines should be revised to require more rigorous Type Approval testing
COMMENT: IMO SG committed to brining the Convention into force as soon as possible and has written to all key flag administrations urging them to ratify. Stats updated 4th Feb.

16. Ballast Water Management – IMO
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

17. Ballast Water Management – IMO
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 can be taken
Stage 4 – Detailed analysis. If indicative sampling exceeds D2 standard by a certain threshold, a detailed analysis of ballast water can be taken

18. Ballast Water Management – IMO
Implementation schedule (availability of BWMS)
IMO Assembly Resolution (A.1088(28)) adopted, Dec 4, 2013 recommends governments:
implement the Convention based on the entry into force date of the Convention
considers ALL vessels constructed (keel laid) before entry into force as existing vessels
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

19. Ballast Water Management
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!!

20. Ballast Water Management – IMO
BWMS Type Approvals
Outcome of MEPC 67, October 2014 – Success!!(?)
Adopts an MEPC Resolution 253(67) 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 (May 2015)

21. Ballast Water Management – IMO
INTERTANKO and other industry associations submitted MEPC 68/2/16 to clarify MEPC 253(67)
BWMS approved to existing G8 shall not be required to be replaced when new G8 guidelines become applicable
BWMS approved to existing G8 shall not be required to be replaced for the life of the ship, provided they are installed, operated and maintained correctly
PSC should not detain ship, or fine or take criminal action against shipowner, if such BWMS does not comply with discharge standard

22. Ballast Water Management – IMO
OUTCOME – “protection of early movers
Installed BWMS approved to the current type approval guidelines should not be required to be replaced once the new guidelines are introduced
If current BWMS are installed, maintained and operated correctly then they should not be required to be replaced for the life of the ship or the BWMS, whichever comes first, due to occasional lack of efficacy
Early movers should not be penalized (sanctioned, warned, detained or excluded) solely due to “occasional exceedance of BWMS (D-2) standard
Footnote: non-penalization may be subject to review as additional information becomes available

23. Ballast Water Management – USCG
Final Regulations issued March 23, 2012
BWM plan and recordkeeping (same as IMO)
BWM discharge standard (same as IMO), review in 4 yrs
Schedule for installation of BWMS similar to IMO, BUT NO intent to align schedule with Resolution A.1088
BWMS not required if no discharge of ballast water into US waters (12 miles)
Acceptance of “Alternative” (AMS) BWMS for 5 years
All ships must eventually install CG approved BWMS
Ships may request an extension to compliance date for installation of a USCG approved BWMS

24. Ballast Water Management – USCG
INTERTANKO Assisting Members with USCG regulations
Implementation Schedule
Decision Tree …

25. USCG Ballast Water Decision Tree

26. Ballast Water Management – USCG
US Coast Guard
INTERTANKO assisting Members
Implementation Schedule
Decision Tree
Model Extension Request (MER) Letter

27. Ballast Water Management – USCG
US Coast Guard – Extension requests
January 1, 2016 extension date given to ships whose drydocking was scheduled for 2014
January 1, 2017 extension date given to ships whose drydocking was scheduled for 2015
January 1, 2018 extension date being given to ships whose drydockings are scheduled in 2016
Availability of USCG approved BWMS will be a factor in determining the length of time for future extensions
INTERTANKO has developed Model Extension Request (MER) letter for members wishing to request extension

28. Ballast Water Management – USCG
US Coast Guard – APPROVED BWM Systems
CG has advised that 22 BWMS manufacturers have submitted “Letter of Intent” to pursue USCG approval (54 AMS accepted by USCG)
For proprietary reasons, USCG cannot tell who those BWMS manufacturers are
INTERTANKO has contacted BWMS manufacturers to determine which of them have submitted “Letter of Intent” (results on INTERTANKO web site)
Only after the testing is completed and the results have been evaluated, will a BWMS manufacturer then submit an application to the USCG for approval of their BWMS

29. Ballast Water Management – USCG
US Coast Guard – APPROVED BWM Systems
USCG has received three applications for BWMS type approval (all three make use of UV treatment)
UV BWMS need further USCG “validation” of methodology for biological efficacy
CG indicates that they expect to have a USCG approved BWMS “sometime in 2015”
CG indicates they will be “realistic” in requiring when a ship calling at US ports must have a CG approved BWM system installed

30. Ballast Water Management
Shipowner dilemma!!
US is not party to IMO BWM treaty. USCG regs:
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
Ship operator must decide to either install AMS (and hope it gets USCG approval!) OR request an extension and hope there is a CG approved BWMS available for installation on their ship prior to the required installation date under the IMO Convention.

31. Ballast Water Management – USEPA
EPA Vessel General Permit issued December 19, 2013
To a large extent EPA VGP requirements are the same as USCG (discharge standard, compliance schedule, etc.)
Approval of BWMS is not required
BWMS monitoring required (functionality, equipment calibration, effluent, biocides)
New ship (keel laid after December 1, 2013) is required to install a BWMS to comply with the VGP, i.e. no acceptance of USCG extension provision in the VGP
EPA /USCG MoU – EPA Enforcement Policy, 27 Dec 2013
Vessel with USCG extension is non-compliant (if discharges in US waters – 3 miles), but EPA regards as a low-enforcement priority, provided all other regs are met

32. AIR EMISSIONS
Protocol to the International Convention for the Prevention of Pollution from Ships (MARPOL Annex VI)
Adopted in 1997, entered into force in 2005
Addresses nitrogen oxides (NOx), sulphur oxides (Sox), volatile organics compounds (VOCs) and shipboard incineration
Revision adopted in 2008, entered into force in 2010
Make significant changes to standards required for NOx and SOx emissions

33. AIR EMISSIONS
MARPOL Annex VI revision adopted in 2008, includes INTERTANKO proposal for global switch from use of residual to distillate fuels:
1. with a global sulphur content cap using a
two tiered approach:
(i) from 2010, a maximum of 1.00% sulphur content; and
(ii) for ships. engines installed on and after , a maximum 0.50% sulphur content
2. a Global Sulphur Emission Control Area (SECA)

34. Air Emission Requirements (SOx)

35. Emission Control Areas (ECAs)

36. AIR EMISSIONS Major industry concerns
Availability of fuel with sulphur content of less that 0.1%
Operational aspects (fuel switching, fuel segregation, low viscosity, low lubricity)
Fuel oil quality
Port State Control enforcement which ensures a “level playing field”

37. AIR EMISSIONS Low Sulphur Fuel Oil (LSFO) Availability (0.1%)
LS MGO generally available
Sting of 0.1% soothed by oil price falls
Premium expected to keep constant at ~$ per ton
New fuel/blends/hybrids (i.e. HDME 50)

38. AIR EMISSIONS ECAs – Fuel Change Over Challenges Safety aspects
combustion characteristics
heat transfer and circulation
flash point temp. (would 60ºC be lowered?)
Operational aspects
fuel segregation/contamination
incompatibility - fuel filter blockages
low viscosity – leaks & loss in pressure
low lubricity - pump seizure
cloud point temperature
bio element

39. AIR EMISSIONS HAZID to avoid mechanical failure & power loss
INTERTANKO/OCIMF Recommendations on Fuel Change Over Procedures
API Technical Considerations for Fuel Switching
CIMAC Guideline for Operation of Marine Engines on Low Sulphur Diesel

40. 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, 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

41. FUEL OIL QUALITY
Fuel oil quality for ships is regulated under Regulations 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

42. 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

43. 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
Work to progress through a Correspondence Group
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

44. FUEL OIL QUALITY CORRESPONDENCE GROUP REPORT (MEPC 68)
Initial approach on “guidance” could consist of a range or menu of options, from policies and quality control measures for fuel providers
“Majority” of the CG participants indicate the current legal framework is adequate for assuring fuel quality
INTERTANKO expresses “disappointment” with progress of CG and recommends development of “best practice” guidance and relook at adequacy of legal framework which is supported by majority of member states and almost all NGOs.
CG tasked to develop draft guidance on best practice and to further examine the adequacy of the current legal framework

45. 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

46. Reducing GHG emissions on new ships by 30% by 2025
GREENHOUSE GAS
Reducing GHG emissions on new ships by 30% by 2025
Design Index
(EEDI)
Attained EEDI < Required EEDI
10%
Phase 1
Reference Line Today
Phase 2
20%
Phase 3
on and after 2025
30%
Ship Size
(DWT)

47. 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!!

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

49. Shipping is energy efficient
GREENHOUSE GAS
Shipping is energy efficient
(Toyota Prius - 1 tonne, 1 kg CO2, 12 km)

50. INT. SHIPPING CONTRIBUTIONS TO GLOBAL CO2
Ships reduce GHG emissions at a higher rate than land
Source: IMO 3rd GHG Study (2014)

51. GREENHOUSE GAS 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?

52. GREENHOUSE GAS OUTCOME of MEPC 67 (October 2014)
No clear way forward on the need for an operational energy efficiency standard for ships (Political Issue!!)
Unspoken issue – Common But Differentiated Responsibilities (CBDR) principle in UNFCCC
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

53. GREENHOUSE GAS OUTCOME of MEPC 68 (May 2015)
Agreement that development of a data collection system for ships should follow a three step approach:
1. data collection
2. data analysis
3. decision-making on what further measures, if any, are required
Many detail issues still unresolved, including whether cargo should be part of the data collection (cargo is part of the EU data collection system)
Agreement to consider the matter further at intersessional meeting in September and its next session in April 2016

54. CONCLUSIONS
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

55. THANK YOU!
COMMENT: the +3 are BWMS with model variations, so there are 3 within the 13 BWMS approved that are simply variations of the approved BWMS, e.g. BWMS Mark 1 and BWMS Mark 2.