1. IBC 2009 APRIL 23, 2009 FACING THE CHALLENGES TO REDUCE AIR EMISSIONS FROM SHIPS JOSEPH ANGELO DEPUTY MANAGING DIRECTOR

2. INTERTANKOMISSION SAFE, ENVIRONMENTALLY Provide Leadership to the Tanker Industry in serving the World with the SAFE, ENVIRONMENTALLY SOUND AND EFFICIENT SOUND AND EFFICIENT seaborne transportation of oil, gas and chemical products

3. INTERTANKO PRIMARY GOAL Lead the CONTINUOUS IMPROVEMENT of the Tanker Industry’s Performance in striving to achieve the Goals of: ZERO FATALITIES ZERO POLLUTION ZERO DETENTIONS

4. Why Marine Distillate Fuel? Why did INTERTANKO propose the global use of Marine Distillate Fuel? Initial proposals to IMO focused only on air emission standards and abatement equipment Fuel standard was NOT being considered Main purpose of the INTERTANKO submission was to “present issues that merit further discussion by the IMO Working Group when considering the revision of Annex VI of MARPOL”

5. Why Marine Distillate Fuel? Marine Distillate Fuel Addresses the ROOT CAUSE of air pollution from ships, rather than cleaning up the air pollution after it has been created on the ship Solves the problem ASHORE, not on the ship! Strives for ZERO pollution!!

6. IMO AMENDMENTS The sulphur content of the fuel must not exceed: Open sea4.50%Prior to Jan 1, 2012 3.50%After Jan 1, 2012 0.50%After Jan 1, 2020 (Review of 0.50% standard to be conducted by group of experts by 2018 to determine availability of such fuel. If determined not possible, then date becomes Jan 1, 2025) SECAs1.50%Prior to Mar 1, 2010 1.00%After Jan 1, 2012 0.10%After Jan 1, 2015

7. IMO AMENDMENTS Regulation 4 - Equivalent Measures An Administration may allow any fitting, material, appliance or apparatus to be fitted in a ship or other procedures, alternative fuel oils, or compliance methods used as an alternative to that required by this Annex if such methods are at least as effective in terms of emissions reductions as that required by this Annex, including those for SOx, PM and NOx. The Administration should take into account guidelines developed by the Organization. The Administration shall endeavour not to impair or damage its environment, human health, property or resources or those of another state.

8. IMO AMENDMENTS Adopted Equivalent Measures are a positive outcome for ship operators Adminstrations are responsible, not ship operators, to assess the effectiveness of alternative measures Adminstrations are responsible, not ship operators, to determine that alternative measures do not impair or harm the environment of another state

9. CHALLENGES Ship operators face three major challenges Which choice to comply Enforcement Fuel switching

10. WHICH CHOICE? TWO BASIC ALTERNATIVES “CLEAN” FUELS - Low sulfur residual fuel oils (LSRFO) - Marine distillate fuels (MDO or MGO) AND/OR SHIPBOARD TECHNOLOGY

11. WHICH CHOICE? LSRFO FUELS Increase storage capacity for LSRFO Segregation of HSFO and LSF/MDF tanks Requires fuel switching Additional storage for lower BN number lube/cylinder oil Manifolds modifications for bunkering & fuel sampling Will require the use of shipboard technology Temporary solution (?) Availability (?) Cost (?)

12. WHICH CHOICE? European refineries have no real incentive to produce LS RMFO unless the premiums are such that its price would resemble distillates Commerically speaking, refineries would have a clear incentive for further conversion of its entire residual streams to distillate products compared to residue desulphurisation to produce more LS RMFO Ship owners may just as well resort to burning MDO to meet the 1.5% sulphur cap

13. WHICH CHOICE? MARINE DISTILLATE FUELS With no other measure, immediately reduces: – SOx emissions by 80% to 90% – PM emissions by 90% – NOx emissions by 10% to 15% Reduces fuel consumption by some 4% for ALL Ships Facilitates further NOx reductions by in-engine modifications for IMO’s Tier II & III Eliminates the need of retrofitting of additional bunker storage capacity and associated piping Eliminates current onboard fuel treatment plants - additional cargo volume

14. WHICH CHOICE? OTHER ENVIRONMENTAL BENEFITS OF MARINE DISTILLATE FUELS Significantly reduces onboard engineroom generated waste “Cleaner” waste, free of hazardous elements found in residual fuels Negates the need for abatement technology and associated wastes and disposal of such wastes Potential spills significantly less harmful

15. WHICH CHOICE? SAFETY BENEFITS OF MARINE DISTILLATE FUELS Less incidents with engine breakdowns due to poor quality fuels No need for complex fuel change over operations No risk of incompatibility of blended fuels Safer working environment for ships crew

16. WHICH CHOICE? UNRESOLVED ISSUES RELATED TO Marine Distillate Fuel AVAILABILITY COST

17. WHICH CHOICE? SHIPBOARD TECHNOLOGIES Abatement technologies (exhaust gas scrubbers) “Cold ironing” – only addresses problem in port and lack of international standards for –voltage/frequency of power –shore/ship connection systems and –compatibility with shipboard requirements for power supply for hydraulic power sources (compressors needing up to several Megawatts)

18. WHICH CHOICE? EXHAUST GAS SCRUBBERS Size issue taking up considerable space on the ship More than one needed for most ships, up to four for larger ships (six on shuttle tankers) Massive amounts of water needed on a continual basis New waste stream from ship that must be disposed at sea or ashore Additional ship operational processes and procedures for already overworked crew What do you do when it breaks down?? Will port states accept a ship with exhaust gas scrubbers??

19. WHICH CHOICE? UNRESOLVED ISSUES RELATED TO Exhaust Gas Scrubbers AVAILABILITY COST RELIABILITY ACCEPTABILITY

20. WHICH CHOICE? To face this challenge, each ship operator must make a decision Marine Distillate Fuel appears to offer significant advantages! BUT, Each ship operator will choose what they feel is best for their operations

21. ENFORCEMENT Regulation 18 - Fuel Oil Availability Each Party shall take all reasonable steps to promote the availability of fuel oils to comply with this Annex. If a ship is not compliant, it should present evidence/record it attempted to buy the compliant fuel in accordance with the voyage plan. The ship is not required to deviate from the voyage and should not be delayed. If evidence is provided by the ship, there should be no measures against the ship. The ship will have to notify its Administration and the relevant port of call each time it cannot find the compliant fuel.

22. ENFORCEMENT Regulation 18 - Fuel Oil Quality Fuel shall meet specific criteria Supplier certifies that fuel meets requirements Supplier provides Bunker Delivery Note (BDN) with fuel oil details Ship keeps BDN onboard for 3 years Supplier also retains a copy of the BDN for 3 years Supplier provides sealed representative fuel sample (based on IMO Guidelines) Ship keeps the sample onboard for 12 months Any test of the fuel has to be done on the representative sample using Annex VI procedure

23. ENFORCEMENT Regulation 18 – Party obligations Take measures to promote availability of compliant fuel Require suppliers to provide BDN and sample Maintain a register of local suppliers Take action against suppliers of non-compliant fuel oil Inform flag state when non-compliant fuel was delivered to their ships and keep IMO informed for transmission to all member states Inform the Party under which jurisdiction the fuel was delivered of non-compliant fuel Take remedial action to bring non-compliant fuel into compliance

24. ENFORCEMENT Plenty of requirements for the ship, the fuel supplier and parties to Annex VI Ship leaves the port with the assumption that the fuel is compliant BUT, No mandatory control mechanism to ensure that the fuel is compliant Potential to expose ship to enforcement action by port states and/or engine problems with bad fuel

25. ENFORCEMENT Our Members experience has shown that: Most PSC officers target controls on: - Bunker Delivery Note (BDN) - Availability of the MARPOL fuel sample - Fuel change-over recordings in log books HOWEVER, Some PSC officers: - Want to see commercial fuel test reports rather than the BDN and then decide if control is necessary - Take fuel samples from service tanks In addition, many Flags do not respond to ship notifications of non-compliant fuel delivery

26. ENFORCEMENT Documentation indicates that fuel is compliant, but ship encounters problems: - Engine failure - Ship black out - Fuel pump failure - Reduced engine power Further analysis has shown: - Chemical wastes added to fuel - Fuel does not meet ISO specs - Fuel contains solid contaminates - Sulfur exceeds allowable limits

27. ENFORCEMENT ENFORCEMENT Number of Tanker Engine and Hull/Machinery Incidents Based on data from LMIU, ITOPF + others

28. ENFORCEMENT To face this challenge, ship operator needs to: Document all action taken to achieve compliance - Bunker quotations - Correspondence with supplier - Voyage plan Document/report how obtaining compliant fuel will cause deviation from intended voyage or undue delay Retain on board - Bunker Delivery Note - Representative fuel sample - Fuel quality test report Notify Flag, Port authority where fuel was obtained and PSC officers of non-compliant fuel

29. ENFORCEMENT INTERTANKO believes that more can be done Elimination of poor fuel quality needs to be addressed proactively by industry, rather than reactively by regulators after a serious accident occurs Appropriate test methodologies and standards are in place What is needed is a properly defined system of professional and independent control Fuel suppliers, test labs and ship operators should join together to address this problem

30. FUEL SWITCHING Need to use 2 or 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 Need for two differing cylinder lube oil systems (one for HSFO and one for LSFO/Distillate) Risk of incompatibility between differing grades of fuel during changeover Safety concern switching to fuels with reduced or increased ignition/combustion points

31. FUEL SWITCHING To face this challenge, ship operator needs to: Discuss with engine manufacturer the need for appropriate safety measures when switching fuels Ensure proper procedures for safe switching of fuels Increased training of crew to deal with operational procedures of switching

32. THANKYOU! WWW.INTERTANKO.COM