PANAMA MARITIME IX Initiatives to reduce toxic gas

PANAMA MARITIME IX Initiatives to reduce toxic gas emissions: perspective of the shipping companies. Iniciativas para reducir las emisiones de gases tóxicos: perspectiva de las navieras Peter M. Swift, MD, INTERTANKO

TANKERS “ Я” US

INTERTANKO – the Voice of the Tanker Industry International Association of Independent Tanker Owners INTERTANKO represents approximately 80% of the international oil and chemical fleet MISSION • To provide leadership to the Tanker Industry in serving the world with safe, environmentally sound and efficient seaborne transportation of oil, gas and chemical products VISION FOR THE TANKER INDUSTRY • A responsible, sustainable, respected Tanker Industry, committed to continuous improvement and constructively influencing its future ONE OF THE ASSOCIATION’S PRIMARY GOALS • Lead the continuous improvement of the Tanker Industry’s performance in striving to achieve the goals of: Zero fatalities, Zero pollution, Zero detentions

Round Table of international shipping associations BIMCO, ICS, INTERCARGO, INTERTANKO Congratulate the Panama Maritime Authority on Achieving ISO 9001: 2000 certification and Successful completion of the IMO voluntary Flag State Audit

PANAMA MARITIME IX Industry delivering on the Environmental Challenges A GOOD NEWS STORY

TANKER SHIPPING A GOOD NEWS STORY OIL POLLUTION IN 2008 A RECORD LOW Since records began in 1970

TANKER SHIPPING A GOOD NEWS STORY All tanker incidents and accidental pollution Number of incidents 000 ts spills Upward trend in number of incidents reversed, while trade continues to rise

TANKER SHIPPING A GOOD NEWS STORY Gasoline price at the pump (Dec 08/Jan 09) Dollars per litre 1. 50 1. 20 Long haul freight rate Marketing* 0. 90 Oil price Tax 0. 60 0. 30 0. 00 . USA Japan Germany UK Sources: IEA/Baltic Exchange Freight cost remains a fraction of delivered cost of oil

Initiatives to Reduce Air Emissions The Good News Continues • IMO MARPOL Annex VI Revisions and NOx Technical Code adopted in 2008 • Good progress at IMO on measures to reduce Green House Gas emissions

Annex VI Revisions and NOx Technical Code 2008 • SOx , and hence also Particulate Matter, emissions will be lowered progressively: 0. 5% fuel limit globally by 2020 (latest 2025) from current 4. 5% and 0. 1% in Emission Control Areas from current 1. 5 % by 2015 • New NOx limits on existing engines and progressively stricter limits on new engines Marine fuel oil quality will be further improved

Further initiatives – More ECAs (? ) § 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

Revision of MARPOL Annex VI (Pollutants) DRIVERS FOR CHANGE • Driven by governments – IMO member states “prepared” since Convention adopted in 1997 – Environmental impact often local/regional rather than global – EU Sulphur Directive in 1999 & Thematic studies (2000+) set unilateral challenge – California (2005) led US programmes – Local legislation emerged in Norway et al, and pending in Japan et al • Environmental Lobby coordinated and effective • Shipping Industry support initially very limited – Only a few pro-active, most reactive, some very negative • Economic drivers mostly negative – Extra costs for refiners and owners

AND MORE GOOD NEWS Reductions in VOC Emissions • Tanker industry introduced voluntary measures to reduce VOC emissions from cargo on passage in 2002 – cutting these by approximately 80% • MARPOL Annex VI revisions incorporated these in 2008, and take effect in 2010

Initiatives to Reduce Green House Gas Emissions Shipping has a head start as the most energy efficient means of transport

CO 2 Emissions per Unit Load by Transport Mode Large Tanker 1 Large Containership 3 Railway 6 Coastal Carrier 11 Standard-size Commercial Truck 49 Small-size Commercial Truck 226 Airplane 398 0 100 200 300 400 Units Relative Source: Ministry of Land, Infrastructure and Transport (Japan): The Survey on Transport Energy 2001/2002 MOL (Japan): Environmental and Social Report 2004 Shipping energy efficient 15

TANKER SHIPPING A GOOD NEWS STORY Shipping’s GREEN Credentials • This car, weighing one tonne, uses 1 litre of fuel to move 20 kms • This oil tanker uses 1 litre of fuel to move one tonne of cargo 2, 500 kms – more than twice as far as 20 years ago

One particular challenge for the shipping industry - i. e. seaborne trade will continue to grow strongly Trends – Population, Energy Use, Seaborne trade & CO 2 emissions Index Source: Fearnleys/INTERTANKO There has been strong growth in shipping

Reductions in GHG (CO 2) Emissions DRIVERS FOR CHANGE • Driven hardest by a limited number of governments – Supported mostly by EU governments, plus Japan, Australia, Canada and a few others – Until recently only limited support in US (mostly environmental interests) – Relatively little enthusiasm in much of the developing world, but now changing ? • Environmental Lobby growing – But not yet fully coordinated • Maritime industries showing considerable support – Proactive involvement – Although “hesitant” on market based instruments • Economic incentives strong – Fuel savings translate into potentially significant cost savings; plus incentives for innovation & new technologies

Initiatives underway at the IMO 1998: IMO initiated work on Green House Gas emissions 2003: IMO Assembly adopted Resolution A. 963(23): Policies and Practices Related to the Reduction of GHG from Ships Today: Work continues through the MEPC This year: we can confidently expect MEPC 59 to adopt - • Mandatory Design Index for new ships (long term measure) • Ship Efficiency Management Plan – existing ships: - Best practices to save energy used by the ship - Use of voluntary Operational Index (for each voyage & over a period of time/voyages)

Initiatives underway at the IMO Ship Performance Index: CO 2 / work done e. g. tonnes of CO 2 produced per tonne mile of cargo • Energy efficiency design index for new ships incentivises designers and builders. At the next stage: The ship’s design index should be less than a maximum limit to be set by regulations. The maximum value will then be lowered over time. • Voluntary operating index measures efficiency of ship in service. A management tool for owners and charterers to measure energy efficiency on a voyage. Incentivises the owner to keep hull and machinery “clean” and charterer to use the ship efficiently – capacity, routing and speed.

SEMP: Examples of Best Practices for tanker emissions & energy efficiency 1. 2. 3. 4. 5. Programme for Measuring and Monitoring Ship Efficiency Voyage Optimization Programme 1. 2. 3. Propulsion Resistance Management Programme 1. 2. Hull Resistance Propeller Resistance Machinery Optimisation Programme 1. 2. Main Engine monitoring and optimisation Optimisation of lubrication as well as other machinery and equipment Cargo Handling Optimization 1. 6. Speed selection optimization Optimised route planning Trim Optimization 2. Cargo vapours control procedure on all crude tankers (80 -90% reduction of cargo vapours) Cargo temperature control optimization Energy Conservation Awareness Plan 1. 2. On board and on shore training and familiarisation of company’s efficiency programme Accommodation-specific energy conservation programme

IMO is also reviewing possible economic measures to reduce CO 2 emissions • Bunker Levy /Compensation Scheme • Emissions Trading Scheme • Other, e. g. differentiated charges Industry has established Guiding principles and believe any measure should: • Be effective in reducing global GHG emissions • Be binding on and applicable to all ships • Be cost effective • Not distort competition • Support sustainable environmental development without penalising trade growth • Promote technical innovation and leading technologies • Be practical, transparent, fraud-free, easy to administer

Initiatives already under way - parallel voluntary measures For most ship types, some form of : • Speed optimisation • Voyage optimisation • Capacity optimisation is already in hand. For Tankers: • Liaison is encouraged between owners and charterers to optimise vessel speed and voyage schedules http: //www. ocimf. com/view_document. cfm? id=1147

Other initiatives under discussion Pending the setting of mandatory upper limits for the Energy Efficiency Design Index of new ships, the tanker industry is discussing: • The Establishment of a Reference Value for a New Ship (i. e. a Target) • Development of a Rating System relative to the Reference Value Similar to the performance rating of white goods

Other initiatives already under way - parallel voluntary measures Ports / terminals • Incentivised to improve port efficiency • Reward environmentally friendly ships with lower port dues Industry is currently developing a Port Efficiency Index A Performance Indicator* of ship-port efficiency measuring: Total CO 2/ Unit of Cargo handled from arrival to departure *i. e. an extension of the IMO New Ship Design Index / Operational Index [ & similarly for SOx, NOx & VOC emissions]

The Good News continues…. The Shipping Industry is committed to playing its part in finding solutions to reduce Green House Gas emissions. Industry: • Taking a pro-active approach to reductions in CO 2 emissions • Encouraging innovation to improve performance • Continues to support global trade • Encourages modal shift to shipping to reduce overall emissions

THANK YOU / GRACIAS “Proud of our people, Proud of our ships” For more information, please visit: www. intertanko. com www. poseidonchallenge. com www. shippingfacts. com www. maritimefoundation. com