Revision of Marpol Annex VI and its

“ Revision of Marpol Annex VI and its implications for the Gulf region ” Peter M. Swift, MD, INTERTANKO 15 December 2008, Dubai

“ Revision of Marpol Annex VI and its implications for the Gulf region ” Air Emissions from Shipping - observations on process and practical aspects

Air Emissions from Shipping • Classical Pollutants – SOx, NOx, PM [MARPOL Annex VI] • Green House Gases – GHGs, principally CO 2

MARPOL Annex VI: Evolution (Regulatory) • Origins in IMO in early 1990 s • Annex VI adopted in 1997 • Annex VI entered into force in 2005 – revisions proposed immediately thereafter • 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

MARPOL Annex VI: Evolution (Political) • Environmental impact of SOx, NOx, PM often local / regional rather than global • Environmental Lobby coordinated and effective • Shipping Industry support for change initially very limited – Many reactive, few pro-active, some very anti • Economic drivers mostly negative – Extra costs for refiners and owners

Annex VI Amendments : in summary • Compromise accepted by all with adoption in 2008 – tacit approval procedure means entry into force on 1 July 2010 • New regulation on SOx and by default on PM • Primary compliance through fuel • Alternative methodologies (e. g. scrubbers) accepted as Equivalent Measures (but first to be approved by Administrations) • Marine fuel oil quality to be further improved • No measures to be taken against ships that do not receive adequate supply • Guidelines how to assess compliance if BDN data is challenged by PSC or test results • NOx Tier I on large engines already from the 1990 s • NOx Tier II and Tier III on new engines

MARPOL Annex VI Amendments GLOBAL S cap 2010 ECA S cap Tier III ECA only 4. 50% 1. 00% ----- yes ----- (July 1 st) 2011 2012 3. 50% 2015 0. 10% 2016 2020 / 2025 ---- yes 0. 50%

Annex VI: SOx Regulations New ECA areas could be? : USA West Coast Mediterranean Others? Particulate matter regulated by the sulphur content of the fuel or by scrubber technology [3335624. 19. 05. 2008 LS/KEA] 8

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/k. Wh) – 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/k. Wh) • Applies to engines installed on ships constructed on and after 1 January 2011

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 k. W (but engines between 130 k. W – 750 k. W may be exempted by the Administration) • Outside ECAs - Tier II limits only • Emission levels for Tier III are as follows: – 3. 40 g/k. Wh (engines with n<130 rpm) – 9*n(-0. 2) g/k. Wh (engines with 130 rpm < n < 2000 rpm) – 1. 96 g/k. Wh (engines n > 2000 rpm)

Annex VI Amendments: In summary • Compromise - positive but not perfect • Positives: – avoids fragmented regional legislation – 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

Regional Requirements - Still a potential problem § Planned new ECAs (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

Global / Regional Sulphur cap GLOBAL ECA EU (in port) 2010 (July 1 st) 4. 50% 1. 00% 0. 10% 2012 3. 50% 2015 2020/2025 0. 10% 0. 50% California (24 nm) 0. 50%

Some practical problems remain • Still need to use 2/3 fuels per voyage for few more years • Need for two differing cylinder lube oil systems (one for HSFO and one for LSFO/Distillate) • Fuel quality issues, especially with blending of LS fuels • Incompatability and other problems during change overs • Safety and cross-contamination issues when switching from HFO to MDO in boilers (EU and California)

Green House Gas (CO 2) Emissions • Driven primarily by a limited number of governments – Supported mostly by EU governments, plus Japan, Australia and a few others – Only limited support in US (mostly environmental interests) – Very little enthusiasm in much of the developing world • Environmental Lobby growing – Not yet fully coordinated • Maritime industries showing considerable support – Proactive involvement – Although “hesitant” on market based instruments • Economic incentives strong – High cost of bunker fuel / softening freight markets

The Good News : 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 16

The Good News: 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

The Good News : VOC Emissions Voluntary/Regulatory Measures • Tanker industry introduced voluntary measures to reduce VOC emissions from cargo on passage in 2002 – cutting these by approximately 80% • IMO MARPOL Annex VI revisions will incorporate these in 2008, and take effect in 2010

GHG reductions: Voluntary Measures already underway • Speed optimisation • Voyage optimisation • Capacity optimisation

GHGs : IMO Regulatory Development IMO initiated GHG work in 1998 IMO 2000 GHG study, updated 2008 IMO voluntary operating index since 2004 Ship Performance Index: CO 2 / work done IMO developing: For New Ships : Design Index (Mandatory) Best practice guidance on measures to reduce CO 2 emissions (Ship Efficiency Management Plan) and For Ships in Service : Operational Index (Non-mandatory)

SEMP Drafted 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

Optimising speed and voyage schedule http: //www. ocimf. com/view_document. cfm? id=1147 • Liaison encouraged between owners and charterers to optimise vessel speed and voyage schedules

Market Based Instruments • Bunker Levy / Compensation Scheme • Emissions Trading Scheme • Other, e. g. differentiated charges Guiding principles: any measure should: • Be effective in reducing global GHG emissions • Be binding on and applicable to all flag states • Be cost effective • Not (significantly) distort competition • Support sustainable environmental development without penalising trade growth • Promote technical innovation and leading technologies • Be practical, transparent, fraud-free, easy to administer

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

Hebei Spirit – A plea for justice Captain Jasprit Chawla & Chief Officer Syam Chetan of Hong Kong-based tanker Hebei Spirit

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

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 • Work is underway to a draft VOC Management Plan model to be submitted to IMO