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July, 2009

Climate Change :A Challenge for Engineers !

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What is the greenhouse effect?

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What is causing global warming?The six greenhouse gases with the highestwarming potential are:

•Carbon dioxide - CO2

•Methane - CH4

•Nitrous oxide - N2O

•Hydro fluorocarbons - HFCs

•Per fluorocarbons - PFCs

•Sulphur hexafluoride - SF6

Of these gases, CO2 is by far the most abundant

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The impact:

- Increased temperature

- Sea level rise due tomelting of permanent icecaps and glaciers

-More violent and frequentweather phenomena

CLIMATE CHANGE

Source: IPCC FAR 2007

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NASA 2006

Time is running out …

Climate Change is already experienced worldwide

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ANDY TRANSPORT DESIGNAUTOMOTIVE, RAIL, SHIP, FERRY, VLCC, PPFUEL SAVED 7.48 Bn$/Day ROYALTY 15 Bn$,15 CENTERS.CER 12 BnT/Yr…INV CAP 150 … WC 1500…WORK….4500 Bn$/YrDOUBLE SPEED for SAME TON-HP-ENGINE by ANDY BEARING1/3 FUEL for SAME HP Nor Asp by ANDY ROTARY ENGINECOMBINED gets 1/6 FUEL, 1/6 CO2e, 5/6 CER for SAME TON-SPEEDROYALTY 15 Bn$, 15 CENTERS

400200420.80.40.280kg40kgFuel T/hr12Mn6Mn120K60K24,00012000600024001200HP23018050403024181412Thk cm1150900250200150120907060OD cm

ANDY ENGINE ROTARY NO BOILER, NO TURBINE

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CO2e OIL = 2.9 T/T ; COAL = 2.33 T/TCER = 15,048 – 2,928 = 12,120 MnT/Yr

150015012,1202,92815.048MnT540015TOTAL3003016808402520COAL10803PP70070609012187308F.OIL25207SHIP2002017403482088OIL7202RAIL3003026105223132OIL10803Automotive

WCBn$

INBn$

CERMnT/Yr

ANDYCO2e

NOWCO2eTYPEFUEL MnT

T/Day…T/YrVEHICLE

FERRY DESIGN NOW NEW DOUBLE SPEEDFuel 4 Lit/hr/1000 CC; HP 120/ 1000 cc ; CO2e T/yr = 16.74* L/hrFare $1/100 km ; Freight $2/100 km /TSS SAME SPEED; DS DOUBLE SPEED DL DOUBLE LOAD

582.82.8886.413,3928002000,330kn,24k,200LFerryANDY.DL382.82.8886.413,3928001000,660kn,24k,200LFerryANDY.DS241.41.4443.26,6964001000,330kn,12k,100LFerryANDY.SS234.58.6443.240,17624001000,330kn,24k,600LFerryNORMAL

20.440.861.35021201000,16 kn,1200,30 LFerryNOW

CostMn$

NetMn$

FuelMn$

FAREMn$

Co2eT/Yr

FuelL/hrTon, Speed HP, VolVesselDESIGN

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* Millions are suffering from ever moreviolent and frequent hurricanes inAsia and the Americas• millions are suffering from too much water• millions are suffering from too little water• millions are suffering from poor water

Are things getting worse already?

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FUEL SAVED 12 MnT/Day… COST 7.48Bn$/Day

NET INCOME 20.8 Bn$ / Day

7481 Mn$.12 MnT3.015TOTAL

400.2.01.03200COALPP

2916.5.8331.1677500F.OILSHIP

1665.1.6650.33321000OILRAIL

2500.2.500.5031000OILAUTOMOTIVE

FUEL SAVED/DayQty….. VALUE

FUEL MnT/DayNOW......ANDY

RATE$/T

TYPEVEHICLE

TOTAL INV 150+1500= 1650 Bn$…REPAID in 80 DAYSCDM 12*25 = 300 ; WORK 4500; FUEL 2693 Bn$/YrNET = 300 + 4500 + 2693 = 7493 Bn$/Yr…..RoI = 454 %REPAID in 7493/360= 20.8 Bn$/Day; 1650/20.8= 80Days

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... or no water at all

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What is the world community doing?

First step: Adoption of the United Nations FrameworkConvention on Climate Change (UNFCCC) in 1992.

- Aimed at stabilizing atmospheric concentrations ofgreenhouse gases to avoid “dangerous anthropogenicinterference” with the climate system.

Second step: Adoption of the Kyoto Protocol in 1997- Commits developed countries (Annex I Parties) toreduce their overall emissions by an average of 5.2%below 1990 levels between 2008-2012.

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What is the world community doing?(continued)

Third step: The Bali Conference in 2007- Adopted the Bali Action Plan to meet the immediatechallenges of climate change, namely; adaptation,mitigation, technology transfer and financing.

Fourth step: The Copenhagen Conference in 2009- Expected to adopt more drastic reductions effectivefrom 2012, through a “post-Kyoto” treaty.

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IPCC Fourth Assessment Report (FAR)# 1ºC to 2C increase in temperature above 1990 levels willplace many unique and threatened systems, including manybiodiversity hotspots, at significant risk.# A global mean temperature increase of more that 2C willlead to increasing risk of species extinction and climate havoc

# The CO2 concentration must not exceed 450 ppm to keepthe global warming within 2C above 1990 level by 2100

To avoid this, CO2 emissions must peak within10 –15 years maximum

What is the consensus viewof the world’s most eminent scientists?

CO2 Concentration in Ice Core Samples andProjections for Next 100 Years

150

200

250

300

350

400

450

500

550

600

650

700

Years Before Present(B.P. -- 1950)

CO2

Con

cent

ratio

n (p

pmv)

Vostok RecordIPCC IS92a ScenarioLaw Dome RecordMauna Loa Record

Current(2001)

Projected(2100)

0100,000200,000300,000400,000

Increasing CO2 concentration

CO2 Concentration in Ice Core Samples andProjections for Next 100 Years

150

200

250

300

350

400

450

500

550

600

650

700

Years Before Present(B.P. -- 1950)

CO2

Con

cent

ratio

n (p

pmv)

Vostok RecordIPCC IS92a ScenarioLaw Dome RecordMauna Loa Record

Current(2001)

Projected(2100)

0100,000200,000300,000400,000

CO2 Concentration in Ice Core Samples andProjections for Next 100 Years

150

200

250

300

350

400

450

500

550

600

650

700

Years Before Present(B.P. -- 1950)

CO2

Con

cent

ratio

n (p

pmv)

Vostok RecordIPCC IS92a ScenarioLaw Dome RecordMauna Loa Record

Current(2001)

Projected(2100)

0100,000200,000300,000400,000

2005

Expected in 2100

Source: IPCC FAR 2007

To put it graphically….

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So, to what extent is shipping to blame?At present, CO2 emissions from internationalshipping amount to less that 3% of the totalworld’s emissions from all sources.

A very modest contribution, but in recent years ithas been targeted by the media with theperception that, collectively, ships emit as muchCO2 as some individual industrialized countries,

Often ignoring some facts …

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e.g. that Shipping:

• Carries 90%+ of world trade:– Raw materials and

commodities– Finished goods– Foodstuffs– Fuel

• Underpins global economy andis essential for sustainabledevelopment

• Is safe, secure and the mostenvironmentally- friendly andfuel-efficient of all modes oftransport

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CO2 emissions bydifferent Transport modes

To illustrate this…

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Are we merely reacting to the press?

IMO’s determination to address climate change comesfrom a deep and genuine concern for the environmentand the future of the planet

As a former British Prime Minister put it, we have no rightto “live at the expense of future generations”

Governments, industry as a whole and each andeveryone of us individually have a duty of care towardsthe environment

So, shipping is expected to contribute, however modestly,to the wider efforts being made to arrest global warming

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Has UNO taken any action already?

IMO has been working on this issue for more than ten years1991: Resolution A.719(17) – Recognized the need of establishing a

policy on prevention of air pollution from ships1997: MARPOL Conference: Resolution 8 – CO2 emissions from ships2000: IMO Study on Greenhouse Gas Emissions from Ships2003: Assembly resolution A.963(23) – IMO Policies and practices

related to the reduction of greenhouse gas emissions from ships2005: MEPC/Circ.471 – Interim Guidelines for voluntary ship CO2

Emission Indexing for use in trials2005: MEPC 55 – Work plan to identify and develop the mechanisms

needed to achieve the limitation or reduction of CO2 emissionsfrom international shipping

2007: MEPC 56 – Timeframe and Terms of Reference for updating the2000 IMO Study on Greenhouse Gas Emissions from Ships

2008: MEPC 57 – Fundamental principles underlying IMO policies onGHG emissions from ships

2008: June - Intersessional meeting of the Working Group on GHGemissions from ships in Oslo

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Where are we now?

Regulatory package for all ships nearing completion.

In accordance with the approved Work Plan, MEPC 58 isexpected to agree to the following:

Technical measures:

-New Ship CO2 Design Index

Operational measures:

-Revised CO2 Operational Index and associatedguidelines

-Guidance on best practices for the fuel-efficientoperation of Ships

MEPC 58 to continue developing market-based measures.

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In a bit more detail…The new ship CO2 Design Index:

# A formula that will enable shipdesigners and builders to designand construct ships of the future formaximum efficiency and thus,minimum GHG emissions

# A baseline will limit the level of emissions accordingto ship type, size, speed, power, design etc.

# To be made mandatory, probably under MARPOLAnnex VI

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In a bit more detail…

The CO2 Operational Index:

# Intended to measure the operational efficiency ofan existing ship

# It allows efficiency comparisons between similarships on similar routes and enables the operator tointroduce further efficiency measures

# With its associated Guidelines, it is meant to bevoluntary in nature

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In a bit more detail…

The Guidance on Best Practices:# Will provide existing ship operators with practical adviceas to the technical and operational means at their disposalto make their ships more efficient

# Being developed in close collaboration with the shippingindustry

# Meant to be voluntary in nature# Conceived as an efficiencymanagement tool for shipoperators

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Examples of efficiency measures:Technical:

-Improved fuel consumption – Hull and engines

-More efficient propellers and rudders

-Shore power – “cold ironing”

-Wind power

-Alternative fuels

Operational:

-Energy management

-Vessel speed reduction

-Improved routeing & less waiting

-Enhanced fleet management

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Will these reductions be enough?

They probably would if demand for international shippingstopped growing. BUT…

-World trade is likely to keep increasing, even duringa global economic crisis

-Emerging economies, such as China, India, Braziland others generate a growing need for shipping

-Many developing countries depend on sea transportfor food and basic commodities

So, the reductions achieved by applying technical andoperational measures may be offset by an increase inshipping activity over time.

That’s why we may need market-based measures

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Market-based measures?

Basically, these are economic mechanisms that enablethose who emit more CO2 than an established limit or“cap” to buy “credits” earned by those who emit less thanthe limit. There are two main modalities beingconsidered for shipping:

-Emission Trading Scheme (ETS)

-Fuel Levy

This subject is very complex and merits a dedicatedpresentation. Perhaps next year.

The introduction of these measures may necessitate aself-standing treaty instrument, along the lines of theIOPC Fund Convention

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Are there any serious obstacles?

We hope there will not be major problems in regulatingthe technical or operational measures. However, anumber of countries continue invoking the UNFCCC’sprinciple of “common but differentiated responsibilities”

They argue that industrialized countries (Annex I Parties)should be the ones to take action in reducinggreenhouse gas emissions from any source

This principle is applied to shipping under article 2.2 ofthe Kyoto Protocol, which states that “The Partiesincluded in Annex I shall pursue limitation or reduction ofemissions of greenhouse gases not controlled by theMontreal Protocol from aviation and marine bunker fuels,working trough ICAO and IMO, respectively.”

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This seems fair; what is the problem?

The principle is fair if applied to land-based industriessubject to national controls, such as power generation,cement production or land transport.

However, if applied to shipping, the effect would be thatships flagged in Annex I (industrialized) countries (25% ofthe world fleet) would be obliged to reduce their emissions,whereas ships flagged in non-industrialized countries (thevast majority of the world fleet) would not.

This is contrary to the spirit of all IMO Conventions, whichapply equally to all ships, regardless of flag.

Any such regime would eliminate the “level playing field”principle and would introduce unfair competition and flaghopping.

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Is there a solution in sight?

The Secretary-General, while emphasizing the need tokeep IMO Membership united, is spearheading a high-levelcampaign, advocating the following two principles:

-Any IMO regulatory regime should be applicable to allships engaged in international trade, regardless of flag

-The development and enactment of such a regulatoryregime should be the responsibility of IMO, not theUNFCCC

Administrations are being provided with sound arguments,both procedural and legal.

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How can this work in practice?e.g. by separating the technical/operational measuresfrom the market-based measures, such that:

Technical / Operational measures

-Mandatory provisions (CO2 Design Index) may be adoptedunder MARPOL Annex VI at MEPC 59

-Non-mandatory provisions (CO2 Operational Index and BestPractices) may be adopted by MEPC resolution

-Both of these would apply to all ships.

Market-based measures

-Continue developing an acceptable global mechanism(Emission Trading Scheme/Fuel Levy/Hybrid)

-Applicable to all ships but revenues to be used withcommon but differentiated responsibilities in mind.

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Finally, will UNFCCC accept the plan?

Hopefully…But it has to be adopted by IMO Membersfirst!

The Secretary-General intends to present a positionpaper to the Conference of Parties to the UNFCCC(COP 15) to be held in Copenhagen in December 2009

In the post-Kyoto instrument to be adopted by COP 15,ideally, there should be an article merely stating that:

“The Parties shall pursue limitation or reduction ofemissions of greenhouse gases not controlled by theMontreal Protocol from marine bunker fuels, workingthrough IMO.”

With no IMO regime in place, regional and unilateralaction may proliferate (EU; USA; Japan; Australia)

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Summing up•If shipping is to have a positive impact on climatechange, it needs a global regime developed and enactedby IMO and applied to all ships engaged in internationaltrade, giving due consideration to the needs ofdeveloping countries

•IMO will continue to work hard, in co-operation with theindustry, the UNFCCC Secretariat and other relevant UNorganizations, to achieve that noble objective

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Thank you for your attention!Venture Cap Fund us $

M A APPAN M E, Mb 9109840463337

5 Mn2 Mn3 MnFerry 500 T, 660 kn

35.4 Mn10.2 Mn25.2 MnTotal20 Mn4 Mn16 MnVLCC 10kT, 330 kn

5 Mn2 Mn3 MnShip 1000 T, 330 kn5 Mn2 Mn3 MnRail 1000T 600 kph

400,000200,000200,000Automotive RD,FDBothEngineBearingVehicle