IBIA ANNUAL CONVENTION SEPTEMBER 11, 2007 REDUCING AIR EMISSIONS FROM SHIPS JOSEPH ANGELO DIRECTOR, REGULATORY AFFAIRS AND THE AMERICAS

IBIA ANNUAL CONVENTIONIBIA ANNUAL CONVENTIONSEPTEMBER 11, 2007SEPTEMBER 11, 2007

REDUCINGREDUCING AIR EMISSIONS AIR EMISSIONS

FROM SHIPSFROM SHIPS

JOSEPH ANGELOJOSEPH ANGELODIRECTOR, REGULATORY AFFAIRS DIRECTOR, REGULATORY AFFAIRS

AND THE AMERICASAND THE AMERICAS

INTERTANKOINTERTANKO

INTERNATIONAL ASSOCIATION OF INTERNATIONAL ASSOCIATION OF INDEPENDENT TANKER OWNERSINDEPENDENT TANKER OWNERS

MEMBERSHIPMEMBERSHIP

• 260+ MEMBERS260+ MEMBERS

• 2,650+ TANKERS2,650+ TANKERS

• 220+ MILLION DWT220+ MILLION DWT

• MORE THAN 75% OF INDEPENDENT MORE THAN 75% OF INDEPENDENT TANKER FLEETTANKER FLEET

• 300+ ASSOCIATE MEMBERS300+ ASSOCIATE MEMBERS


MISSIONMISSION

PROVIDE LEADERSHIPPROVIDE LEADERSHIP TO THE TANKER INDUSTRY TO THE TANKER INDUSTRY

IN SERVING THE WORLD WITH THE IN SERVING THE WORLD WITH THE SAFE, ENVIRONMENTALLY SOUND AND SAFE, ENVIRONMENTALLY SOUND AND

EFFICIENT SEABORNE EFFICIENT SEABORNE TRANSPORTATION OF OIL, GAS AND TRANSPORTATION OF OIL, GAS AND

CHEMICAL PRODUCTSCHEMICAL PRODUCTS


PRIMARY GOALPRIMARY GOAL

LEAD THE LEAD THE CONTINUOUS IMPROVEMENTCONTINUOUS IMPROVEMENT OF THE TANKER INDUSTRY’S OF THE TANKER INDUSTRY’S

PERFORMANCE IN STRIVING TO PERFORMANCE IN STRIVING TO ACHIEVE THE GOALS OF:ACHIEVE THE GOALS OF:

• ZERO FATALITIESZERO FATALITIES

• ZERO POLLUTIONZERO POLLUTION

• ZERO DETENTIONSZERO DETENTIONS

AIR EMISSIONS - IMOAIR EMISSIONS - IMO

• SEPT 1997 – IMO ADOPTS ANNEX VI TO SEPT 1997 – IMO ADOPTS ANNEX VI TO MARPOL, REGS FOR THE PREVENTION MARPOL, REGS FOR THE PREVENTION OF AIR POLLUTION FROM SHIPSOF AIR POLLUTION FROM SHIPS

• MAY 2005 – ANNEX VI ENTERS INTO MAY 2005 – ANNEX VI ENTERS INTO FOR INTERNATIONALLY (US AND FOR INTERNATIONALLY (US AND CANADA CURRENTLY NOT PARTY)CANADA CURRENTLY NOT PARTY)

• JULY 2005 – MEPC 53 DECIDES ANNEX JULY 2005 – MEPC 53 DECIDES ANNEX VI SHOULD BE REVISED TO REDUCE VI SHOULD BE REVISED TO REDUCE AIR EMISSIONS FROM SHIPSAIR EMISSIONS FROM SHIPS

AIR EMISSIONSAIR EMISSIONS

IMO ANNEX VI REVISION TIMETABLEIMO ANNEX VI REVISION TIMETABLE

• MEPC 54 (March 2006) – Proposals for revision. The MEPC 54 (March 2006) – Proposals for revision. The work is delegated to BLG Sub-Committeework is delegated to BLG Sub-Committee

• BLG 10 (April 2006) – Initial review of the proposals BLG 10 (April 2006) – Initial review of the proposals and documents (over 30 documents)and documents (over 30 documents)

• Two correspondence groups (April – October 2006)Two correspondence groups (April – October 2006)

• INTERSESSIONAL MEETING OSLO (November 2006) INTERSESSIONAL MEETING OSLO (November 2006)

• BLG 11 (April 2007) – considerBLG 11 (April 2007) – consider draft proposals for draft proposals for revised Annex VI, the NOx Code and Guidelinesrevised Annex VI, the NOx Code and Guidelines

• MEPC 56 (July 2007MEPC 56 (July 2007), BLG 12 (Feb 2008) & MEPC 57 ), BLG 12 (Feb 2008) & MEPC 57 (March 2008) – final rounds for approval(March 2008) – final rounds for approval


• COVERED BY ANNEX VICOVERED BY ANNEX VI

– Oxides of Nitrogen (NOx) – create OzoneOxides of Nitrogen (NOx) – create Ozone– Sulphur Oxides (SOx) – create acidificationSulphur Oxides (SOx) – create acidification– Hydrocarbons (HC) – gas, soot and some Hydrocarbons (HC) – gas, soot and some

particulatesparticulates– Volatile Organic Compounds (VOC)Volatile Organic Compounds (VOC)– Refrigerant GasesRefrigerant Gases

• NOT COVERED (CURRENTLY) BY ANNEX VINOT COVERED (CURRENTLY) BY ANNEX VI

– Particulate MatterParticulate Matter– Carbon Dioxide (COCarbon Dioxide (CO22) ) – Carbon Monoxide (CO)Carbon Monoxide (CO)

AIR EMISSIONS – SOXAIR EMISSIONS – SOXDATE SHIP TYPE WHERE max. % S REG.

19.05.2005 All Everywhere 4.5 IMO19.05.2006 All Baltic Sea 1.5 IMO & EU11.08.2006 All All EU Ports EU

MGO (DMA and DMX) 0.2MDO (DMB and DMC) 1.5

11.08.2006 Passenger ships EU 1.5 EU

1.01.2007 All aux. & diesel-electric 24 miles off California shore CARB main engines on all ships MGO (DMA grade) --

MDO (DMB grade) 0.5

11.08.2007 All North Sea & English Channel 1.5 EU22.11.2007 All North Sea & English Channel 1.5 IMO1.01.2010 All All EU ports 0.1 EU1.01.2010 Inland waterway ships All EU inland waterways 0.1 EU

1.01.2010 All aux. & diesel-electric 24 miles off California shore CARB main engines on all ships MGO (DMA grade) 0.1

1.01.2012 16 Greek ferries Greek ports 0.1 EU

AIR EMISSIONSAIR EMISSIONSPROPOSALS FOR AMENDMENTSPROPOSALS FOR AMENDMENTS

- Lower - Lower limits for SOx & NOx emissionslimits for SOx & NOx emissions- - SECAs with lower S cap (1.0% or 0.5%)SECAs with lower S cap (1.0% or 0.5%)- NOx emission limitation on existing engines- NOx emission limitation on existing engines- - NECAs – NOx controlled areasNECAs – NOx controlled areas- Restrict Particulate Matters (PM) emissions- Restrict Particulate Matters (PM) emissions- - Restrict on VOC emissions from cargo oil Restrict on VOC emissions from cargo oil

tanks tanks - Restriction on CO- Restriction on CO22 emissions emissions


INTERTANKO EXECUTIVE COMMITTEE INTERTANKO EXECUTIVE COMMITTEE GUIDING PRINCIPLES –GUIDING PRINCIPLES –

• ENSURE A SOLID PLATFORM OF ENSURE A SOLID PLATFORM OF REQUIREMENTSREQUIREMENTS

• BE REALISTIC AND FEASIBLEBE REALISTIC AND FEASIBLE• SEEK POSITIVE REDUCTION IN AIR SEEK POSITIVE REDUCTION IN AIR

EMISSIONS FROM SHIPSEMISSIONS FROM SHIPS• CONTRIBUTE TO A LONG TERM AND CONTRIBUTE TO A LONG TERM AND

PREDICTABLE REGULATORY REGIMEPREDICTABLE REGULATORY REGIME• PREVENT UNILATERAL/REGIONAL PREVENT UNILATERAL/REGIONAL

REGULATIONS – IMO STANDARDSREGULATIONS – IMO STANDARDS


• INITIAL PROPOSALS FOCUSED ON AIR INITIAL PROPOSALS FOCUSED ON AIR EMISSIONS STANDARDS AND EMISSIONS STANDARDS AND ABATEMENT EQUIPMENTABATEMENT EQUIPMENT

• FUEL STANDARD WAS FUEL STANDARD WAS NOTNOT BEING BEING CONSIDERED CONSIDERED

• MAIN PURPOSE OF INTERTANKO MAIN PURPOSE OF INTERTANKO SUBMISSION WAS TO “PRESENT SUBMISSION WAS TO “PRESENT ISSUES THAT MERIT FURTHER ISSUES THAT MERIT FURTHER DISCUSSION BY IMO WORKING GROUP DISCUSSION BY IMO WORKING GROUP WHEN CONSIDERING REVSION OF WHEN CONSIDERING REVSION OF ANNEX VI OF MARPOL”ANNEX VI OF MARPOL”


INTERTANKO SUBMISSIONINTERTANKO SUBMISSION

• DISTILLATE FUELS WITH SULPHUR CAP:DISTILLATE FUELS WITH SULPHUR CAP:

- FROM [2010], MAXIMUM OF 1% SULPHUR- FROM [2010], MAXIMUM OF 1% SULPHUR

- FOR ENGINES INSTALLED AFTER [2015],- FOR ENGINES INSTALLED AFTER [2015], MAXIMUM OF 0.5% SULPHUR MAXIMUM OF 0.5% SULPHUR

• GLOBAL SULPHUR EMISSION CONTROL GLOBAL SULPHUR EMISSION CONTROL AREAAREA

• REVISION OF CHECKING AND MONITORING REVISION OF CHECKING AND MONITORING OF COMPLIANCEOF COMPLIANCE


IMO WORKING GROUP PROPOSALS – SOXIMO WORKING GROUP PROPOSALS – SOXA. A. Status QuoStatus Quo - No change - No change

B. B. Sulphur Emissions Control Area (SECA)Sulphur Emissions Control Area (SECA)::– A global sulphur cap (unchanged or lower value) A global sulphur cap (unchanged or lower value) – SECA sulphur cap lowered in two tiers:SECA sulphur cap lowered in two tiers:

• 1.0% in [2010]1.0% in [2010]• 0.5% in [2015]0.5% in [2015]

C1. C1. Change to distillate fuelsChange to distillate fuels (ref. INTERTANKO): (ref. INTERTANKO):– Use of distillate fuels for all shipsUse of distillate fuels for all ships– A global sulphur cap in two tiers: A global sulphur cap in two tiers:

• 1.0% in [2012]1.0% in [2012]• 0.5% in [2015]0.5% in [2015]

– Include in MARPOL Annex VI the specification for the distillate Include in MARPOL Annex VI the specification for the distillate fuel to be used by shipsfuel to be used by ships

C2. C2. Global capGlobal cap – As C1 but allows use of residual fuel + scrubbers – As C1 but allows use of residual fuel + scrubbers


• IMO BULK LIQUID & GASES (BLG) IMO BULK LIQUID & GASES (BLG) SUBCOMMITTEE MET APRIL 16-20 TO SUBCOMMITTEE MET APRIL 16-20 TO CONSIDER THE OUTCOME OF ITS CONSIDER THE OUTCOME OF ITS NOVEMBER WG MEETINGNOVEMBER WG MEETING

• ADDITIONAL SUBMISSIONS MADE BY ADDITIONAL SUBMISSIONS MADE BY THE US, NORWAY, SWEDEN, ICS, THE US, NORWAY, SWEDEN, ICS, OCIMF, BIMCO, FOEI AND OTHERSOCIMF, BIMCO, FOEI AND OTHERS


USA PROPOSALUSA PROPOSAL

• SOx & PM – globally, consider INTERTANKO proposal for MDO [with 0.5% S cap]

• SOx & PM – emission limits at [200] nm from shore as from 2011 [0.1% S cap]

• NOx standards for existing (pre-2000) engines - 20% reduction

• NOx for new engines:– Tier II - 15% – 25% as from 2011– Tier III - 80% only in defined areas

(NECAs) as from 2016


BIMCO PROPOSALBIMCO PROPOSAL

RETAIN THE CURRENT ANNEX VI STRUCTURE, BUT RETAIN THE CURRENT ANNEX VI STRUCTURE, BUT

LOWER EMISSION LIMITS GLOBALLY AND IN SECAsLOWER EMISSION LIMITS GLOBALLY AND IN SECAs

GLOBALLYGLOBALLY- - 3% SULPHUR CAP IN 2012 3% SULPHUR CAP IN 2012- - 1.5% SULPHUR CAP IN 20161.5% SULPHUR CAP IN 2016- - USE TREATMENT TECHNOLOGIESUSE TREATMENT TECHNOLOGIES

IN SECAs SHIPS SHOULD USE MDO ONLYIN SECAs SHIPS SHOULD USE MDO ONLY- 1% SULPHUR CAP IN 2011- 1% SULPHUR CAP IN 2011- 0.5% SULPHUR CAP IN 2015- 0.5% SULPHUR CAP IN 2015- ALSO USE TREATMENT TECHNOLOGIES - ALSO USE TREATMENT TECHNOLOGIES


OUTCOME FROM BLG MEETING:OUTCOME FROM BLG MEETING:

• RETAIN 6 OPTIONS, 4 FROM WG MTG RETAIN 6 OPTIONS, 4 FROM WG MTG PLUS US AND BIMCO OPTIONS; ANDPLUS US AND BIMCO OPTIONS; AND

• IMO SG WILL PROPOSE STUDY TO IMO SG WILL PROPOSE STUDY TO DETERMINE THE EFFECTS OF THE DETERMINE THE EFFECTS OF THE OPTIONSOPTIONS


MEPC 56 MET IN JULY 9 – 13 MEPC 56 MET IN JULY 9 – 13 “ “NOTES” OUTCOME OF BLG 11NOTES” OUTCOME OF BLG 11

NEXT STEPS AT IMO: NEXT STEPS AT IMO:

• IMO SG INITIATES STUDYIMO SG INITIATES STUDY

• BLG WORKING GROUP MEETING IN BLG WORKING GROUP MEETING IN OCTOBER IN GERMANYOCTOBER IN GERMANY

• BLG MEETS FEBRUARY 2008BLG MEETS FEBRUARY 2008

• MEPC 57 MEETS MARCH/APRIL 2008MEPC 57 MEETS MARCH/APRIL 2008


TWO BASIC ALTERNATIVESTWO BASIC ALTERNATIVES

• ““CLEAN” FUELSCLEAN” FUELS

- Low sulfur residual fuel oils (LSRFO)- Low sulfur residual fuel oils (LSRFO)

- Distillate fuels (MDO) - Distillate fuels (MDO)

And/OrAnd/Or

• SHIPBOARD TECHNOLOGYSHIPBOARD TECHNOLOGY


LSRFO FUELSLSRFO FUELS

• Increase storage capacity for LSRFO• Segregation of HSFO and LSF/MDO tanks• Requires fuel switching • Additional storage for lower BN number

lube/cylinder oil• Manifolds modifications for bunkering & fuel

sampling• Requires the use of exhaust gas scrubbers• Availability (?)• Cost (?)


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


DISTILLATE FUELS (MDO)DISTILLATE FUELS (MDO)

• Applies to ALL existing ships/engines• 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


OTHER ENVIRONMENTAL BENEFITS OF MDO OTHER ENVIRONMENTAL BENEFITS OF MDO

• SIGNIFICANTLY REDUCES ONBOARD SIGNIFICANTLY REDUCES ONBOARD ENGINEROOM GENERATED WASTEENGINEROOM GENERATED WASTE

• ““CLEANER” WASTE, FREE OF HAZARDOUS CLEANER” WASTE, FREE OF HAZARDOUS ELEMENTS FOUND IN RESIDUAL FUELSELEMENTS FOUND IN RESIDUAL FUELS

• NEGATES NEED FOR ABATEMENT NEGATES NEED FOR ABATEMENT TECHNOLOGY AND ASSOCIATED WASTES TECHNOLOGY AND ASSOCIATED WASTES AND DISPOSAL OF SUCH WASTEAND DISPOSAL OF SUCH WASTE

• POTENTIAL BUNKER SPILLS SIGNIFICANTLY POTENTIAL BUNKER SPILLS SIGNIFICANTLY LESS HARMFULLESS HARMFUL


SAFETY BENEFITS OF MDOSAFETY BENEFITS OF MDO

• LESS INCIDENTS WITH ENGINE LESS INCIDENTS WITH ENGINE BREAKDOWNS DUE TO POOR QUALITY BREAKDOWNS DUE TO POOR QUALITY FUELSFUELS

• NO NEED FOR COMPLEX FUEL CHANGE NO NEED FOR COMPLEX FUEL CHANGE OVER OPERATIONSOVER OPERATIONS

• NO RISK OF INCOMPATIBILITY OF BLENDED NO RISK OF INCOMPATIBILITY OF BLENDED FUELSFUELS

• SAFER WORKING ENVIRONMENT FOR SHIPS SAFER WORKING ENVIRONMENT FOR SHIPS CREWCREW


UNRESOLVED ISSUESUNRESOLVED ISSUESRELATED TO RELATED TO MDOMDO

• AVAILABILITYAVAILABILITY

• COSTCOST

• CO2CO2


SHIPBOARD TECHNOLOGIESSHIPBOARD TECHNOLOGIES

• Scrubber technologies are not yet proven and Scrubber technologies are not yet proven and have their own environmental as well as have their own environmental as well as economic and availability challenges economic and availability challenges

• ““Cold ironing” - with associated problems like Cold ironing” - with associated problems like lack of international standards forlack of international standards for– voltage/frequency of powervoltage/frequency of power– shore/ship connection systems andshore/ship connection systems and– compatibility with shipboard requirements for power compatibility with shipboard requirements for power

supply for hydraulic power sources (compressors supply for hydraulic power sources (compressors needing up to several MW) needing up to several MW)

AIR EMISSIONSAIR EMISSIONSEXHAUST GAS SCRUBBERSEXHAUST GAS SCRUBBERS

Storage Storage tank for tank for solid solid wastewaste

Filters for PMFilters for PM

Water Water waste waste treatment treatment plantplant

AIR EMISSIONSAIR EMISSIONS- For a main engine of 20 MW, seawater up to 22,000 t/day needs to be processed(45 t/hr/MW*) (supplemented with some 6,500 t/day to lower pH)

- Up to 100 kg/day of hazardous sludge (5kg/day/MW*)

* data supplied by Krystallon


SCRUBBERSSCRUBBERS• EXTREMELY LARGE IN SIZE TAKING EXTREMELY LARGE IN SIZE TAKING

CONSIDERABLE SPACE ON SHIPCONSIDERABLE SPACE ON SHIP

• MORE THAN ONE NEEDED FOR MOST SHIPS, MORE THAN ONE NEEDED FOR MOST SHIPS, UP TO FOUR FOR LARGER SHIPSUP TO FOUR FOR LARGER SHIPS

• MASSIVE AMOUNTS OF WATER NEEDED ON A MASSIVE AMOUNTS OF WATER NEEDED ON A CONTINUAL BASISCONTINUAL BASIS

• NEW WASTE STREAM FROM SHIP THAT MUST NEW WASTE STREAM FROM SHIP THAT MUST BE DISPOSED AT SEA OR ASHOREBE DISPOSED AT SEA OR ASHORE

• ADDITIONAL SHIP OPERATIONAL ADDITIONAL SHIP OPERATIONAL PROCESSES AND PROCEDURES FOR PROCESSES AND PROCEDURES FOR ALREADY OVERWORKED CREWALREADY OVERWORKED CREW


• SCRUBBER INSTALLATION– 4 scrubbers/ship– time to retroift – at least 30 days/ship– 100 shipyards (ships over 30,000 dwt)

• RETROFIT ( 1 ship/shipyard every day):– for 10,00O ships: 8+ years– for 15,000 ships: 12.5 years

• RETROFIT ( 2 ships/shipyard every day):– for 10,00O ships: 4 years– for 15,000 ships: 6+ years


UNRESOLVED ISSUESUNRESOLVED ISSUESRELATED TO RELATED TO SCRUBBERSSCRUBBERS

• AVAILABILITYAVAILABILITY

• COSTCOST

• CO2CO2

FINAL THOUGHTSFINAL THOUGHTS

FOR THOSE THAT ADVOCATE A CHOICE FOR FOR THOSE THAT ADVOCATE A CHOICE FOR COMPLIANCE, ARE THEY CERTAIN THEY COMPLIANCE, ARE THEY CERTAIN THEY WILL HAVE A CHOICE??WILL HAVE A CHOICE??

WILL THE FUEL PRODUCERS ENSURE WILL THE FUEL PRODUCERS ENSURE ADEQUATE SUPPLIES OF MDO WORLDWIDE ADEQUATE SUPPLIES OF MDO WORLDWIDE FOR THOSE SHIPOWNERS THAT DO NOT FOR THOSE SHIPOWNERS THAT DO NOT WISH TO USE SCRUBBERS??WISH TO USE SCRUBBERS??

OROR

WILL ALL SHIPOWNERS HAVE TO INSTALL AND WILL ALL SHIPOWNERS HAVE TO INSTALL AND USE SCRUBBERS IN CASE MDO IS NOT USE SCRUBBERS IN CASE MDO IS NOT AVAILABLE WORLDWIDE??AVAILABLE WORLDWIDE??

FINAL THOUGHTSFINAL THOUGHTSWHO SHOULD BE RESPONSIBLE FOR WHO SHOULD BE RESPONSIBLE FOR

VERIFICATION AND COMPLIANCE?VERIFICATION AND COMPLIANCE?

• SHIPOWNERSHIPOWNER for:– Cost and installation of technology– Combustion process– Exhaust gas emission standards– Disposal of by-products

OROR• FUEL PRODUCERFUEL PRODUCER for:– Quality of fuel supplied

AND• ENGINE MANUFACTURERSENGINE MANUFACTURERS– Facilitate engine design that copes with a predictable

rule development on lowering emissions

FINAL THOUGHTSFINAL THOUGHTS

Marine Diesel OilMarine Diesel Oil ADDRESSES ADDRESSES

THE ROOT CAUSE OFTHE ROOT CAUSE OF

AIR POLLUTION FROM SHIPSAIR POLLUTION FROM SHIPS

RATHER THAN THE EFFECTS OFRATHER THAN THE EFFECTS OF

CLEANING UP THE AIR POLLUTIONCLEANING UP THE AIR POLLUTION

ON THE SHIPON THE SHIP

AFTER IT HAS BEEN CREATEDAFTER IT HAS BEEN CREATED

THANKTHANK

YOUYOUWWW.INTERTANKO.COMWWW.INTERTANKO.COM

Documents

IBIA ANNUAL CONVENTION SEPTEMBER 11, 2007 REDUCING AIR EMISSIONS FROM SHIPS JOSEPH ANGELO DIRECTOR, REGULATORY AFFAIRS AND THE AMERICAS