MARITIME AIR EMISSIONS Lloyd’s List events 11 December 2007 Distillates THE Solution THE holistic solution for the revision of MARPOL Annex VI Peter M Swift

Atmospheric Pollution from Ships THE PROBLEM (S) ? Societal concerns about harmful emissions (SOx, NOx, PM pollutants) Little evidence of action by industry over past decade Different / conflicting local and regional drivers for change No clear consensus on what the best way forward is – other than revise Annex VI and hope that this is adequate enough to stave off unilateral actions

Atmospheric Pollution from Ships CHOICES TO BE MADE ! Solution(s) HFO with abatement technologies Cleaner fuels – LSFO or Distillate or Adopt trading systems ? Application(s) Globally Locally/regionally

HFO with abatement technologies Seawater scrubbers Freshwater scrubbers Trials underway Application to existing ships complex Other outstanding issues include: - availability - costs - handling of waste streams and products (including acceptability in restricted waters & ports, human health, etc.) - compatibility with catalytic reducers A further burden for the crew !

SECAs, Mini-SECAs, NECAs, Regional Zones ? Potential for complications and confusion Real potential for different: Regional requirements ? Implementation dates ? Multi-fuels / Sulphur levels (LSFO, Distillate, Gas Oil) ? + complex monitoring/verification ? IMO: Nov 2007 EU: Aug 2007 May 2006 A burden for the operator A further burden for the crew ! Sulphur Emission Control Areas, the Baltic and the North Sea

Emissions Trading – an option for SOx, NOx, PM emissions ? Issues: - where, with whom ? - all or some emissions ? - measurement, monitoring & verification A burden for the operator A further burden for the crew !

The INTERTANKO proposal All ships to burn only distillate fuels, with a global sulphur content cap: Tier I - a maximum sulphur content of 1.0%, and Tier II - for new engines - a maximum [0.5%] sulphur content i.e. one Global Sulphur Emission Control Area One Single Fuel specification included in Annex VI Simplified checking and monitoring provisions

Distillates – The Benefits Applies to existing ships/engines, as well as new With no other measure, immediately reduces: - SOx emissions by 80 to 90 % - PM emissions by 90 % - NOx emissions by 10 to 15 % Facilitates further NOx reductions by in-engine modifications (for IMO’s Tier II & III) Facilitates further improvements in energy efficiency (and GHG reductions) Improves engine reliability Reduces onboard fuel generated waste Cleaner, Simpler and more Efficient ships

Distillates – The Benefits Reduces onboard plant and maintenance Provides safer working environment for ships’ staff and shore side workers Avoids carriage of multi-fuels and fuel blending/switching problems Reduces control and monitoring requirements Lessens harmful impact of bunker spills Lowers burden for crew Cleaner, Simpler and more Efficient ships

The CO2 Equation CARBON NEGATIVE SOx deposits in Ocean due to Buffering effects Energy required to run scrubbers Sulphur deposits to Ocean in scrubber waste water due to Buffering Energy required to produce LSFO/Distillates CARBON POSITIVE Burning Distillate vs HFO Low sulphur – little or no buffering Higher calorific value No pre-treatment required for fuels No post-treatment required of fuel wastes + More efficient engines, better performance

The Distillate Solution The distillate solution addresses the root cause of air pollution from ships. Cleaner fuel for cleaner air !

For more information, please visit: THANK YOU For more information, please visit: www.intertanko.com www.poseidonchallenge.com www.shippingfacts.com www.maritimefoundation.com

The Distillate Proposal Accepted by most as being THE ideal solution, but Issues: Availability of MDO: 2012, 2015, 2020, or later still ? (But will HFO be available in 2020?) Price: Oil company investment for distillate globally US$126 bn. - future fuel price for distillate 1/3 rd more than HFO ? or Investment in scrubbers: 60,000 ships x (say) US$3m per ship = US$180 bn. Low Sulphur Fuel Oil globally at the same price as distillate Holistic approach: At least carbon neutral, probably carbon positive, i.e. net beneficial effect Leave open options for other solutions ? But will the shipowner have ANY option ?