North American Panel Stamford, CT. 19 March 2007 Peter M. Swift

North American Panel AIR EMISSIONS & REVISION of MARPOL ANNEX VI Peter M. Swift

Drivers of Change 1.Society is driving the requirement for ships to reduce harmful air emissions from engine exhausts – particularly in Europe and the US and to a lesser extent in Japan and elsewhere 2.Legislators, regulators and others are taking action and planning more 3.The IMO has initiated a revision process for MARPOL Annex VI States and industry are united in trying to ensure that Air Emissions are regulated internationally through the IMO

EU Thematic Strategy on Air Pollution Health: Fine Particles (PM 2.5 ) & Ozone (NOx and VOCs) –Range of problems from minor respiratory effects to premature death; also cardiovascular effects. No known thresholds for effects Acid rain (SO 2, NOx, NH 3 ) –Affects freshwaters and terrestrial ecosystems leads to loss of flora & fauna; reduced growth of forests, leaching of toxic metals into soil solution Eutrophication (NOx, NH 3 ) –Excess nutrient nitrogen causes species composition change & loss of biodiversity. Increases susceptibility to other stresses such as drought Ozone (non-health, NOx and VOCs) –Damages trees and plants including agricultural crops; damages buildings/materials

Fine particles PM 2.5 LIFE EXPECTANCY: In 2000 reduced by 8.1 months Target For 2020 Down to 5.5 months Life years lost: 3.6M in M in 2020 Premature deaths 350,000 in ,000 in Met. year months

Problem of too much nitrogen deposited to ecosystems in 2020 Percentage of ecosystem area in each model grid cell with nitrogen deposition above “safe level” Total Ecosystem area exceeded from eutrophication km 2 % 1997 met. year

EU Sulphur studies

Summary of “Business as Usual” (includes current ship measures) Emissions continue to decline But in 2020 –Premature deaths related to fine particulates still 270,000 –Loss of statistical average life still 5 months in the EU –Ozone premature mortality equal to 20,800 cases –119,000 km 2 of forest at risk from acid rain –590,000 km 2 of ecosystems at risk from nutrient Nitrogen –760,000 km 2 of forest at risk from ozone Cost-effective improvements are possible kT/annu m % SO % NOx % VOCs % PM % NH % Ships will represent 125% and 101% of land based SO 2 and NOx emissions in Emissions

EU action to date on Air Pollution Many measures taken on land based sources to reduce polluting emissions (Large Combustion Plant, road vehicles, fuels etc.) Community Marine Emissions Strategy of 2002 lead to the adoption of Directive 2005/33/EC on the sulphur content of marine fuels –SOx emission control areas – 1.5% S fuels –Marine gas oils used at berth from 2010 (0.1%) This has already been factored into Commission’s analyses for the Thematic Strategy

EU has mandate for more action on Air Pollution from ships (1) European Parliament In 2002, “Commission to take action by end 2006 if IMO has not proposed tighter international NOx standards” In 2006, Resolution: –Establish NOx emission standards for ships using EU Ports –Designate the Mediterranean Sea and North East Atlantic as SECAs –Lower sulphur content of marine fuels used in SECAs to 0.5% –Introduce financial instruments such as SOx and NOx taxes –Encourage differentiated port and fairway charges favouring low emission operation –Encourage use of shore-side electricity by ships in ports. –Proposal on marine fuel quality in the EU –Calls on the Commission to propose coordinate action to ensure a level playing field and to insist on action within the IMO; is convinced that a better balance between the costs of reducing emissions from ships and land-based sources is needed.

EU has mandate for more action on Air Pollution from ships (2) Council of Ministers (EU) In 2002, Conclusions: - “Reinforce consideration to promote in revision of Annex VI more ambitious measures as regards tighter global sulphur cap.. and tighter NO2 standards.” - “Urges EU Member States to submit proposals on tighter NOx standards under Annex VI.” - “Invites Commission to take action by end 2006 if IMO has not proposed tighter international NOx standards.” In 2006, Conclusions: - “Commission to continue its efforts to reduce ships’ emissions.”

EU: Further information Ship emissions policy and technical studies Thematic Strategy on air pollution & CAFE National emissions ceilings directive

US EPA Submission to IMO (BLG) Air pollution from ocean going vessels (OGVs) is a significant source of damage to human health …… its overall contribution is rapidly growing. In 15 years since the MEPC began discussions on air emissions, only limited progress has been made toward reducing these emissions. While the sulphur content of marine fuel oil has been capped at 45,000 ppm, the vast majority of fuel never exceeded that level and the global sulphur cap has resulted in little, if any, reduction in sulphur emissions. …, This fuel sulphur cap is set at a level 3,000 times higher than is commonly now used in land-based transportation. The consequence of OGVs achieving only modest improvement in air emissions, while all other transportation sources are making continued improvement, is that OGVs are now one of the largest anthropogenic sources of air pollution… Recent estimates in the scientific community indicate OGVs represent approx.18-30% of the world’s NOx pollution & 9% of global SOx emissions. IMO Member States now hold a unique opportunity to revise the MARPOL Annex VI engine and fuel standards in a manner that will provide a long-term solution to the significant air emissions generated by ships.

Estimate from Port of Los Angeles

JAPANESE Submission to IMO (BLG) NOx reductions / NECA proposal New engines Japan also supports a two-step approach, 2010 for Tier II and tentatively 2015 for Tier III. Basically, the NOx emission limits should be set to reduce the NOx emissions from ships as much as possible. Japan also has a project of NOx reduction technologies development. The target date of this project is 2012 and its goal is nearly 80% NOx reduction. At the same time, we propose to introduce geographically-based standard for Tier III, taking into account that there is trade-off relationship between the NOx emission and CO2 emission and that the effect to the environment by NOx is local while the greenhouse effect by CO2 is global. Existing engines In order to reduce the total amount of NOx emissions from ships, existing engines should also be regulated. The NOx emission limits and range of existing engines to be regulated should be appropriately determined, taking into account the effect to the environment, their life time, the trend in development of new technologies and so on.

Governing Regulations MARPOL Annex VI adopted in 1997 and entered into effect in Baltic Sea - SECA from May North Sea - SECA in November 2007 Europe Sulphur Directive (1999 & Rev) governs inter alia emissions in port (0.1% S at berth) California (CARB): new regulations which took effect Jan 2007 Various ports - local regulations on Ship Emissions, which inter alia are inhibiting future expansion/development - introducing differentiated port fees Of particular concern to tramp sectors, trading internationally, lifting bunkers in ports worldwide

IMO & UNILATERAL LEGISLATION ON LOW SULPHUR MARINE FUELS DATESHIP TYPEWHEREmax. % SREG AllEverywhere4.5IMO AllBaltic Sea1.5IMO & EU AllAll EU Ports MGO (DMA and DMX) MDO (DMB and DMC) EU Passenger shipsEU1.5EU All aux. & diesel-electric main engines on all ships 24 miles off California shore MGO (DMA grade) MDO (DMB grade) CARB AllNorth Sea & English Channel1.5EU AllNorth Sea & English Channel1.5IMO AllAll EU ports0.1EU Inland waterway shipsAll EU inland waterways0.1EU All aux. & diesel-electric main engines on all ships 24 miles off California shore MGO (DMA grade)0.1 CARB Greek ferriesGreek ports0.1EU

EXISTING Sulphur Emission Control Areas (SECAs) NOV MAY 2006 SOURCE: /

Mediterranean Black Sea Japan-Tokyo Bay Korea Singapore United States (Individual state and port legislation) Canada Mexico Possible new SECAs

. Ship emissions occurs in the Northern hemisphere and close to land

IMO MARPOL Annex VI Prevention of Air Pollution from Ships Covered by Annex VI – Oxides of Nitrogen (NOx) – create Ozone – Sulphur Oxides (SOx) – create acidification – Hydrocarbons (HC) – gas, soot and some particulates – Volatile Organic Compounds (VOC) – Refrigerant Gases Not covered (currently) by Annex VI – Other Particulate Matter – Carbon Dioxide (CO 2 ) – Carbon Monoxide (CO) Engine exhaust gases are dependent upon engine type, engine settings and fuel type

MARPOL Annex VI PROPOSALS FOR AMENDMENTS Lower limits for SOx & NOx emissions SECAs with lower S cap (1.0% or 0.5%) NOx emission limits on existing engines NECAs – NOx controlled areas Restrictions on Particulate Matters (PM) emissions Further controls on VOC emissions from cargo oil tanks

New Parameter for Air Pollution Control ? Particulate Matter Emission control What are these Particulates? –Sulphates from SOx –Nitrates from NOx –VOC from uncombusted hydrocarbons –Heavy Metals e.g. Vanadium, Nickel, Aluminium, Sodium, Calcium, Zinc; from Heavy Fuel oil and Lube Oil –Soot – from the aromatics in heavy fuel oil

INTERTANKO Process (1/2) 2005 Revision Process for Annex VI initiated 2005/6 INTERTANKO initiates committee review of Annex VI 2005/6 INTERTANKO Council discusses CARB, cold ironing et al Apr/May Intersessional Meeting called for November 2006 ‘06(Date clash with Nov ’06 Council) May ’06 HKSOA announces support for (LS) Global SECA proposal June ’06 ExCom support principle of assessing a distillate only option, but refer to ISTEC June ’06 INTERTANKO “thinking” discussed with ICS and INTERCARGO Jul ’06 ICS invite INTERTANKO to Strategy Committee. INTERTANKO accepts highlighting current thinking re distillates, Subsequently INTERTANKO expresses same to RT Members et al. (Committee now scheduled for first meeting May 2007)

INTERTANKO Process (2/2) Sept ’06 Draft INTERTANKO paper to intersessional passed to ICS, BIMCO et al Sept ’06 Joint meeting of ISTEC and INTERCARGO’s CASTEC support case for distillates being tabled at IMO intersessional Sept ’06 ExCom agree to tabling of submission FOR DISCUSSION of distillate option. Copy of DRAFT submission passed immediately to RT colleagues, inviting comments and support. Oct ’06 INTERTANKO secures extension on filing and submits revised paper aimed at removing any ambiguities and to clarify purpose of submission; in particular stressing “suggestion” i.e. merits discussion Nov ’06 IMO Intersessional WG develops 4 options to be sent to MEPC

INTERTANKO Approach Principles behind the INTERTANKO position: –ensure a solid platform of requirements –be realistic and feasible –seek a long term and positive reduction of air emissions from ships, and –contribute to a long term and a predictable regulatory regime

REVISION OF MARPOL ANNEX VI INTERTANKO SUGGESTION FOR DISCUSSION Distillate fuels & 2-tiered S cap program: –from [2010], a maximum of 1.00% S content –for ships’ engines installed on and after [2015], a maximum [0.50]% S content A Global Sulphur Emission Control Area A New Fuel specification in Annex VI Simpler monitoring of compliance

Distillate/MDO Advantages: AIR EMISSIONS 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 with some 4% from ALL ships and thus CO2 emissions Facilitates further NOx reductions by in-engine modifications for IMO’s Tier II & III

Distillate/MDO Advantages: AIR EMISSIONS Engines designed for use of MDO only will accommodate further emission reductions over their entire life time Further regulatory reduction of air emissions from ships will be a function of better quality fuels and not be limited by engine’s functional parameters

Distillate/MDO : ADDITIONAL BENEFITS ENVIRONMENTAL: –Reduces onboard fuel generated waste –No fuel heating/pre-treatment or waste incineration = energy saving –ALL ships become “greener” –“Cleaner” waste & free of hazardous elements contained in residual fuels –Avoids use of abatement technologies = no further additional waste & no need of further waste disposal –[Any bunker spill significantly less harmful] SAFETY: –Less incidents with engine breakdowns caused by poorer quality fuels / lower maintenance load –No need of complex fuel change-over operations –No risk of incompatibility of blended fuels –Safer working environment for crews

Revision of Annex VI: Alternative Approaches ISSUES under discussion include: Future costs and availability of LSFO, distillates, scrubbers, etc. Proving of / reliability of scrubber and SCR technologies Costs of extra bunker tanks, & associated systems, costs of manifold modifications / sampling Costs of additional maintenance Means of disposing of wash water and scrubbed by-products Suitability of blended fuels Net environmental benefits and Fuel oil record book

FUEL OPTIONS TO REDUCE AIR EMISSIONS At what cost and who takes responsibility ? High sulphur residual with abatement technology such as scrubbers, etc. Low sulphur residual Combination HS/LS residual MDO (Low sulphur) Other combinations

CO 2 Emissions – Net Environmental Benefit Additional refinery CO2 emissions from de-sulphurisation of residuals Additional refinery CO2 emissions from MDO production/distillation Ship CO2 emissions lower with MDO due to lower fuel consumption Ship CO2 emissions lower with MDO since no need to heat residual fuels prior treatment & injection High CO2 emissions in manufacturing & operating scrubbers Higher CO2 emissions with catatylic converters when using residual fuels rather than distillates

Volatile Organic Compounds (VOC) Emissions & their Control VOCs generated both during loading and on passage Vapour return lines used in some ports INTERTANKO developed VOC control procedure (VOCON) with potential to reduce by more than 70% VOC emissions on passage System further enhanced by adoption of the Pres-Vac VOCON P/V valve Further industry development with KVOC loading system Norway advocating incorporation of VOC Management Plan in to Annex VI Ongoing work by INTERTANKO on VOC operational controls related to cargo Reed Vapour pressure

Alternative Approaches ITEMS FOR DISCUSSION include: Future production of low sulphur fuels & time frame Proving of / reliability of SCR and scrubber technologies Costs of extra bunker tanks & associated systems Costs of manifold modifications / sampling Costs of additional maintenance Means of disposing of wash water and scrubbed by-products Suitability of blended fuels Net benefits Future costs of low sulphur HFO/IFOs

BLG Working Group Options: SOx A. Status Quo - No change B. Sulphur Emissions Control Area (SECA): –A global sulphur cap (unchanged or lower value) –SECA sulphur cap lowered in two tiers: 1.0% in [2010] 0.5% in [2015] C1. Change to distillate fuels (no SECA) : –Use of distillate fuels for all ships –A global sulphur cap in two tiers: 1.0% in [2012] 0.5% in [2015] –Include in MARPOL Annex VI the specification for the distillate fuel to be used by ships C2. Global cap – As C1 but allows use of residual fuel + scrubbers

What next ? BLG : April 2007 MEPC 56: 9-13 July 2007 EU Commission to take stock of progress –Review of Sulphur Directive – 2008 –Scope for Community measures to reduce ship emissions pursuant to Council’s conclusions – 2008 US considers own legislation if IMO does not deliver - ?

USA Proposal to BLG11 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

Norwegian proposal to BLG11 SOx: MDO 0.5% sulphur content in all ships by 2015 NOx: slow speed engines (n < 130 rpm) and intermediate speed engines (130rpm < n < 1000 rpm) - in engine technology –a) Tier II: 20% –b) Tier III: 40% NOx on existing (pre 2000) slow speed engines – as by Tier I standard (17 g/kWh)

Other Proposals to BLG11 Japan No suggestions for measures related to SOx and PM emissions. NOx emissions - reduction by 80% by a combination of fuel quality, in engine technology and after treatment technology. Sweden SOx & PM emissions - use of MDO with a lower sulphur content, most likely in a two tier step at dates to be established by IMO.

What next? Annex VI or VII ? – Scrubber / Catalytic Converter toxic waste handling Biomass (marine bio-diesel) – to assist in achieving a 20% reduction target for CO 2 Emissions trading – extended to shipping Sequestration of CO 2 / Carbon capture

Current position INTERTANKO encourages open debate on the options available to reduce damaging air emissions from ships and has sought to provide for discussion comprehensive solutions that are applicable on a global basis. We remain anxious that the current reviews around the world do not result in a mix of local and regional requirements that impose an onerous burden on international shipping, especially those engaged in tramp shipping - bunkering in and trading to ports around the world. We continue to stress the importance that any new requirements should take full account of all the operational and safety considerations, and should be assessed on the same basis - this latter should involve the cost and environmental implications of all the production, manufacturing, operating and waste handling aspects of the proposed system, as well as other practicalities with respect to introduction, fitting/retrofitting, etc.

INTERTANKO Encourages further discussion at Panel Meetings, Seminars and Council pre BLG NOTE: NO INTERTANKO submission to BLG

Challenges for IMO ” Reduce air emissions from ships ” What emissions - SOx, NOx, PM, VOCs ? - Later CO 2 ? Where - Globally, Coastal regions ? Timing: - Phased, where/when/how ?

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