IFLOS SUMMER ACADEMY 2008 Panel Discussion “SHIP AIR EMISSIONS” Peter M. Swift, MD, INTERTANKO

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

Ship Air Emissions Drivers for change Regulating change

Pollutant Emissions – Revision of MARPOL Annex VI Driven by governments –IMO member states “prepared” since Convention adopted in 1997 –Environmental impact often local/regional rather than global –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 Environmental Lobby coordinated and effective Shipping Industry support initially very limited –Many reactive, few pro-active, some very anti Economic drivers mostly negative –Extra costs for refiners and owners

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

Gasoline price at the pump (June 2008) USD per litre USAJapanGermanyUK Long haul sea freight rates Refining, Marketing, profit Oil price Tax Cost elements in gasoline price :

Gasoline price at the pump in Germany € per litre Source: IEA € 1.0 € 1.1 € /200201/200406/2008 Cost of fuel increased by 44% since January 2004

Bunker price development USD/tonne, HFO 380 cst, Fujairah USD/tonne Source: Bunker World Cost of fuel increased by 440% since January 2004

Ship Air Emissions Regulating change The role of self regulation / voluntary measures

IMO “Regulation” – Stage 1 Performance indexing : CO 2 / work done –New Ships : Design Index –Ships in Service : Operational Index Best practice guidance on measures to reduce CO2 emissions

Parallel Voluntary Measures Speed optimisation Voyage optimisation Capacity optimisation

Voluntary Measures / IMO “Regulation” – Stage 2 Development of: New Ship Design Index – Reference Line / Benchmark (i.e. Target) New Ship Design Index – Rating Scale

Other Voluntary Measures - possible future regulation Charterers / shippers Incentivised to select most efficient transportation system and to improve ship utilisation efficiency Ports / terminals Incentivised to improve port efficiency Reward environmentally friendly ships with lower port dues Industry is currently developing a Port Efficiency Index A Performance Indicator* of ship-port efficiency measuring: Total CO2/ Unit of Cargo handled from arrival to departure *i.e. an extension of the IMO New Ship Design Index / Operational Index [ & similarly for SOx, NOx & VOC emissions]

Voluntary/Regulatory Measures to reduce VOC Emissions 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

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