North American Panel 23 March 2009 Stamford, CT. Peter M. Swift

[ Initiatives to Reduce ] Greenhouse Gas Emissions Shipping has a head start as the most energy efficient means of transport

3 CO 2 Emissions per Unit Load by Transport Mode Source: Ministry of Land, Infrastructure and Transport (Japan): The Survey on Transport Energy 2001/2002 MOL (Japan): Environmental and Social Report 2004 Large Tanker Large Containership Railway Coastal Carrier Small-size Commercial Truck Airplane Standard-size Commercial Truck Units Relative Shipping energy efficient

TANKER SHIPPING A GOOD NEWS STORY TANKER SHIPPING A GOOD NEWS STORY 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

Reductions in GHG (CO 2 ) Emissions DRIVERS FOR CHANGE Driven hardest by a limited number of governments –Supported mostly by EU governments, plus Japan, Australia, Canada and a few others –Until recently only limited support in US (mostly environmental interests) –Relatively little enthusiasm in much of the developing world, but now changing ? Environmental Lobby growing –And becoming more coordinated Maritime industries showing considerable support –Proactive involvement –Although “hesitant” on market based instruments Economic incentives strong –Fuel savings translate into potentially significant cost savings; plus incentives for innovation & new technologies

One particular challenge for the shipping industry - i.e. seaborne trade will continue to grow strongly Source: Fearnleys/INTERTANKO Index There has been strong growth in shipping Trends – Population, Energy Use, Seaborne trade & CO 2 e missions

Initiatives underway at the IMO 1998: IMO initiated work on Green House Gas emissions 2003: IMO Assembly adopted Resolution A.963(23): Policies and Practices Related to the Reduction of GHG from Ships Today: Work continues through the MEPC This year: we can expect MEPC 59 to adopt - Mandatory Energy Efficiency Design Index for new ships Ship Energy Management Plan – existing ships: - Best practices to save energy used by the ship - Use of voluntary Energy Efficiency Operational Index In December: the outcome(s) of MEPC 59 will be presented to UNFCCC COP15 meeting in Copenhagen

Initiatives underway at the IMO Ship Performance Index: CO 2 / work done e.g. tonnes of CO 2 produced per tonne mile of cargo Energy efficiency design index for new ships incentivises designers and builders. At the next stage: The ship’s design index should be less than a maximum limit to be set by regulations. The maximum value will then be lowered over time. Voluntary energy efficiency operational indicator measures efficiency of ship in service. A management tool for owners and charterers to measure energy efficiency on a voyage. Incentivises the owner to keep hull and machinery “clean” and charterer to use the ship efficiently – capacity, routing and speed.

SEMP: Examples of Best Practices for tanker emissions & energy efficiency 1.Programme for Measuring and Monitoring Ship Efficiency 2.Voyage Optimization Programme 1.Speed selection optimization 2.Optimised route planning 3.Trim Optimization 3.Propulsion Resistance Management Programme 1.Hull Resistance 2.Propeller Resistance 4.Machinery Optimisation Programme 1.Main Engine monitoring and optimisation 2.Optimisation of lubrication as well as other machinery and equipment 5.Cargo Handling Optimization 1.Cargo vapours control procedure on all crude tankers (80-90% reduction of cargo vapours) 2.Cargo temperature control optimization 6.Energy Conservation Awareness Plan 1.On board and on shore training and familiarisation of company’s efficiency programme 2.Accommodation-specific energy conservation programme

IMO is also reviewing possible economic measures to reduce CO 2 emissions Emissions Trading Scheme Bunker Levy GHG Compensation Scheme Hybrids of above Other, e.g. differentiated charges Industry has established Guiding principles and believe any measure should: Be effective in reducing global GHG emissions Be binding on and applicable to all ships Be cost effective Not distort competition Support sustainable environmental development without penalising trade growth Promote technical innovation and leading technologies Be practical, transparent, fraud-free, easy to administer

Initiatives already under way - parallel voluntary measures For most ship types, some form of : Speed optimisation Voyage optimisation Capacity optimisation is already in hand. For Tankers: Liaison is encouraged between owners and charterers to optimise vessel speed and voyage schedules

Other initiatives under discussion Pending the setting of mandatory upper limits for the Energy Efficiency Design Index of new ships, there exists the potential for: The Establishment of a Reference Value for a New Ship (i.e. a Target) Development of a Rating System relative to the Reference Value Similar to the performance rating of white goods

Other initiatives already under way - parallel voluntary measures Ports / terminals Ports developing Environmental Ship Index (for pollutants and GHGs) Incentives to improve port efficiency Reward environmentally friendly ships with lower port dues

UNCTAD Conference Maritime Transport and the Climate Change Challenge Engine Design Fuel Efficiency Gain Engine derating < 3.5% Diesel electric drives 5-30% Combined diesel electric and diesel mechanical drives <4% Waste heat recovery <10% Enhanced engine tuning and part load operation <4% Common rail engine <1% New BuildRetro-fit Operational Source: International Transport Forum 2009, OECD Estimates of fuel efficiency improvements are drawn from (Wartsila, 2008), (Green, Winebrake, & Corbett, 2008), (Bond, 2008) Tanker/Bulker Container Ro-ro Ferry-Cruise Offshore Supply

UNCTAD Conference Maritime Transport and the Climate Change Challenge Propulsion Systems Fuel Efficiency Gain Wing thrusters <10% Counter-rotating propellers <12% Optimised propeller-hull interface <4% Propeller-rudder Unit <4% Optimised propeller blade sections <2% Propeller tip Winglets <4% Propeller nozzle <5% Propeller Efficiency Monitoring <4% Efficient Propeller Speed Modulation <5% Pulling Thruster <10% Wind power: Flettner rotor <30% Wind power: Kites & Sails <20% New BuildRetro-fit Operational Tanker/Bulker Container Ro-ro Ferry-Cruise Offshore Supply

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