1. Prof. Kevin Cullinane Director of TRI Environmentally Sustainable Shipping in International Supply Chains

2. Environmental Effects of Logistics CO 2 emissions / climate change Air pollution Pollution of land and water Noise Vibration Visual intrusion Accidents Land-take

3. LOCAL Health & air quality REGIONAL Acidification Photochemical GLOBAL Greenhouse -indirect Greenhouse - direct EffectPMHMNH 3 SO 2 NOxNMVOCCOCH 4 CO 2 N2ON2O Geographical Impact of Pollutants PM – ParticulatesHM - Heavy metalsNH 3 - AmmoniaSO 2 - Sulphur dioxide NOx - Oxides of nitrogenNMVOC - Volatile organic compounds (hydrocarbons) CO - Carbon monoxideCH 4 - MethaneCO 2 - Carbon dioxide N 2 O - Nitrous oxide Source: TRL, A. Hickman, MEET deliverable EU ST-96-SC.204 (1999)

5. World Fleet Fuel Consumption Source: IMO (2008) Note: The blue diamond shows the IMO consensus estimate and the whiskers the high and low bound estimates

6. CO 2 Emissions from Shipping Compared with Global Total Emissions Source: IMO (2008)

7. CO 2 Emissions from Shipping Compared to Other Modes of Transport in 2005 Source: IMO (2008) But fastest growth in last 10 years + outside Kyoto Protocol

8. Estimates of Other Emissions from Shipping Source: Marintek (2008)

9. Cardiopulmonary Mortality Attributable to Ship PM 2.5 Emissions Source: Corbett et al (2007)

10. Forecast of SO 2 Emissions in the EU 2000-2020 (ktonnes) TSAP – EU Target IMO – IMO Expected Outcome after Regulation

11. Forecast of NO x Emissions in the EU 2000-2020 (ktonnes) TSAP – EU Target IMO – IMO Expected Outcome after Regulation

13. 13 carries 90%+ of world trade underpins the global economy and is essential for sustainable development is safe and secure is the most environmentally- friendly and fuel-efficient of all modes of transport Q. What do we learn from the IMO? A. The IMO tells us that shipping:

14. 14 CO 2 Emissions by Mode of Transport Source: NTM (Swedish Network for Transport and the Environment)

15. 15 CO 2 Emissions by Mode of Transport Source: ECSA/ICS (2008)

16. 16 Economies of Scale in CO 2 Emissions by Mode of Transport Source: Fridell (2010)

17. We have a problem! So what are the possible solutions?

18. Motivation for Unilateral Action Directly Profitable: Greater fuel efficiency reduces costs. A ‘Win-win’ ‘Green-gold’ solution. Revenue Generation: Possible trade- off between cost increase and ill- defined ‘green image benefits’ – sustainable procurement.

19. What Possible Unilateral Action? Technical: Improved fuel consumption – hull and engines More efficient propellers and rudders Wind power Alternative fuels

20. Alternative fuels/energy sources Bio fuel – Capacity and ethics. Bio-diesel supplement. Price. Supply problems – cars. Nuclear power – Military vessels. Regulation. Crew competence. Waste. Gas (LNG) – Auxiliary engines. Short sea shipping/ferries. Carrying capacity. Large reserves. Fuel cells - upstream inefficiencies. Wind and Solar – Supplementary on selected routes.

21. What Possible Unilateral Action? Technical: Shore power – “cold ironing” Better waste heat utilization Low Sulphur Fuel Scrubbers and Filters

22. What Possible Unilateral Action? Operational: Energy optimal fleet operation Vessel speed reduction Improved routeing & less waiting Enhanced fleet management

23. But not all are commercially attractive!

24. Regulation April 2008, IMO’s MEPC agree sulphur emission caps as follows: A reduction to 3.50% (35,000 ppm) effective 1 January 2012 A reduction to 0.50% (5,000 ppm) effective 1 January 2020 but subject to a review to be completed no later than 2018 If this review is negative, the effective date defaults to 1 January 2025 Specific ‘Sulphur Emission Control Areas’ (SECAs) have been defined - English Channel, Baltic Sea and North Sea where: A reduction to 1.00% (10,000 ppm) effective 1 March 2010 A reduction to 0.10% (1,000 ppm) effective 1 January 2015

25. Map of SECAs – English Channel, North Sea and Baltic Sea

26. United States Nox and SECA - from 2012

27. 27 The New IMO Energy Efficiency Design Index (EEDI) A formula that enables ship designers and builders to design and construct ships of the future for maximum efficiency and, thus, minimum GHG emissions A baseline limits the level of emissions according to ship type, size, etc. To be mandatory under MARPOL Annex VI

28. 28 The Energy Efficiency Operational Index (EEOI) Intended to measure the operational efficiency of an existing ship It allows efficiency comparisons between similar ships on similar routes and enables the operator to introduce further efficiency measures With its associated Guidelines, it is meant to be voluntary in nature

29. 29 IMO ‘Guidance on Best Practices’ in Environmental Management Measures Provides ship operators with practical advice on technical and operational measures for making their ships more efficient Developed in close collaboration with the shipping industry Voluntary in nature

30. 30 Ship Energy Efficiency Management Plan Onboard management tool includes: Improved voyage planning (Weather routeing/Just in time) Speed and power optimization Optimized ship handling (ballast/trim/use of rudder and autopilot) Improved fleet management Improved cargo handling Energy management

31. 31 Yes - if demand for international shipping stopped growing. BUT… World trade is likely to keep increasing, even during a global economic crisis Emerging economies, such as China, India, Brazil and others generate a growing need for shipping Many developing countries depend on sea transport for food and basic commodities Globalisation remains Is this Enough?

32. Volkswagen Global Supply Network

33. Hard Drive Singapore Memory card Germany CD / DVD Philippines Graphics card China Assembled Malaysia Designed in Texas and Taiwan Battery Mexico Power adaptor Thailand Power cord India Memory stick Israel Microprocessor Costa Rica Dell Laptop: A Global Product

34. 34 So, the reductions achieved by applying technical, operational and regulatory measures may be offset by an increase in shipping activity over time. That’s why we may need market-based measures. Basically, these are economic mechanisms that enable those who emit more CO 2 than an established limit or “cap” to buy “credits” earned by those who emit less than the limit. There are two main forms being considered for shipping: Emissions Trading Scheme Carbon Levy Is this Enough?

35. 35 Conclusions Shipping is the least environmentally damaging mode of freight transport BUT The shipping industry has lacked anticipation and been late to engage in address environmental issues International shipping will continue to expand but greater fuel efficiency is key The market will not solve the environmental footprint of shipping - intervention is required Regulation is needed at a global level of implementation to all ships – IMO With no IMO regime in place, regional and unilateral action may proliferate (EU; USA; Japan; Australia) Care should be taken in developing policy measures so that the environmental advantage of shipping versus other modes is not undermined – modal backshift Cooperation and coordination is required with regional powers to achieve a holistic solution

36. 36 Thank You!