1. Hellenic Forum Athens 6 March 2007 Peter M. Swift

2. Hellenic Forum REVISION of MARPOL ANNEX VI Air Emissions Peter M. Swift

3. Governing Regulations MARPOL Annex VI entered into effect in 2005 Baltic Sea - SECA from May 2006 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 are inhibiting future expansion/development - introducing differentiated port fees Of particular concern to tramp sectors, trading internationally, lifting bunkers in ports worldwide

4. SECAs & CHANGE OVER AREAS AUGUST 2007 MAY 2006 Source: http://maps.google.com / Changeover Area

5. IMO & UNILATERAL LEGISLATION ON LOW SULPHUR MARINE FUELS DATESHIP TYPEWHEREmax. % SREG. 19.05.2005AllEverywhere4.5IMO 19.05.2006AllBaltic Sea1.5IMO & EU 11.08.2006AllAll EU Ports MGO (DMA and DMX) MDO (DMB and DMC) 0.2 1.5 EU 11.08.2006Passenger shipsEU1.5EU 1.01.2007All aux. & diesel-electric main engines on all ships 24 miles off California shore MGO (DMA grade) MDO (DMB grade) - 0.5 CARB 11.08.2007AllNorth Sea & English Channel1.5EU 22.11.2007AllNorth Sea & English Channel1.5IMO 1.01.2010AllAll EU ports0.1EU 1.01.2010Inland waterway shipsAll EU inland waterways0.1EU 1.01.2010All aux. & diesel-electric main engines on all ships 24 miles off California shore MGO (DMA grade)0.1 CARB 1.01.201216 Greek ferriesGreek ports0.1EU

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

7. 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 (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)

8. 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

9. INTERTANKO : Guiding Principles Executive Committee (June 2006) – Principles for an 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

10. 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

11. 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

12. 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 CO 2 emissions Facilitates further NOx reductions by in- engine modifications for IMO’s Tier II & III

13. 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 limited by engine’s functional parameters

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

15. 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

16. Challenges for IMO Reduce air emissions from ships What emissions - SOx, NOx, PM, VOCs ? - Later CO2 ? Where - Globally, Coastal regions ? Timing: - Phased, where/when/how ?

17. OPTIONS ? Reduce air emissions from ships AT WHAT COST AND WHO TAKES RESPONSIBILTY ? High sulphur residual with scrubbers Low sulphur residual Combination HS/LS residual MDO (Low sulphur) Other combination

18. CO 2 Emissions – Net Environmental Benefit High refinery CO 2 emissions from de- sulphurisation of residuals High refinery CO 2 emissions from MDO production/distillation Ship CO 2 emissions lower with MDO due to lower fuel consumption Ship CO 2 emissions lower with MDO since no need to heat residual fuels prior treatment & injection High CO 2 emissions in manufacturing & operating scrubbers

19. 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

20. 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)

21. Other Propsals 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.

22. What next? BLG : 16 -20 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

23. What next? Annex VII – Scrubber / Catalytic Converter toxic waste handling Biomass – 20% reduction target for CO 2 Emissions trading – extended to shipping Sequestration of CO 2

24. 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.

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