North American Panel

23 March 2009

Stamford, CT.

Peter M. Swift

[ Initiatives to Reduce ][ Initiatives to Reduce ]Greenhouse Gas EmissionsGreenhouse Gas Emissions

Shipping has a head start as the most Shipping has a head start as the most energy efficient means of transportenergy efficient means of transport

3

CO2 Emissions per Unit Loadby 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

100 200 300 400

398

226

49

11

6

3

1

0

Units Relative

Shipping energy efficient

TANKER SHIPPING A GOOD NEWS STORYTANKER 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 (CO2) EmissionsDRIVERS 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

IndexIndex

80

100

120

140

160

180

19

80

19

81

19

82

19

83

19

84

19

85

19

86

19

87

19

88

19

89

19

90

19

91

19

92

19

93

19

94

19

95

19

96

19

97

19

98

19

99

20

00

20

01

20

02

20

03

20

04

20

05

20

06

20

07

Population

Energy use

Seaborne trade

CO2 emission

There has been strong growth in shipping

Trends – Population, Energy Use, Seaborne trade & CO2 emissions

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: CO2 / work done

e.g. tonnes of CO2 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 Practicesfor tanker emissions & energy efficiency

1. Programme for Measuring and Monitoring Ship Efficiency2. Voyage Optimization Programme

1. Speed selection optimization2. Optimised route planning3. Trim Optimization

3. Propulsion Resistance Management Programme1. Hull Resistance2. Propeller Resistance

4. Machinery Optimisation Programme1. Main Engine monitoring and optimisation2. Optimisation of lubrication as well as other machinery and equipment

5. Cargo Handling Optimization1. Cargo vapours control procedure on all crude tankers (80-90% reduction of

cargo vapours)2. Cargo temperature control optimization

6. Energy Conservation Awareness Plan1. On board and on shore training and familiarisation of company’s efficiency

programme2. Accommodation-specific energy conservation programme

162

168

174

20 30 40 50 60 70 80 90 100 110 % SMCR

Engineshaft power

SFO

C

ME/ME-C 100% SMCR optimised

MC/MC-C 100% SMCR optimised

ME/ME-C Part load optimised

3-4g/kWh

Economy mode:

3-4g/kWh

IMO is also reviewing possible economic measures to reduce CO2 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

http://www.ocimf.com/view_document.cfm?id=1147

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 ConferenceMaritime 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

Bu

ild

Ret

ro-f

it

Op

erat

ion

al

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 ConferenceMaritime 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

Bu

ild

Ret

ro-f

it

Op

erat

ion

al Tanker/Bulker

Container

Ro-ro

Ferry-Cruise

Offshore Supply

THANK YOUFor more information, please visit:

www.intertanko.com www.poseidonchallenge.com

www.shippingfacts.comwww.maritimefoundation.com