REMPEC - Designation of the Mediterranean Sea as a SOx Emission Control Area (SECA) Under MARPOL...

REGIONAL MARINE POLLUTION EMERGENCY RESPONSE CENTRE

FOR THE MEDITERRANEAN SEA (REMPEC)

EURO-MEDITERRANEAN PARTNERSHIP

EUROMED COOPERATION ON MARITIME SAFETY AND PREVENTION OF POLLUTION FROM SHIPS

(SAFEMED) EU-Funded MEDA Regional Project MED 2005/109-573

Designation of the Mediterranean Sea as a SOx Emission Control Area (SECA)

under MARPOL Annex VI

Guidelines & Procedures regarding the ratification process of Annex VI & the preparations required for the submission of an Application to IMO for the

Mediterranean Sea to be designated as a SECA

SAFEMED Task 3.7 O

a Report prepared under the Project

EUROMED Cooperation on Maritime Safety and Prevention of Pollution from Ships SAFEMED (MED 2005/109-573)

financed by the European Commission under an IMO/EC contract

presented to REMPEC by

Robin Meech

DESIGNATION OF THE MEDITERRANEAN SEA AS A SOx EMISSION CONTROL AREA (SECA) UNDER MARPOL ANNEX VI

The present report was prepared within the framework of the EU-Funded MEDA Regional Project Euromed Cooperation on Maritime Safety and Prevention of Pollution from Ships - SAFEMED (MED 2005/109-573) being implemented by the Regional Marine Pollution Emergency Response Centre for the Mediterranean Sea (REMPEC). The views expressed in this report are those of the Consultant and cannot be attributed in any way to the EU, IMO, UNEP, MAP, REMPEC or the Consultants employer. The designations employed and the presentation of the material in this report do not imply the expression of any opinion whatsoever on the part of EU, IMO, UNEP, MAP and REMPEC concerning the legal status of any State, Territory, city or area, or its authorities, or concerning the delimitation of their frontiers or boundaries.

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Contents

I EXECUTIVE SUMMARY6 II OVERVIEW OF ANNEX VI...7 III RATIFICATION OF ANNEX VI.18 A ADVANTAGES19 B OBLIGATIONS22 C ECONOMIC COSTS29 D DELEGATION.30 E LEGISLATION DRAFTING33 F CONSEQUENCES FOR NATIONAL MARITIME ADMINSTRATIONS36 IV DESIGNATION OF THE MEDITERRANEAN SEA AS A SECA.40 A STRUCTURING THE APPLICATION...40 B PROCESSES..45 C SUPPORTING INFORMATION AND STUDIES REQUIREMENT..48 D ANALYSIS AND INFORMATION AVAILABLE..58 E DATA AND ANALYSIS COSTS.68 F PREPARATION SCHEDULE..70 Appendix 1.73 Appendix 2.99 Glossary103 References105

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Tables Table II-1 Current Options under Debate 12 Table III-1 Unit Benefits of Reducing Principal Pollutants (Euro/tonne) 19 Table III-3 Fleet Registered with Countries with a Mediterranean Seaboard 23

Table III- 4 Obligations of Contracting Governments/Parties to Annex VI 25

Table III- 5 Specific Flag State Obligations 26

Table III- 6 Specific Port State Obligations 28 Table III-7 Mediterranean Ports Handling Vessels of 400 GT or Greater 37 Table III-8 Suggested Format for the Form to Initially Register 38 Bunker Suppliers Table III-9 Suggested Format for the Form to Renew Register 39 Bunker Suppliers Table IV-1 Countries Ratifying Annex VI 41 Table IV- 2 Stakeholder Consultation 47 Table IV-3. Existing Protocols Developed under the UNECE LRTAP 50 Convention to Address Acid Deposition Table IV- 4 National Emission Ceilings for SO2, NOx, VOC and 59 NH3, to be obtained by 2010 (Kilo tonnes) (1) Table IV- 5 Emission Control Costs for the Joint Scenario H1 and the 60 Sensitivity Case with Reduction of Ship Emissions (H8), compared to the H1 Scenario Case, in million EURO/year Table IV-6 Information Requirements 66 Table IV-7 Scope of Studies to Support the Application for a SECA 69

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Figures Figure II-1 Definition of the Baltic and North Sea SECA 9 Figure II-2 Relationship between Fuel Sulphur Content and Total PM Emissions 16 Figure III-1 Base Case 2005 SO2 inventory 20 Figure IV-1 Comparative SOx Emissions by Mode 40 Figure IV-2 EMEP 50 km Reporting Grid Squares 45 Figure IV-3 RAINS Model Basic Processes 51 Figure IV- 4 The Structure of the RAINS Model 52 Figure IV-5 Approach to Estimating the Inventory of the SOx Emissions 53 from Shipping Figure IV- 6 Data requirements in estimating location and density of SOx 54 emissions Figure IV- 7 Vessels Movements into or out of the Mediterranean Sea in 2006 56 Figure IV-8 Estimated SOx and NOx Emissions in the Mediterranean 61 Sea (kilotonnes) Figure IV-9 Percent of Sulphur Deposition from International Shipping 68 in 2000 (left) and in 2020 with Current Legislation Figure IV-9 Schedule for Completion of Studies 70

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I EXECUTIVE SUMMARY

Currently, the Regional Marine Pollution Emergency Response Centre for the Mediterranean Sea (REMPEC) is implementing a European Union (EU) financed MEDA project entitled EUROMED COOPERATION ON MARITIME SAFETY AND PREVENTION OF POLLUTION FROM SHIPS - SAFEMED. The SAFEMED Project is being implemented in ten Euromed Mediterranean Partners, namely Algeria, Egypt, Israel, Jordan, Lebanon, Morocco, Palestinian Authority, Syria, Tunisia and Turkey. The primary objective of the SAFEMED Project is to mitigate the existing imbalance in the application of maritime legislation in the region between the Mediterranean Partners that are not members of the EU and those who are members, through promoting a coherent, effective and uniform implementation of the relevant international conventions and rules aimed at better protection of the marine environment in the Mediterranean region by having safer shipping and preventing pollution from ships. In addressing the protection of the marine environment a particular task is to assist the Mediterranean Partners in the preparation of a proposal, and subsequent submission to International Maritime Organization (IMO), to designate the Mediterranean Sea as a SOx Emission Control Area (SECA) under MARPOL Annex VI. Noting that the majority of the MSBS, including all the Mediterranean partners, have not yet ratified Annex VI, and the fact that an application for a SECA can only be made by a State party to Annex VI, the SAFEMED team concluded that in order to achieve this task appropriate guidelines and procedures to assist the Mediterranean partners should be developed. This report addresses these issues. The application to designate the North Sea as a SECA in 1999 provides some guidance but the sophistication of the analytical techniques, the availability of detailed data bases and perceptions of the environmental community suggest that the application to designate the Mediterranean Sea as a SECA will need to utilise this greater knowledge. Most of the models and data is available but will require extension to the States with a Mediterranean seaboard that are not members of the EU. An application can be made by any of the States that have ratified Annex VI. Currently these are Croatia, Cyprus, France, Greece, Italy, Slovenia and Spain. No doubt other States will ratify in the near future. A SECA can be designated by IMO without all the States on its seaboard having ratified Annex VI. The form of Annex VI is currently under debate with expectation that a new set of constraints will be agreed in 2008 and implemented within two years. It is generally agreed that emissions from ship will be subject to increasingly stringent regulations over the coming years. Any analysis to designate the Mediterranean Sea as a SECA will need to take account of this changing future. These studies and analysis are estimated to take some 26 months from the decision to move ahead with the application at a cost of Euro 0.9 million to Euro 1.3 million executed in nine separate but interrelated tasks. The total time from the decision to move ahead to the commencement of low sulphur operations in the Mediterranean Sea is estimated at least five years suggesting coming into force of the SECA in 2014.

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II OVERVIEW OF ANNEX VI The International Maritime Organization (IMO), a UN agency, commenced debate on the reduction of emissions to air from ships in the 1980s. This was principally lead by Scandinavian member States and encouraged by the environmental Non-Governmental Organizations (NGOs). IMO charged its internal Marine Environment Protection Committee (MEPC) to devise a convention to reduce emissions as the sixth annex to the International Convention for the Protection of Pollution from Ships 1973 as modified by the Protocol of 1978 related thereto,(MARPOL 73/78). Annex VI was published in 1998. There followed an extended ratification process, which was achieved on 19 May 2004, when conditions were met requiring 15 member States representing more than 50 per cent of the world gross tonnage to have signified their agreement to the Annex. Annex VI came into force May 19, 2005, 12 months after it was ratified, and requires all ships entering the port of a State party to Annex VI to comply with emission requirements, regardless of whether or not its flag State is a party to Annex VI. How the provisions of Annex VI are enforced is the responsibility of the government of the State that is party to Annex VI. Any State that is not party to Annex VI can not enforce any part of the protocol. It can of course implement unilateral legislation that may incorporate similar regulations to those included in Annex VI. Annex VI provides for the monitoring and reduction of emissions of ozone-depleting substances, Nitrogen Oxides (NOx), Sulphur Oxides (SOx), Volatile Organic Compounds (VOC) and pollutants resulting from ship board incineration. To date there is no reference to Particulate Matter (PM). Annex VI applies to emissions from fuels used for propulsion and auxiliary equipment on vessels of 400 gross tonnage and above, as well as fixed and floating drilling rigs and other platforms. Annex VI is documented in an IMO publication (ISBN 92-801-6089-3), which sets out the amendments to MARPOL 73/78 to include Annex VI, the 19 regulations that constitute Annex VI, the five appendices of which Appendix III defines the criteria and procedures for designation of a SOx Emission Control Area (SECA), and eight resolutions. The SOx emission requirements of Annex VI are discussed in the following sections. 1. Global Cap - Vessels flagged in a State that is a signatory to Annex VI are obliged to comply with all aspects of Annex VI, including consumption of fuel oil with a sulphur content not exceeding 4.5%, regardless of the vessels location (often referred to as the Global Cap). This has little or no practical impact on global emissions, since less than 0.2% of bunkers consumed have a sulphur content exceeding 4.5%. Vessels flagged in States that are not signatories to Annex VI need not comply with the Global Cap. Initially a Global Cap of 1.5% was considered, which would have halved global SOx emissions, but input, including extensive economic/environmental impact studies focused on the European region, from the oil industry and others resulted in a move from a global cap of 1.5% to the concept of Sulphur Emission Control Areas. The SECA concept is based on the need to reduce emission from shipping where these emissions significantly contribute to environmental and health related problems. The Global Cap was set at 4.5% together with the constraints on any increase in average sulphur content, then provided a

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mechanism for avoiding any increases in sulphur levels outside of SECAs. It should be noted that a global cap of 4.5% has little or no impact in reducing SOx emissions since less than 0.2% of bunker deliveries have ever been above this level. There is continuing debate regarding lowering this cap in the future (see below) 2. Bunker Delivery Note (BND) - A BDN must be generated and signed by both the supplier and buyers representative for every delivery of fuel oil in a port of a State that is a signatory to Annex VI (Annex VI only refers to fuel oil but it is assumed by most parties that it also applies to distillate bunker fuels such as marine gas oils, as defined in MARPOL Annex I). The BDN must identify the receiving ship and the supplying company, the date of delivery, and the tonnage of fuel(s) delivered, together with an accurate measure of the density and sulphur content. At the same time a representative sample of each delivery must be retained by the ship for one year together with the BDN, which must be retained for three years by both buyer and seller. Suppliers are required to be registered with the designated authority in each State that is a signatory to Annex VI, often the port State authorities or the national environmental agency. It will no doubt be within the interest of suppliers to retain a sample at least as long as the ship operator retains his sample. Both sample and BDN can be accessed by the designated authority in each State. Fuel suppliers in States that are not signatories to Annex VI need not comply with the requirements of Annex VI, including the issuance of a BDN or fuel samples. A BDN may not be issued in these States, though this will be of decreasing concern as the number of States party to Annex VI increases. However, most purchasers are requesting a BDN so as to be able to document compliance when entering the jurisdiction of a State that has ratified Annex VI. 3. Sulphur Emission Control Area (SECA) - A sulphur emission control area is a designated sea area within which vessels flagged in States that are signatories to Annex VI must either use fuel oil with a sulphur content not exceeding 1.5%, or utilize an Exhaust Gas Cleaning System (EGCS), that reduces emissions to the equivalent of 6.0 grams of SOx per kilowatt hour output. For the latter criteria, it is assumed that the average consumption by a typical marine diesel engine is 200 grams fuel per kilowatt hour, which with a fuel content of 1.5% sulphur, would result in emissions of 6 grams of SOx (one gram of sulphur converts approximately to 2 grams of SOx). The exhaust cleaning systems must not cause water pollution through, for example, discharge of dirty waste water to the environment. A vessel passing through a SECA that is flagged in a State that is not a signatory to Annex VI need not comply with the SECA restriction, or the Global Cap, although this has yet to be tested. The Baltic and North Seas have been designated as SECA under Annex VI, with the boundaries of these areas being as shown in Figure II-1. Definition of the SECA An application for designation of an area as a SECA can only be submitted to the IMO by contracting States to the MARPOL 73/78 Protocol of 1997 (Annex VI) that are directly affected by the traffic in the proposed SECA. Not all affected States need be party to the application, which must demonstrate a need to prevent, reduce and control SOx emissions from ships. Appendix III of Annex VI sets out the criteria and procedures for the designating of a SECA.

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The application shall include: A clear definition of the sea area proposed; Description of the land and sea areas at risk; An assessment of the marine SOx emissions in the designated area and their impact on the environment and human health together with a description of the methodologies employed; Meteorological conditions in the proposed SECA and any localized critical areas; Expected shipping traffic patterns; Description of any land based SOx controls in place when the SECA is expected to

come into force. Figure II-1 Definition of the Baltic and North Sea SECA In assessing a SECA (the detail assessment procedures are set out in Section VI), the IMO principally takes account of the relative costs of reducing marine SOx emissions as compared with land based controls and the economic impact on international shipping affected by the proposed SECA. The IMO ensures that all its members have the opportunity to assess the application. The IMO ensures that all its members have the opportunity to assess the application. 4. Fuel Oil Quality - Regulation 18 of Annex VI states that fuels supplied must be fit for purpose meeting the sulphur requirements, not cause excessive NOx, not contain inorganic acids or be harmful to personnel and the environment. It is within this regulation (and Appendix V of Annex VI) that details of the BDN are defined. 5. NOx Emissions Regulation 13 of Annex VI sets parameters to restrict NOx emissions. It applies to vessel constructed or significantly modified after 1 January 2000 and restricts emissions to following level dependent on the rated engine speed, namely crankshaft revolutions per minute, notated as n in the following definitions of the maximum NOx emissions permitted in terms of grams per kilowatt hour: 17.0 when n is less than 130 rpm 45 x n(-0.2) when n is 130 or more but less than 2,000 rpm

9.8 when n is 2,000 or greater rpm

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The regulation is further defined in Appendix II (Test cycles and weighting factors) and Resolution 2 Technical Code on Control of Emissions of Nitrogen Oxides from marine Diesel Engines. 6. Implementation of a SECA -. This can take up to five years if the time to prepare the application is included. The final details of the SOx technical code for use of scrubbing remain under debate. There are a number of unresolved issues, including the definition of the quality of wash water discharges. As a result the exact schedule for the implementation of the technical code remains uncertain It was expected to be in place by the time the Baltic Sea SECA become enforceable (19 May 2006) and the North Sea (21 November 2007). At such time, it will be enforceable by all countries that are signatories to the Protocol of 1997. However, the Baltic Sea SECA is in place and there is no doubt the North Sea will follow on, both be implemented without the final details on scrubbing being resolved. There are, as noted below (Section I.9.4), further amendments expected to Annex VI redefining the maximum sulphur level permitted in a SECA and possible the type of fuel that can used. 7. Application Process and Procedures - The general procedure for a State proposing a new SECA is to prepare the application in line with Appendix III of Annex VI. The State applying for a SECA must be a party to Annex VI, as noted earlier. The MEPC meets every eight months, which is a factor in the overall timeframe required for a decision. Documents of more than six pages must be submitted to MEPC at least 90 days before the next MEPC meeting. Generally, questions will be asked by interested States beforehand. They should be submitted 40 days before the MEPC meeting and can only come from States that have ratified the MARPOL PROT 1997. The Secretary of the Air Pollution Working Group (APWG), who is a full time employee of IMO, will check the completeness of a SECA application. He will most likely comment back to applying State(s) on any obvious shortfalls in the information provided, but his role is more functionary than for expressing specific comments on the application. The application will be raised early by the MEPC and members of the Air Pollution Working Group will be selected from the delegates. The Chairman of MEPC will agree on the membership of the APWG. Practically all selected delegates can be expected to come from States that have ratified the MARPOL PROT 1997. They will then meet during the next three to four days and either recommend to MEPC that the application be accepted, or suggest some amendments. Prior to submission of an application for a SECA the countries making the application should have informally discussed its application with key delegates and hopefully ironed out any difficulties. This does involve a certain amount of lobbying and education of other parties to Annex VI about the issues of most concern to the Mediterranean States. The Baltic Sea was enshrined in the initial agreed text for Annex VI and as such does not provide a model for any future applications. The North Sea provides a more useful example of preparing an application to designate an area as a SECA, but even this was agreed with political good will. (See Appendix 1). Once the MEPC has sanctioned a SECA application, the Secretary Generals office informs all members of IMO. There is a six-month, Tacit

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Agreement Procedure period during which objections and questions can be directed at the Secretariat of IMO. Assuming these are dealt with satisfactorily then the amendment to Annex VI will be placed before the next plenary session of the IMO, where it is formally adopted by the IMO. At which point all signatories to MARPOL Convention should include it in their nations legislation. There is then a one year notice period until the regulations enter into force and then another 12 months grace period before enforcement can commence as per Regulation 14 (7) of Annex VI. In practice most signatories to Annex VI have been tardy in enshrining Annex VI into their nation legislation which has been a cause of much of the confusion and low level of compliance reported in the Baltic SECA. 8. Current Debate Now that Annex VI has been adopted it can be amended through proposals to MEPC by States that have ratified the MARPOL PROT 1997. IMO has been criticized by some parties for its slow procedures and as a result there is increasing pressure to radically amend Annex VI. If IMO does not introduce generally accepted revisions to Annex VI, then some States will start to introduce unilateral legislation that might lead to a weakening of the influence of IMO. Most recently a working group has been established to assess the six proposals currently before MEPC. These have been defined by MEPC and are set out in Table II-1 There is a concerted effort to reduce sulphur levels in marine fuels which eventually will be met by increasing volumes of distillate fuels, certainly anywhere a maximum sulphur level below 1% is mandated. The one caveat is if Exhaust Gas Cleaning Systems (EGCS) can be developed economically, a real possibility when competing with distillate fuels. It can only be hoped by such time a reasonably stable set of regulations will have been adopted globally. This is a possibility that is diminishing with greater pressure, from some States to introduce their own regulations irrespective of what might transpire within IMO. 9. Factors Influencing the Definition of the Size of a SECA - The size of the proposed SECA will be determined by four issues:

(i) Practicality of enforcement Can the appropriate State/federal bodies monitor what ships of any flag are doing and when there is a transgression bring a case against them. The IMO cannot recommend the level of penalties or fines, as these are the prerogative of each country or State.

(ii) Scientific justification that the prescribed emission reduction will have

sufficient benefits to the environment. For example, will a reduction in SOx emissions at the limit of the proposed boundary of the SECA have a positive impact on land?

(iii) The introduction of a SECA will need political support from other States

States with ship registries might bring pressure against proposed regulations that could increase the costs to international shipping as well as setting a precedent for more stringent regulations elsewhere. The proposed SECA would be more likely to be adopted if it had the support of all adjoining States to the SECA.

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(iv) The environmental benefits valued in a manner acceptable to most analysts, outweigh the costs. The majority of costs will be incurred by ship operators in terms of more costly, lower sulphur fuels and/or installation of abatement technology. There will be other costs including those for enforcement.

When an application for a SECA for the Mediterranean Sea is made it is unlikely to demand separate justification for all sections of the coast line. Any objection to a SECA is likely to come from member States that consider that international shipping will be unnecessarily disadvantaged. Table II-1 Current Options under Debate 1) Reference Baseline (previously referred to as Option A: Status quo) This is the current requirements of Regulation 14, with the same sulphur caps and allows for any type of fuel to be used. The only way to reduce SOx from shipping with this option would be to have more SECAs. 2) Option B: Change to SECA requirements This retains the current structure of Regulation 14, with a global sulphur cap (unchanged or lowered) and a SECA sulphur cap lowered first to 1.00% by a tentative date of 2010, then to 0.50%, possibly by 2015. There are no restrictions to fuel types with this proposal. 3) Option B1: (Based on submission from the US government by the Environmental Protection Agency (US EPA). Requires a lower sulphur limit for SOx emissions or require the use of a distillate fuel with low sulphur level within a defined distance from shore. The current distance from shore, defining the extent of the SECA is suggested at 200 nautical miles. It permits the options for ship-owners to choose to comply through the use of low-sulphur fuel and/or the use of exhaust gas cleaning technology. It also includes a limit on emissions of particulate matter (PM). Does not include any reduction in the Global Cap. 4) Option B2: (Based on submission from BIMCO)- This defines a gradual lowering of the Global Cap content (max 3.0% in 2012, max 1.5% in 2016), or use of alternative mechanisms (such as exhaust gas cleaning systems) to obtain equivalent levels of emission reduction. Additionally, it requires use of distillate in SECA, port areas, and estuaries, with gradual lowering of the sulphur content (max 1.0% in 2011, max 0.5% in 2015), or use of alternative mechanisms (such as exhaust gas cleaning systems) to obtain equivalent levels of emission reduction. 5) Option C: Change to distillate fuels (Based on submission from INTERTANKO) This requires use of distillate fuels for all ships globally, with a global sulphur cap set at 1.00% by a possible date of 2012, then reduced further to 0.50%, possibly by 2015. The specification for the distillate fuel to be used by ships would need to be included in the regulation. This is the only option that restricts the type of fuel and does not allow for the use of residual fuels or exhaust gas cleaning systems as an alternative. 6) Option C2: Distillate fuel with option To use residual fuel. The Global Caps would be as in Option C, but permits the use of residual fuel in combination with alternative mechanisms (such as an exhaust gas cleaning system) to obtain an equivalent level of emission reduction. Source IMO The boundary defining the SECA for the Baltic Sea is obvious. The definition of the North Sea SECA was included in Annex VI and it is unclear how much analysis was undertaken in selecting its boundaries since they principally follow lines of latitude and longitude that

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are exact integers. It appears that the boundary selection was somewhat arbitrary (see Figure II-1). In the North Sea application there is extensive reference to the Convention on Long- Range Transboundary Air Pollution (LRTAP) although the North Sea application does not consider the definition of the boundaries, merely referencing Annex VI. It might be assumed that the IMO would expect some argument to determine how far from the shore the SOx restrictions should be applied. Also, increasing the extent of the SECA will raise shipping costs resulting in higher freight rates, which will have a negative impact in the economies of the States bordering a SECA. The European Parliament has reintroduced the possibility of extending the North Sea SECA to the limits of the Economic Exclusive Zones of all member States, a distance off shore of 200 miles. The European Commission, responsible for the technical evaluation of this proposal, is negative about justifying such an extension on the grounds of indefinable impact and enforceability. 10. Criteria Considered in a SECA Application - Annex VI does not set out hurdles or levels to be achieved in order that an application to implement a SECA can be confirmed. As noted, the application for the North Sea is the only stand alone application to date and this considered all the criteria set out in Appendix III of Annex VI, but there is debate as to whether it specifically demonstrates that a SECA was the most effective means of reducing emissions. Section 2.2 of Appendix III of Annex VI defines six proposed criteria each of which must be addressed:

(i) A clear delineation of the proposed SECA in terms of longitude and latitude of the boundaries together with a reference chart on which the SECA is marked.

(ii) A description of the land and sea areas at risk from the impacts of ship SOx

emissions. The criteria for a SECA are specifically directed at risks from SOx emissions including human health. In order to incorporate additional risks related to SOx, where primary Particulate Matter (PM) emitted from the stack and secondary PM formed from SOx through reactions in the atmosphere are the most obvious, it would be expected that some degree of preliminary discussions will be required with members of MEPC. This discussion might take the form of an explanation to both demonstrate the damaging impacts of PM (i.e., to human health) and the relationship between sulphate PM and SOx emissions from the ships main and auxiliary engines. It is of note that the EPA has included reference to PM in its proposal to upgrade Annex VI (see Table II-1, Option B1). The issue of emissions from boilers, used extensively by tankers discharging cargoes, also needs to be addressed as these combustion sources present a significant source of SOx and PM when the tankers are along side in port. Any description of the areas at risk will presumably be determined from the disposition analysis, prevailing weather and the sensitivity of the land and sea ecosystems.

(iii) The proposal is to include an assessment that SOx emissions from ships and

their attendant adverse impacts are contributing to air pollution and in the form of deposition. The assessment shall include a description of the impacts on terrestrial and aquatic ecosystems, areas of natural productivity, critical habitats,

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water quality, human health and areas of cultural and scientific significance. Appendix III of Annex VI does not define a datum above which pollution must be demonstrated to surpass before the initiation of a SECA, only that the pollution has adverse impacts. The phrase attendant adverse impacts could well be interpreted to include PM as well as other pollutants that arise from combustion of sulphur in marine fuels. If it can be shown that the introduction of a SECA will also reduce primary and secondary PM (and perhaps other pollutants), then this argument can only strengthen the case. The reference to human health further strengthens the argument to assign greater benefits to reducing PM. The analysis methodologies and the sources of relevant data are to be determined by the applicant and identified within the application.

(iv) Relevant information pertaining to weather conditions and, particularly, wind

patterns in the proposed area is required to demonstrate how marine emissions will impact the sea and land ecology at risk. Obviously, predominately onshore winds, as, for example, are experienced in northern Europe, result in greater pollution on land. Information is also requested that will further enhance the case for a SECA that demonstrates that the topographical, geological, oceanographically, morphological or any other conditions that could lead to increased probability of higher localized air pollution or levels of acidification. In Scandinavia, the predominately organic rock with thin overlaying soils leads to exaggerated damage to plant life and in particular the extensive forests from acidification. Mountainous regions inshore impacted by onshore winds can lead to intensification of air pollution and acid deposition.

(v) Data on marine traffic in the proposed SECA is to be presented, including the

patterns and density. This information is generally available locally including port visits and ferry traffic, from international data providers such as Lloyds Maritime Intelligence Unit and vessel piloting and monitoring data bases maintained by some ports and government agencies. These identify departures and arrivals at destinations, but seldom identify actual routes used, although this data can be assembled thorough communication with the shipping industry active in the area. The emission estimates will be based on data collected on ship fuel usage and fuel quality, vessel movement activity, vessel main and auxiliary engine size, emission factors and related information. The application should also include forecasts of future traffic. This should be in terms of types and sizes of vessels steaming in the area as well as their origins and destinations since this determines their routing and likely bunkering port. This in turn provides a means of estimating the sulphur content of the bunkers being consumed prior to the implementation of the proposed SECA.

(vi) A description of the land based (and presumably any existing marine) measures

taken by the States affected by the application that will run concurrent with the SECA. This can be presumed to include current and proposed emission controls in the area impacted by the introduction of the SECA. This information will be used in the assessment of the proposal (ref Clause 3.3 Appendix III of Annex VI) in terms of the relative costs of introducing the SECA with land based controls. There is no indication of how or what measures will be used in this economic assessment, but reference is made to the costs to shipping engaged in international trade. Presumably introducing a SECA must not be seen as

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increasing the costs to shipping compared with land based controls which can be assumed would be borne by those most benefiting from reduced pollution. As land based controls, such as lower sulphur on-road vehicle fuels and gas stack desulphurization reach their practical limits the costs of further reductions of emissions becomes prohibitive and, hence, marine controls present the potentially more cost effective approach.

The MEPC, when considering a SECA, is currently most influenced by the reduction in SOx. Additional reductions in NOx or other pollutants do not currently carry as much weight. Particulate matter (PM) control has previously not been seen as a direct result of introducing a SECA, hence including the benefits of reducing PM as an additional justification for a SECA would require demonstration of a strong link with SOx emissions from fuel combustion. The following relationship (see Figure II-2) was devised by Lloyds and relates to total PM. It could be considered as a starting point for such an argument. The relationship between SOx emissions and PM generation is extremely complex. The particles are defined by size with particles less than 2.5 microns in diameter (PM2.5) being considered the most damaging to human health. Control and measurement are both complicated as some of the particles are formed in the atmosphere downwind away from a vessels funnel. There is additional compelling data on this issue. The health and environmental benefits from PM concentration reductions are valued in Europe at a far higher value than concentration reductions of either SOx or NOx. Values are also dependent on the location of the exposure to the pollutant 11. Quantification of SOx Emissions - The initial quantification of SOx emissions is based on marine traffic. As noted, detailed recent traffic data for ship by ship movements can be purchased from Lloyds and this can be related to the registry information allowing determination of each vessels engine type and size as well the likely type of fuel consumed. Separate analysis is needed to forecast future vessel traffic. The greatest uncertainty is in determining the sulphur content of fuels being consumed in the proposed SECA currently and in future. 12. Deposition and Impact of SOx - Having defined the extent of emissions it will be necessary to define its disposition. This is dependent on the prevalent weather. A number of models exist in Europe including the EMEP model developed and maintained under the UNECE, Convention on Long-Range Trans-boundary Air Pollution. Under this Convention, extensive programs are in place for the mapping of the critical loads of vulnerable ecosystems, which was a key feature in the North Sea application. The mitigation of damage to ecosystems was the key determinate when adopting the North Sea SECA. Some ecosystems are inherently more sensitive to acidic deposition than others. This sensitivity has been used to develop the concept of critical load, which is generally defined as a quantitative estimate of an exposure to one or more pollutants below which significant harmful effects on specified sensitive elements of the environment do not occur

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according to present knowledge (UNECE, 2004). Knowledge of which ecosystems are the most sensitive and where they are located allows strategies to be devised which maximize the environmental benefit at least cost. Figure II-2 Relationship between Fuel Sulphur Content and Total PM Emissions

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1

00 0.5 1.0 1.5 2.0 2.5 3.0

Source: Lloyds Register Marine Exhaust Emission Research Programme Demonstration of acidic deposition impacts from SOx will be an important, but not the only impact to be considered. IMO has not had an opportunity to define other sources of environmental and health damage to the same extent as it has for acidic deposition from ship SOx emissions. IMO, when considering an application for a SECA, can be expected to look to a quantification of the consequences of damage caused by SOx. The applicant for the new SECA is then required to define how much of this damage is as a consequence of marine SOx. As noted, damage from other pollutants has in the past not been seen as germane to the argument for a SECA but this is expected to change. 13. Fuel Oil Quality and Availability - More attention is being paid in IMO on fuel quality as defined in Annex VI Regulation 18, but more important is that the SECA application must be able to demonstrate that sufficient Lower Sulphur Fuel Oil (LSFO), of adequate quality, can be made available to meet the increased demand resulting from the proposed SECA. This will present increasing difficulties that will be accentuated by the increasing demand from the existing SECA (likely to increase demand for LSFO by some 10 million tonnes by 2010), and further if the whole of North America waters become a SECA. The US and Canadian federal governments are supporting studies of marine fuel supply and demand in North America. Availability of LSFO will be a key issue in the future. 14. Cost Effectiveness Analysis - Cost effectiveness analysis is required to demonstrate that a SECA is a lower cost strategy for the reduction of the deposition of SOx. Analysis of regulations already in place, proposed regulations and policies for decreasing SOx from land based sources needs to be referenced, and the inherent costs compared with the SECA

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option. The costs are principally a function of the sulphur premium between lower (1.5%S) and current fuels, typically with a sulphur levels in residual bunkers of 2.7%. Estimating the sulphur price premium is complex, values ranging from Euro 8/tonne, the average in North West Europe prior to the introduction of SECA to Euro 35 to Euro 40/tonne reflecting the fully built up costs of residual desulphurisation have been quoted in numerous reports. Should maximum sulphur levels in SECA be reduced below 1.5% as is proposed in all the alternative options being considered by IMO (see Table II-1), then the premium will no doubt increase dramatically. Should a switch to distillate fuels be mandated then the premium could easily reflect the current difference between residual and distillate marine fuels of Euro 220/tonne. If abatement becomes widespread then eventually its economics could set the differential in the longer term. The trials of SOx control on a P&O ferry operating across the English Channel and other scrubber developments suggests a price premium for lower sulphur fuels in the range of Euro 40/tonne will make this approach financially viable. There are more than ten technologies under development and if the approach is widely adopted, (it should be noted that it is included in all but one of the six IMO options currently under debate), then the capital costs will come down from economies of scale and technological advances. This will dramatically further encourage the adoptions of this approach. There will no doubt be market instability as new SECA are implemented resulting in extreme price differentials, but presumably any cost effectiveness analysis will be based on longer term scenarios. The costs of implementing the SECA including increased bunker costs, investment in abatement, enforcement, possible transfer of cargo from sea to land and air if marine transport costs become uncompetitive will all need to be addressed in the cost effectiveness analysis. There are some cost savings to ships when using lower sulphur fuels principally from reduced engine wear. Quantification of environmental and health benefits will require estimation to similar levels of confidence. It can be expected that it will take some five years between the definite go ahead being declared to make the application to designate the Mediterranean Sea a SECA and the commencement of enforcement.

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III RATIFICATION OF ANNEX VI In order to designate the Mediterranean Sea as a SOx mission Control Area (SECA) at least one involved member State must have ratified Annex VI of MARPOL Convention. The key benefit is a cleaner and healthier environment particularly in terms of air quality resulting in improved health, reduced damage to the environment, both in the sea and on land and less damage to heritage sites. The costs of ratification will fall on the implementing States through increased administrative costs and to the shipping sector from the use of more costly, lower sulphurous marine fuels as well as operating vessels in many different ways which invariably increase costs. It can be assumed that these costs will eventually be passed onto the end user, namely shippers of goods and passengers. There is a secondary issue that if marine transport becomes too costly freight will transfer to road and rail which, particularly from a carbon footprint point of view, will be less environmentally friendly.

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A ADVANTAGES 1. Cleaner Environment This is at the heart of a SECA and is the principal advantage. The cleaner environment will impact all countries with a Mediterranean Sea board as well as some distance in shore. This study is principally directed at the process of establishing a SECA and hence reducing SOx emissions. SOx damages the environment, crops and health. In a recent study undertaken for CONCAWE a total of 840 kilo tonnes SOx per annum will be emitted by ships by 2010 growing to 1.088 million tonnes by 2020. (see Ref 1). This assumes the enforcement of the EU Directive 2005/33/EC amending 1999/32/EC (LSFD), which constrains passenger ferries trading regularly into EU ports to use residual fuel with a maximum sulphur content of 1.5%. An example of the location of emissions is shown in Figure III-1. However, further modelling is required to determine where these emissions impact the environment. These results compare with a previous study undertaken for the European Commission which estimated SOx emissions from shipping to be nearly twice as high at 1.6 million tonnes in 2010 rising to 2.08 million tonnes by 2020. As with practically all analysis, to determine both costs and benefits of reducing SOx and other emissions, there can be a wide discrepancy in the results. In economic terms the EU has published values of reducing tonnes of SOx from the environment. The values shown in Table III-1 reflect the averages of the lowest ranges estimated in the report to the European Commission DG Environment entitled Damages per tonne emission of PM2.5, NH3, SO2, NOx and VOC from each EU25 Member State (excluding Cyprus) and surrounding seas (see Ref 2). They indicate the generally greater benefits from reducing emissions from land based sources and the juxtaposition of the benefits of reducing the three key pollutants. It should be noted that the current debate on amending Annex VI, as per Table II-1, does not include any reference to including PM or NOx values. Table III-1 Unit Benefits of Reducing Principal Pollutants (Euro/tonne) Pollutant Land Emissions At Sea Emissions SO2 13,700 3,700 NOx 4,600 2,500 PM 2.5 25,900 12,600

Source: EU (Ref 2) Annex VI, as currently drafted, focuses on the benefits from only reduced SOx concentrations of terrestrial and aquatic ecosystems, areas of natural productivity, critical habitats, water quality, human health and areas of cultural and scientific significance. There are significant health benefits which should be defined in the application exercise.

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Switching one tonne of the currently used higher sulphur bunkers, typically with a sulphur content of 2.7%, to a ton of 1.5% bunkers, as prescribed within a SECA, would reduce sulphur emissions by 12 kilograms, equivalent to 24 kilograms of SO2. To achieve a reduction of one tonne of SO2 would require 42 tons of higher sulphur fuel to be switched. The range of benefits from reducing SO2 in the Mediterranean alone range from Euro 2,000 to Euro 6,300/tonne (see Ref 2). Assuming the lowest benefit estimate of Euro 2,000/tonne SO2, then if the price differential between lower sulphur (1.5%) and the current 2.7% is less than Euro 48/tonne, then the benefits out way the costs. In North West Europe, during the first two months that both the Baltic and North Sea SECA have been in force, the average price difference has been Euro 13/tonne. At this price differential the benefits would be over three times the costs. In the future no doubt the sulphur premium will increase significantly as the demand for lower sulphur bunkers grows with increasing compliance and eventually more SECA. On the other hand, the benefits of reducing SO2 emissions from shipping in the Mediterranean are almost certainly some what higher than the lowest estimate of Euro 2000/tonne since this value only related to benefits to the EU Member States and exclude benefits to the other 18 non-EU Mediterranean Sea Board States. Replacing heavier, higher sulphur fuels with typically lighter, lower sulphur fuel oils could be expected to also reduce PM2.5 emissions further benefiting the MSBS and States beyond. This superficial, scoping analysis suggests that there may well be a case to designate the Mediterranean Sea as a SECA. However, whether introducing a SECA in the Mediterranean is the most cost effective route to a cleaner environment will be the subject of the proposed analysis. Other less quantifiable advantages will accrue to States ratifying Annex VI. They will be seen as taking a positive step towards improving the environment and allying themselves to similarly minded States. Figure III-1 Base Case 2005 SO2 inventory Source: Entec (see Ref 1)

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2. Greater Influence A further benefit of ratifying Annex VI is an increased influence in the debate including the option to vote on any future changes to Annex VI in the instance they go to a vote if agreement can not be reached by consensus and tacit acceptance as is usual within IMO. However, in any debate on amendments to Annex VI (or any other MARPOL revision), States that have not ratified can enter the debate, and depending on the persuasiveness of the presentation, influence the outcome.

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B OBLIGATIONS In order to achieve the advantage of a cleaner environment the Mediterranean Sea Board States (MSBS), are required to become involved in the establishment process, the maintenance and enforcement as well implementing subsequent IMO amendments to Annex VI. 1. Certification Each country that ratifies Annex VI must provide for and make arrangements for all vessels flying its national flag that are 400 gross tonnage or above together with every fixed and floating drilling rig and other platforms to be subject to survey. In each State the organization responsible for the surveying and certification (or Administration as defined in Annex VI), must be defined. In most countries this is the marine administration and / or coast guard. The Administration can be expected to already exist in all sea board States and need not be separate from the Port State Control (PSC). It should be government appointed, have the requisite knowledge of ship registration and will almost certainly be already administering the safety and welfare of the manpower employed on the States own flagged ships. There are over ten thousand ships registered under the flags of the 25 MSBS (see Table III-3) greater than 100 GT. It is estimated that the total number of ships 400 GT or above, (as defined by Annex VI), is 10,000. Some 95% of the MSBS gross tonnage is registered in four countries, namely Cyprus (69%), Greece (12%), Malta (9%) and Italy (5%) with Malta being the only State not yet to have ratified Annex VI. In terms of numbers, which reflects the work load for certification, two thirds of the vessels are registered in five countries, namely Greece, Italy, Malta, Spain and Turkey. Of these, only Malta and Turkey have not yet ratified Annex VI. The ships registered in MSBS that have ratified Annex VI amounts to 62% by numbers and 88% by GT. Each State ratifying Annex VI must provide a system for the issuance of International Air Pollution Prevention Certificates (IAPPC). A certificate must be issued to all ships of 400 GT or larger as well as platforms and drilling rigs registered with the State that are engaged in voyages in waters under the jurisdiction of other States that have ratified Annex VI. These certificates are to be issued at the time of delivery. For ships constructed before 19 May 2005, the date the Protocol of 1997, namely Annex VI came into force, no later than the next scheduled dry dock or within three years, which ever occurs first. Generally an IAPPC is valid for five years. At least one interim survey is required during the five year period. The IAPPC will become invalid if sufficient faults are identified during a survey. It will also become invalid if the five year period is exceeded (there is a five month grace period), if significant alterations to the ship cause it not to be compliant and when the ship changes flag. If the new flag has not ratified Annex VI then the IAPPC becomes invalid. The detailed form of the certificates is set out in Appendix I of Annex VI. This identifies the country authenticating the certificate, the ship in terms of name and number, IMO

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number, port of registry and GT. There is an endorsement for subsequent surveys and supplement recording construction and equipment relating to abetment, control of ozone depleting substances, NOx and SOx. Table III-3 Fleet Registered with Countries with a Mediterranean Seaboard

Country of Registration Number Gross Tonnage

Average Age

Albania 75 74,677 34 Algeria 127 764,099 25 Bosnia & Herzegovina - - - Croatia 286 1,157,196 29 Cyprus 971 19,032,1891 14 Egypt 348 1,141,729 26 France 713 1,279,321 21 Greece 1,455 32,048,052 23 Israel 51 763,538 19 Italy 1,566 12,571,161 22 Jordan 32 386,319 26 Lebanon 65 156,957 37 Libyan Arab Jamahiriya 139 105,368 22 Malta 1,294 24,849,818 17 Monaco - - - Montenegro 10 10,519 31 Morocco 513 526,795 21 San Marino - - - Serbia - - - Slovenia 6 1,626 21 Spain 1,638 3,004,626 21 Syrian Arab Republic 151 388,681 35 Former Yugoslav Republic of Macedonia - - - Tunisia 75 168,095 24 Turkey 1,184 4,848,839 25

Totals 10,699 274,569,307 22 World 94,936 721,855,399 22 Mediterranean Seaboard as % of World 11 38

Source : Lloyds Register Fairplay Fleet above 100 GT as of 1 January 2007 The certificates can be issued by the assigned government authority or by any person or organization authorized to undertake the surveys on behalf of the assigned government body. (see Section III.D). An authorized survey authority in a country that has ratified Annex VI can request the comparable organization in another country that has also ratified Annex VI to undertake the survey on their behalf. A copy must be provided to the original authority. The IAPPC will have the same validity as one issued by the country of registration of the ship.

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The certification process requires a significant clerical support as well as inclusion of the necessary regulations within the domestic legislation framework. 2. Enforcement of Compliance A State that has ratified Annex VI has a responsibility through its PSC to instigate inspection of ships in its ports and offshore terminal when they have clear grounds that the master or crew are not familiar with the essential ship board procedures for preventing emissions. This includes the use of bunkers with a sulphur content above the specified level which currently are 4.5% globally and 1.5% in a SECA. The inspection procedure can involve testing the MARPOL sample which should be provided at every bunker delivery (residual and distillate fuels) and ensuring the ship does not leave port until the non compliance issue has been rectified in accordance with Annex VI. Each State will already have PSC procedures and it is expected that the additional responsibilities incurred through ratification of Annex VI will be included in these procedures. Annex VI does not, in accordance with the IMO charter, define levels of penalties that can be applied and each State will need to determine what is appropriate and dissuasive

3. Contracting Governments/Parties Obligations These are referenced in the IMO document Revised Code for the Implementation of Mandatory IMO Instruments (FSI 15/18/Add.1), which is due to be formally approved in the next IMO Assembly in November 20071. This revised Code will replace/revoke IMO Res. A.973(24).

With in Annex VI Contracting Governments/Parties have the following obligations (Table III-4)

1 Refer to IMO Resolution A.996(25)

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Table III- 4 Obligations of Contracting Governments/Parties to Annex VI Annex VI Regulation Obligations Reg. 7

Issue of a Certificate by Another Government A government of a State that has ratified Annex VI can issue a IAPPC on behalf of another government when requested

Reg. 11 (1)

Detection of violation and enforcement - Cooperation between governments in detection and enforcement of violations of Annex VI

Reg. 11 (2)

Detection of violation and enforcement Government have responsibility to inspect any vessel of another State that has ratified Annex VI while under its jurisdiction and report any violations to the ships government.

Reg. 11 (3)

Detection of violation and enforcement Responsibility to notify the master of any vessel that has allegedly violated Annex VI

Reg. 18 (7)

Fuel oil quality Government has responsibility to inspect BDN, copy as required and verify contents through consultation with the port where the BDN was issued. Ensure that through the auspices of organizations designated by the Government:

(a) Maintain a register of local suppliers (b) Require local suppliers to provide BDN and MARPOL samples (c) Require local suppliers to maintain a copy of all BDN for at least

three years for inspection and verification by the designated government agency

(d) Take action against suppliers that have been found to deliver fuel oil that does not comply with the BDN

(e) Inform the flag state of any vessel receiving fuel oil not compliant with Reg 14 and Reg. 18 of Annex VI

(f) Inform IMO of all cases where fuel oil supplies have fails to meet the requirements of Reg. 14 and Reg.18 of Annex VI

Reg.18 (8)

Inform the government where the BDN relating to the delivery of non-compliant fuel took place Ensure that remedial action is taken to bring non-compliant fuels delivered within their jurisdiction into compliance

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4. Specific Flag State Obligations Again reference IMO document FSI 15/18/Add.1, the obligations within Annex VI are shown in Table III-5.

Table III- 5 Specific Flag State Obligations Annex VI Regulation Obligations Reg. 4 (2)

Equivalents The flag state which permits the fitting, material, appliance or apparatus that is an alternative to that required by Annex VI shall communicate this to IMO for distribution by IMO to other parties to the protocol

Reg. 5

Surveys and inspections - 1. Responsible for surveys of all vessels of 400 GT or above to ensure their flag vessel comply with Annex VI: The initial survey, regular surveys at less than five year intervals and intermediate survey at not less than 2.5 years intervals.. 2. For vessels less than 400 GT Flag State can establish appropriate measure at their own discretion. 3. Option to entrust the surveys to Recognised Organisation (see III.D.1) 4. Surveys to include NOx as per Reg.13 5. Institute unscheduled surveys. 6. Ensure corrective action is taken when the equipment on a vessel is deemed not to comply with Annex VI, If the remedial action is not taken then the certificate shall be withdrawn If the vessel is in a port of another State its administration should be informed and that State shall give any assistance to permit the surveyor to carry out their obligations under the regulation. 7. Flag State to approve any changes to the vessels equipment with respect to regulations. Direct replacement of equipment is permitted 8. The Flag State shall be responsible for managing the obligated reports from the owner or master of a vessel on which the equipment covered by this annex is damaged.

Reg. 6

Issue of IAPPC 1. IAPPC to be issued to

(a) any ship of 400 GT or above voyaging in any other States jurisdiction

(b) platform or drilling rigs voyaging in any other States jurisdiction 2. Vessels constructed before 19 May 2005 shall be issued with an IAPPC no later than their first dry dock but no later than 19 May 2008 3. The Flag State remains responsible for the certificate even when the survey is delegated to an authorised third party.

Reg. 9 (4) (c)

Duration and validity of Certificate Transfer of flag When a vessel transfers out of the flag state it shall transfer copies of the IAPPC, and any survey reports within three months to the vessels new flag State administration. (c)

Reg. 11

Detection of violations and enforcement 1.All parties to Annex VI shall cooperate in detecting violations and enforcing the regulations using all appropriate and practical means of detection and environmental monitoring 2. Any ship for which Annex VI applies may be inspected by the flag state administration in any port or offshore terminal within its jurisdiction. In the case of a violation a report shall be made to the administration. 3. The Administration should inform the Administration responsible for a offending vessel of any violation and, when practical, the master of the offending ship shall be informed. 4. An Administration being informed that a vessel within its flag has contravened the Annex shall satisfy itself that sufficient evidence is available to proceed against the offending vessel within the law. The

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Administration shall inform the original party that reported the violation as well as informing IMO. 5. The Administration shall respond to requests to inspect any ship to which the Annex applies so as long as sufficient evidence that the ship has violated the Annex. If the offence is confirmed the Administration must be informed as must the party originally requesting the inspection so that appropriate action can be taken. 6. The international laws concerning the prevention, reduction and control of marine pollution from ships in force at the time shall apply to the rules set out in the Annex.

Reg. 13 (1) (c) (ii)

Nitrogen oxides (NOx) - alternative control measures The Administration shall establish regulation for NOx emissions from vessels flaying its flag.

Reg.13(2) (b)

Nitrogen oxides (NOx)- approval of documentation Any major conversions to engines shall be documented in accordance with the NOx technical code for approval by the Administration.

Reg. 13 (3) (b)

Nitrogen oxides (NOx)- approval of EGCS or equivalents Approval and sanction of NOx gas cleaning systems in accordance with the NOx Technical code

Reg. 14 (4)(b&c)

Sulphur oxides (SOx) - approval of EGCS or equivalents (b)Approval and sanction of SOx exhaust cleaning systems (d) Approval and sanction of any other technical method of abatement

that meets the regulations of the Annex and is verifiable and takes into account the IMO guidelines.

Reg. 14 (6)

Sulphur oxides (SOx)- prescription of log book The Administration shall provide a log book / method of recording, in the instances when a ship uses fuel switching to comply, of the low sulphur fuels in each tank as well as the date, time and position of the ship when the fuel switching was completed.

Reg. 15 (5)

Volatile organic compounds approval of vapour collection systems Approval of vapour recovering systems.

Reg. 16 (2) (a) Shipboard incineration approvals- Approval of incinerators. Reg. 17 (2)

Reception facilities notification on alleged inadequacies of port reception facilities Inform IMO of all cases where the reception facilities provided are unavailable or alleged to be inadequate..

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5. Specific Port State Obligations Again reference IMO document FSI 15/18/Add.1, the obligations within Annex VI are shown in Table III-6

Table III- 6 Specific Port State Obligations Annex VI Regulation Obligations Reg. 10

Port state control on operational requirements 1. Inspect ships of other flags while in their ports or offshore terminals concerning operational requirements related to this annex where there are grounds for believing the master or crew are not familiar ship board procedures for prevention of pollution from ships. 2. When the master or crew are not familiar with the procedures take such steps as to ensure the ship does not sail until the situation to prevent the ship from sailing has been brought to order within the regulations of the annex. 3. The procedures of the Port State Control shall be under the auspices of article 5 of MARPOL 73/78. 4. Regulation 10 shall not limit the rights or obligations of the Port State Control concerning operational requirements provided for in MARPOL 73/78.

Reg. 14(4) (b)

Sulphur oxides (SOx) approvals of wash water criteria to IMO- Definition of criteria of waste water streams from exhaust gas cleaning systems within its ports. These criteria are to be sent to IMO for circulation to other Parties.

Reg. 15 (2&3)

Volatile organic compounds- approvals and notification to IMO 2.Designation of ports within its control where VOC are to be controlled and inform IMO including definition of the size of tanker to be controlled, cargoes requiring and the effective start date of the controls. A minimum of six months notice is required. 3. Provision of vapor control systems in the designated ports and ensure they are operated safely and in a way that does not unduly delay ships using the systems.

Reg. 17 (1)

Reception facilities provision of facilities Provide of reception facilities without delay to ships to (a) receive ozone depleting substances and containers of such when vessel are visiting for repairs; (b) receive residues from exhaust gas cleaning systems when these residues can not be discharged into the marine environment. (c) Receipt of ozone depleting substances of container of such from vessels being scrapped.

Reg.18 (5)

Fuel oil quality inspection of BDN Inspect BDNs on any ship subject to this annex, copy them and obtain agreement from the ship that the copy is a true copy. Can also verify the contents of the BDN through consultation with the port state control in the port where the BDN was issued. The inspection and copying of BDNs shall done a rapidly as possible without causing the ship undue delay.

Reg.18 (8)

Fuel oil quality- Inspection of remedial action (a)Inform the port state control of the port where a BDN was issued that related to non-compliant fuel. (b) Ensure appropriate remedial action is taken to bring non-compliant fuel into compliance.

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C ECONOMIC COSTS In addition to the costs of meeting the obligations noted above, there will be other economic costs. 1. Freight Costs Ship operators will experience higher bunker costs which in turn will result in higher freight costs increasing Cost, Insurance and Freight (CIF) landed prices and decreasing Free On Board (FOB) prices of all types of trade. The degree of freight cost increase will depend on the option adopted in the Mediterranean. If 1.5% sulphur fuels are mandated then intra SECA freights will be increased by some 10% and long haul by less than 5%. If the distillate only option is adopted then freight costs could be increases by 45%.

Ship operators will experience other, less direct costs including:

Increased lubricant contamination risks; Smaller stems increase delivery costs; Increased operating risks; More training; Increased working capital costs; More complicated charter parties; More disputes/ legal and technical fees; Possible fines/penalties; Greater chance of incompatible/unstable fuels; More fuel testing; More de-bunkerings; More samples to hold; Reduced fleet flexibility; More administration; Increased fuel monitoring; Installation and maintenance of monitoring equipment; The costs of uncertainty.

2. Re-routing of Trade - In certain circumstances the higher marine freight could result in transfer of cargo to road, rail or barge which would result in greater emissions of Green House Gasses (GHG) and other pollutants. The introduction of a SECA in the Mediterranean could have a detrimental impact on ports on the Moroccan, French and Spanish Mediterranean coasts as their alternative ports on their Atlantic coasts might present lower freight costs as shipper will not be required to switch to lower sulphur, higher priced fuels.

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D DELEGATION A government, through its assigned administration has two principal responsibilities to determine that its air pollution control regime functions namely certification that can be delegated to a third party and enforcement that can not. 1. Certification - As noted in Section III-B.2, this is a national responsibility to ensure certificates are issues. The issuance is in some countries, delegated to a Recognised Organisation (RO). In countries that have not ratified Annex VI owners of vessels flagged in that country are approaching one of the recognised classification societies requesting to be surveyed to obtain a Statement of Compliance. This can be issued by the classification society and will generally be recognised by the State authorities of countries that have ratified Annex VI. The most usual approach is for the State administration to assign one or more classification society to be its Recognised Organisation. The administration then has a duty to audit the classification society to ensure that the certificates they are issuing are reliable. It should be noted that an RO can not issue an IAPPC on behalf of a State that is not a party to Annex VI. There is an International Association of Classification Societies (IACS) which has nine members and an associate member. These ten societies are globally recognised as the leaders in their field and provide the survey services that permit counties to provide IAPPCs with confidence. The members/associates of IACS are:

American Bureau of Shipping (ABS); Bureau Veritas (BV); Chinese Classification Society (CCS); Det Norske Ventas (DNV); Germanischer Lloyd (GL); Korean Register (KR); Lloyds Register (LR); Nippon Kaiji Kyokai (NK); Registro Italiano Navale (RINA); Russian Maritime Register of Shipping (RMRS); The Indian Register Of Shipping (IRS) (Associate Member).

IMO provides guidelines to member States on the authorisation of organisations to act on their behalf. These are set out in Resolutions A.739(18) and Resolution A.789(19). States have a responsibility to audit the RO since the State has the ultimate responsibility for the validity of any certificate. The State that has ratified Annex VI may request the administration of another State that has ratified Annex VI to organise and survey a vessel, which if it is in accordance with Annex VI can issue the IAPPC and is required to provide the requesting country with a copy of the IAPPC.

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It should be noted that the IAPPC includes survey of procedures and equipment for the control of Ozone depleting substances, NOx, which related to the Technical Code on Control of Emissions of Nitrous Oxides from Marine Diesel Engines (Resolution 2 Annex VI), Volatile organic compounds, shipboard incineration as well as SOx. 2. Enforcement - As noted, this is the responsibility of the PSC and can not be abdicated to a third party. It is the responsibility of the State to ensure its legislation is enforced. This requires clear regulations to be enforced by an authorised body, typically the coast guard or equivalent. This body requires the statutory powers and a set of procedures. Inspection procedures and the guidelines for identifying which vessels should be inspected exist in all such bodies. In terms of sulphur the immediate references are the inspection of the BDN and availability of a MARPOL sample correctly labelled. Reference is also made to the procedures available from the master of the vessel on SOx controls. The enforcement body can test the sample. They may have a facility to do that almost instantaneously using portable X-ray fluorescence (XRF) equipment now available on the market. If this demonstrates a sulphur level above the required maximum (currently 1.5% but very likely to be less in the future), then a subsequent test on the sample will need to be undertaken in an independent, accredited laboratory to substantiate enforcement and possible penalties. When EGCS are more evident then the PCS will need to have the facility to test these are operating effectively with respect to the vessels IAPPC. There is some concern, that the required frequency of survey is too long and EGCS equipment will not maintain its efficiency. (The concern on NOx engine survey is even more acute) A detailed check list for PSC is set out in Appendix 2 of Greenhouse Gas Emissions for Shipping and Implementation Guidance for the Marine Fuel Sulphur Directive (Ref 3). These can be summarised as follows: Distinction should be made between first port after entering a SECA and following ports. a. First port after entering of SECA

1 Check fuel log book with regard to availability of LSF. 2 Check availability of BDNs and fuel samples. 3 Check design of fuel system. 4 Ask for description of fuel switchover procedure. 5 Ask for logbook with data as required by Annex VI and additional data to verify correct performance of fuel switchover procedure. 6 Ask for LSF consumption since start of switchover. 7 Estimate reasonability of fuel consumption since start of switchover (Depending on design of fuel supply system fuel consumption must exceed that between borderline of SECA and port in question). 8 If available check 7 with fuel changeover manual. 9 If vessel is equipped with exhaust gas treatment ask for manual of equipment supplier and check the amount of residuals for reasonability.

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b. Following ports in SECA 1 Check fuel log book with regard to availability of LSF. 2 Check availability of BDNs and fuel samples. 3 Ask for logbook with data as required by Annex VI. 4 Ask for LSF consumption since last port. 5 Estimate reasonability of fuel consumption. 6 If vessel is equipped with exhaust gas treatment ask for manual of equipment supplier and check the amount of residuals for reasonability.

c. First port at second and following entries into SECA

1 Check fuel log book with regard to availability of LSF. 2 Check availability of BDNs and fuel samples. 3 Check design of fuel system. 4 Ask for description of fuel switchover procedure. 5 Ask for logbook with data as required by Annex VI and additional data to verify correct performance of fuel switchover procedure. 6 Ask for LSF consumption since start of switchover. 7 Estimate reasonability of fuel consumption since start of switchover (Depending on design of fuel supply system fuel consumption must exceed that between borderline of SECA and port in question). 8 If available check 7 with fuel changeover manual. 9 Ask for LSF consumption after departure of last port before last time leaving SECA (Depending on design of fuel supply system fuel consumption must exceed that between last port and borderline of SECA by volume of service tank). 10 If vessel is equipped with exhaust gas treatment ask for manual of equipment supplier and check the amount of residuals for reasonability.

The United Nations Convention on the Law of the Sea (UNCLOS) is specific on how and when ships can be restricted from leaving a port or provide information when in international waters and currently violations of emissions to air are not as strictly enforceable as other conventions such as the International Load Lines Convention, 1966. One aspect of enforcement is to maintain a register of suppliers in each country. They require to be registered as and when the legislation comes into force and a facility to confirm their registration usually on an annual basis. Regulation 18 (7) (a) of Annex VI states the administration shall maintain a register of local suppliers of fuel oil.

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E LEGISLATION DRAFTING There are some clear guidelines that will assist in generating legislation that minimises misinterpretation and can be enforceable. In contacts with persons drafting regulation they realise that the final draft is often made less user friendly through the need for legal review and editing. Recommendation for more effective drafting should include the following: 1. Develop the regulations as stand alone this is often not possible where the national statue requires legislation to be enacted as an act where it is usually easier to amend the requirements of Annex VI in to existing legislation. However, a stand alone set of regulations can be more detailed and specific to the control of marine emissions. 2. Consistency with EU Directives In the seven countries that are EU member States and MSBS, namely Cyprus, France, Greece, Italy, Malta, Slovenia and Spain, it is beneficial to ensure the Annex VI regulations are consistent with the EU Directives. In general the EU Directives were drafted to follow Annex VI but as Annex VI inevitably changes there will be inconsistencies with the Directives. Since these impact passenger ferries and distillate fuels retaining, consistency should be relatively easy. 3. Brevity This is the aim of all regulators but takes great skill and is often in conflict with the legal review. Maintaining the body of the regulations as brief as possible with references to appendices facilitates the process and understanding. 4. Easy of Change As noted in Section II.9, Annex VI is under review and will be amended. In the short term, over the next two years, the changes are expected to be quite extensive and there is little doubt this process of change will continue into the future. Hence, the regulations should be assembled in a way that changes can be readily agreed within the domestic context, drafted and advised to those who are affected by the regulations. Changes could include:

Lower sulphur levels mandated in SECA; Lower sulphur levels mandated for the Global Cap; Specifications of fuels mandated in the SECA or globally residual or distillate; Lower NOx emissions standards; Continuous monitoring of emissions; Carbon Dioxide (CO2) indexing; Introduction of Emissions Trading for SOx and CO2; Detailed specifications for wash water from EGCS; Specification for disposal of sludge from EGCS; Regulations specific to PM;

5. Drafting Team Ensure the drafting team fully understand Annex VI, existing relevant regulations and the EU directives. They should be aware of the scope of likely changes to Annex VI and any other relevant legislation. They should be familiar with the technicalities of ship surveying and enforcement. They should also have a technical capability to appreciate the aspects of EGCS and the NOx technical code (which is also due to be amended).

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6. Contents Commence by being completely sure of the purpose of the regulations from which a draft table of contents should be prepared to include but not be limited to the following:

Definitions Methods of survey for all emission types Regulations pertaining to emissions procedures and inspection

Ozone depleting substances, NOx SOx where

Care should be taken in defining the SECA boundaries that they do not intersect with a port so that a section of the port is in the SECA and part outside, as is the case with Falmouth in southern England which is causing problems.

Specification of EGCS Guidelines for bunker sampling and testing specific to

enforcement VOCs On Board Incineration

Type approval and operating limits for shipboard incinerators Reception Facilities

Ozone Depleting Substances EGCS residues

Fuel Oil (and marine diesel) quality issues including Product specifications BDN Sampling

Definition of enforcement procedures Retention of ships Testing procedures Fines and penalties

Pro forma for: IAPPC

Initial / Intermediate Supplement / Record of technical changes

BDN NOx engine performance certificate Suppliers declaration for registration

Annual renewal certificate List of controlled substances

A review of other countries regulations will provide another check list. It is expected that by the end of 2008 more than twenty countries will have published their regulations. 7. Drafting Schedule - Prepare a schedule for the document to be drafted together with a timetable for review by a small, competent team. The schedule should be made public in an attempt to complete the process in less than six months. There is usually a requirement for public consultation and legal review. While the drafting process is in train every effort

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should be made to pave the way through the process of converting the draft into legislation and regulations. The draft should be translated into English in order to widen the public consultation process since the regulations will usually apply to foreign bunker and shipping participants as well as domestic companies. Administration may wish to translate the drafts into other languages depending on their trading partners and bunker supply sources. The appointment of a single person to project manage the whole process can be beneficial. They should have sufficient knowledge and reputation to augment the process while managing the drafting teams processes. The application of the regulations is the best way to identify any deficiencies which will lead to an improved document. As noted, regulation will be changing frequently providing the opportunities to include other improvements.

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F CONSEQUENCES FOR NATIONAL MARITIME ADMINSTRATIONS The consequences for the national ports and maritime administrations and their need for new and / or strengthened authorities in each State will depend very much on the individual attitude to improving the environment via reducing marine emissions. As has been seen to date, there is a wide variation in this. 1. Enforcement Policy - The degree and severity the government wishes to impose its national and international marine environmental regulations, and in particular the introduction of a SECA, will influence the resource requirements. To date there has been a lack of intense inspection within the ports. This reflects:

The lack of formally drafted regulations currently in place; The uncertainty as to whether a PSC can impose its regulations on a foreign

flag vessel outside its territorial waters; A lack of test cases reducing the confidence of the enforcement agencies; In the North Sea, where many ship operators are assuming the SECA will

come into force on 21 November as per Annex VI as opposed to 11 August 2007 as per the EU Directives 1999/32/EC as amended by 2005/33/EC;

Individual ports not wishing to appear too officious. The intensity of enforcement will reflect each governments attitude which may well be influenced by its neighbours. If a relaxed approach is adopted, which certainly is the case in the Mediterranean at the moment, than the number of inspections will be very low, hardly increasing the work load of the PSC officials. To date there have not been mention of any nation increasing the resources in any sections of its administration relating to inspection and enforcement. Whether this is the cause of the low level of inspection so far reported in northern European nations or whether this is caused by a lack of will to check compliance. 2. Complexity of the Regulations Will have some impact on the need for additional resources to:

Implementation and the ratification of Annex VI; Introduce a SECA in the Mediterranean; Upgrade the regulations in line with changes in Annex VI and each nations own

legislation; Administer of the flag obligations; Carry out inspection and enforcement.

Achieving clear, unambiguous regulations will no doubt simplify and lighten the administrative load. 3. Number of Vessel in Own Registry Will influence the resources required to maintain the inspection process for IAPPC and engine certifications with respect to NOx. (see Table III-3 ). It will affect the work load resulting from letters of protest and reports from other nations. The actual vessel surveys may well be outsourced but the registration and administration will need to be undertaken by a government body. 4. Number of Ports and Traffic Levels This influences the PSC resources required for ship inspections. At ports that have a high level of regular traffic with ferries and liner

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services the work level is lower as the bunkering patterns are usually set. Once lower sulphur fuel supplies have been established, vessels generally continue on the same pattern until there is major discontinuity such as new supply source. The other pollution related inspections will be less frequent. The recent Entec report (Ref 1) indicates that there were 250,000 port calls in Mediterranean ports in 2005 and the rates of increase over the previous five years has only been about 1% pa. Including ferries will increase this number to 350,000. There are 336 ports in the Mediterranean assumed to be handling vessel over 400 GT (see Table III-7) which would suggest a regional average of only 3 vessels calls per day per port. A value that may require to be re-visited. Table III-7 Mediterranean Ports Handling Vessels of 400 GT or Greater

Country of Registration Number of Med Ports Med Ports with Bunker Supplies

Number of Suppliers Active in the Country

Albania 4 - - Algeria 17 6 5 Bosnia & Herzegovina - - - Croatia 17 - - Cyprus 14 4 21 Egypt 10 24 France 14 3 18 Greece 60 16 77 Israel 4 2 1 Italy 80 43 39 Jordan - - - Lebanon 9 2 6 Libyan Arab Jamahiriya 16 8 9 Malta 2 2 16 Monaco 1 1 7 Montenegro 1 - - Morocco 3 2 8 San Marino - - - Serbia - - - Slovenia 3 1 1 Spain 30 16 29 Syrian Arab Republic 4 2 3 Former Yugoslav Republic of Macedonia - - - Tunisia 13 3 4 Turkey 38 17 47

Totals 340 128 315 Source: Fairplay Lloyds Register and Bunkerworld 5. Number of Bunker Sup

REMPEC - Designation of the Mediterranean Sea as a SOx Emission Control Area (SECA) Under MARPOL...

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