IBC 2009APRIL 23, 2009

FACING THE FACING THE CHALLENGESCHALLENGESTO REDUCE AIR EMISSIONSTO REDUCE AIR EMISSIONS

FROM SHIPSFROM SHIPSJOSEPH ANGELO

DEPUTY MANAGING DIRECTOR

INTERTANKOINTERTANKO

MISSIONMISSION

Provide Leadershipto the Tanker Industry

in serving the World with the SAFE, ENVIRONMENTALLYSAFE, ENVIRONMENTALLY

SOUND AND EFFICIENTSOUND AND EFFICIENT

seaborne transportation of oil, gas and chemical products

INTERTANKOINTERTANKO

PRIMARY GOALPRIMARY GOAL

Lead the CONTINUOUS IMPROVEMENT

of the Tanker Industry’s Performance in striving to achieve

the Goals of:

• ZERO FATALITIES• ZERO POLLUTION

• ZERO DETENTIONS

Why Marine Distillate Fuel?Why Marine Distillate Fuel?

Why did INTERTANKO propose the global use of Marine Distillate Fuel?

• Initial proposals to IMO focused only on air emission standards and abatement equipment

• Fuel standard was NOT being considered

• Main purpose of the INTERTANKO submission was to “present issues that merit further discussion by the IMO Working Group when considering the revision of Annex VI of MARPOL”

Why Marine Distillate Fuel?Why Marine Distillate Fuel?

Marine Distillate Fuel

• Addresses the ROOT CAUSE of air pollution from ships, rather than cleaning up the air pollution after it has been created on the ship

• Solves the problem ASHORE, not on the ship!

• Strives for ZERO pollution!!

IMO AMENDMENTSIMO AMENDMENTS

The sulphur content of the fuel must not exceed:

Open sea 4.50% Prior to Jan 1, 2012

3.50% After Jan 1, 2012

0.50% After Jan 1, 2020

(Review of 0.50% standard to be conducted by group of experts by 2018 to determine availability of such fuel. If determined not possible, then date becomes Jan 1, 2025)

SECAs 1.50% Prior to Mar 1, 2010

1.00% After Jan 1, 2012

0.10% After Jan 1, 2015

IMO AMENDMENTS IMO AMENDMENTS

Regulation 4 - Equivalent Measures

• An Administration may allow any fitting, material, appliance or apparatus to be fitted in a ship or other procedures, alternative fuel oils, or compliance methods used as an alternative to that required by this Annex if such methods are at least as effective in terms of emissions reductions as that required by this Annex, including those for SOx, PM and NOx.

• The Administration should take into account guidelines developed by the Organization.

• The Administration shall endeavour not to impair or damage its environment, human health, property or resources or those of another state.

IMO AMENDMENTSIMO AMENDMENTS

• Adopted Equivalent Measures are a positive outcome for ship operators

• Adminstrations are responsible, not ship operators, to assess the effectiveness of alternative measures

• Adminstrations are responsible, not ship operators, to determine that alternative measures do not impair or harm the environment of another state

CHALLENGESCHALLENGES

Ship operators face three major challenges

Which choice to comply

Enforcement

Fuel switching

WHICH CHOICE?WHICH CHOICE?

TWO BASIC ALTERNATIVES

• “CLEAN” FUELS

- Low sulfur residual fuel oils (LSRFO)

- Marine distillate fuels (MDO or MGO)

AND/OR

• SHIPBOARD TECHNOLOGY

WHICH CHOICE?WHICH CHOICE?

LSRFO FUELS

• Increase storage capacity for LSRFO• Segregation of HSFO and LSF/MDF tanks• Requires fuel switching • Additional storage for lower BN number

lube/cylinder oil• Manifolds modifications for bunkering & fuel

sampling• Will require the use of shipboard technology• Temporary solution (?)• Availability (?)• Cost (?)

WHICH CHOICE?WHICH CHOICE?

European refineries have no real incentive to produce LS RMFO unless the premiums are such that its price would resemble distillates

Commerically speaking, refineries would have a clear incentive for further conversion of its entire residual streams to distillate products compared to residue desulphurisation to produce more LS RMFO

Ship owners may just as well resort to burning MDO to meet the 1.5% sulphur cap

WHICH CHOICE?WHICH CHOICE?

MARINE DISTILLATE FUELS• With no other measure, immediately reduces:

– SOx emissions by 80% to 90%– PM emissions by 90%– NOx emissions by 10% to 15%

• Reduces fuel consumption by some 4% for ALL Ships

• Facilitates further NOx reductions by in-engine modifications for IMO’s Tier II & III

• Eliminates the need of retrofitting of additional bunker storage capacity and associated piping

• Eliminates current onboard fuel treatment plants - additional cargo volume

WHICH CHOICE?WHICH CHOICE?

OTHER ENVIRONMENTAL BENEFITS OF MARINE DISTILLATE FUELS

• Significantly reduces onboard engineroom generated waste

• “Cleaner” waste, free of hazardous elements found in residual fuels

• Negates the need for abatement technology and associated wastes and disposal of such wastes

• Potential spills significantly less harmful

WHICH CHOICE?WHICH CHOICE?

SAFETY BENEFITS OF MARINE DISTILLATE FUELS

• Less incidents with engine breakdowns due to poor quality fuels

• No need for complex fuel change over operations

• No risk of incompatibility of blended fuels

• Safer working environment for ships crew

WHICH CHOICE?WHICH CHOICE?

UNRESOLVED ISSUESRELATED TO

Marine Distillate Fuel

• AVAILABILITY

• COST

WHICH CHOICE?WHICH CHOICE?

SHIPBOARD TECHNOLOGIES

• Abatement technologies (exhaust gas scrubbers)

• “Cold ironing” – only addresses problem in port and lack of international standards for– voltage/frequency of power– shore/ship connection systems and– compatibility with shipboard requirements for power

supply for hydraulic power sources (compressors needing up to several Megawatts)

WHICH CHOICE?WHICH CHOICE?

EXHAUST GAS SCRUBBERS• Size issue taking up considerable space on the ship

• More than one needed for most ships, up to four for larger ships (six on shuttle tankers)

• Massive amounts of water needed on a continual basis

• New waste stream from ship that must be disposed at sea or ashore

• Additional ship operational processes and procedures for already overworked crew

• What do you do when it breaks down??

• Will port states accept a ship with exhaust gas scrubbers??

WHICH CHOICE?WHICH CHOICE?

UNRESOLVED ISSUESRELATED TO

Exhaust Gas Scrubbers

• AVAILABILITY

• COST

• RELIABILITY

• ACCEPTABILITY

WHICH CHOICE?WHICH CHOICE?

To face this challenge, each ship operator must make a decision

Marine Distillate Fuel appears to offersignificant advantages!

BUT,

Each ship operator will choose what they feel is best

for their operations

ENFORCEMENTENFORCEMENT

Regulation 18 - Fuel Oil Availability

• Each Party shall take all reasonable steps to promote the availability of fuel oils to comply with this Annex.

• If a ship is not compliant, it should present evidence/record it attempted to buy the compliant fuel in accordance with the voyage plan.

• The ship is not required to deviate from the voyage and should not be delayed.

• If evidence is provided by the ship, there should be no measures against the ship.

• The ship will have to notify its Administration and the relevant port of call each time it cannot find the compliant fuel.

ENFORCEMENTENFORCEMENT

Regulation 18 - Fuel Oil Quality

• Fuel shall meet specific criteria• Supplier certifies that fuel meets requirements• Supplier provides Bunker Delivery Note (BDN) with

fuel oil details• Ship keeps BDN onboard for 3 years• Supplier also retains a copy of the BDN for 3 years• Supplier provides sealed representative fuel sample

(based on IMO Guidelines)• Ship keeps the sample onboard for 12 months• Any test of the fuel has to be done on the

representative sample using Annex VI procedure

ENFORCEMENTENFORCEMENT

Regulation 18 – Party obligations

• Take measures to promote availability of compliant fuel• Require suppliers to provide BDN and sample

• Maintain a register of local suppliers • Take action against suppliers of non-compliant fuel oil• Inform flag state when non-compliant fuel was delivered

to their ships and keep IMO informed for transmission to all member states

• Inform the Party under which jurisdiction the fuel was delivered of non-compliant fuel

• Take remedial action to bring non-compliant fuel into compliance

ENFORCEMENTENFORCEMENT

• Plenty of requirements for the ship, the fuel supplier and parties to Annex VI

• Ship leaves the port with the assumption that the fuel is compliant

BUT,

• No mandatory control mechanism to ensure that the fuel is compliant

• Potential to expose ship to enforcement action by port states and/or engine problems with bad fuel

ENFORCEMENTENFORCEMENT

Our Members experience has shown that:

• Most PSC officers target controls on:- Bunker Delivery Note (BDN)- Availability of the MARPOL fuel sample- Fuel change-over recordings in log books

HOWEVER,

• Some PSC officers: - Want to see commercial fuel test reports rather than the BDN and then decide if control is necessary - Take fuel samples from service tanks

In addition, many Flags do not respond to ship notifications of non-compliant fuel delivery

ENFORCEMENTENFORCEMENT

• Documentation indicates that fuel is compliant, but ship encounters problems:

- Engine failure

- Ship black out

- Fuel pump failure

- Reduced engine power

• Further analysis has shown:

- Chemical wastes added to fuel

- Fuel does not meet ISO specs

- Fuel contains solid contaminates

- Sulfur exceeds allowable limits

ENFORCEMENTENFORCEMENTNumber of Tanker Engine and Hull/Machinery IncidentsNumber of Tanker Engine and Hull/Machinery Incidents

Based on data from LMIU, ITOPF + othersBased on data from LMIU, ITOPF + others

0

10

20

30

40

50

60

2002 2003 2004 2005 2006 2007 2008

Engine

Other Hull & Machinery

ENFORCEMENTENFORCEMENTTo face this challenge, ship operator needs to:

• Document all action taken to achieve compliance- Bunker quotations- Correspondence with supplier- Voyage plan

• Document/report how obtaining compliant fuel will cause deviation from intended voyage or undue delay

• Retain on board - Bunker Delivery Note- Representative fuel sample- Fuel quality test report

• Notify Flag, Port authority where fuel was obtained and PSC officers of non-compliant fuel

ENFORCEMENTENFORCEMENT

INTERTANKO believes that more can be done

• Elimination of poor fuel quality needs to be addressed proactively by industry, rather than reactively by regulators after a serious accident occurs

• Appropriate test methodologies and standards are in place

• What is needed is a properly defined system of professional and independent control

• Fuel suppliers, test labs and ship operators should join together to address this problem

FUEL SWITCHINGFUEL SWITCHING

• Need to use 2 or 3 fuels per voyage for few more years

• Need for greater and diversified (segregation) of bunker tanks and pipelines able to receive 3 different grades of bunkers

• Need for two differing cylinder lube oil systems (one for HSFO and one for LSFO/Distillate)

• Risk of incompatibility between differing grades of fuel during changeover

• Safety concern switching to fuels with reduced or increased ignition/combustion points

FUEL SWITCHINGFUEL SWITCHING

To face this challenge, ship operator needs to:

• Discuss with engine manufacturer the need for appropriate safety measures when switching fuels

• Ensure proper procedures for safe switching of fuels

• Increased training of crew to deal with operational procedures of switching

THANKTHANK

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