Anti-Trust/Competition Law
Compliance Statement
INTERTANKO’s policy is to be firmly committed to maintaining a fair and
competitive environment in the world tanker trade, and to adhering to all
applicable laws which regulate INTERTANKO’s and its members’ activities in
these markets. These laws include the anti-trust/competition laws which the
United States, the European Union and many nations of the world have
adopted to preserve the free enterprise system, promote competition and
protect the public from monopolistic and other restrictive trade practices.
INTERTANKO’s activities will be conducted in compliance with its Antitrust/Competition Law Guidelines.
GREENHOUSE GAS EMISSIONS FROM
SHIPS
IMO DEVELOPMENTS
INTERTANKO Council
October 2010
Singapore
OUTCOME FROM IMO/MEPC 61
IMO/MEPC 61 intended to:
IMO/MEPC 61 agreed to:
• Approve a mandatory
regulation on Design and
Operational measures
(EEDI & SEEMP)
• Develop further
Guidelines for the EEDI
formula, calculation of
Reference Line and the
EEDI verification scheme
• Make progress on MBMs,
eventually to reduce the
number of options
• Establish a
correspondence group
to develop further the
EEDI final rule and its
associated guideline
• Establish an
intersessional meeting
on MBMs
IMO POLITICAL DILEMMAS
• Need to reconcile:
– UNFCCC principle of Common But Differentiated
Responsibility (CBDR)
(e.g. EEDI voluntary for ships with developping
countries flags?)
– IMO principle of No Favourable Treatment (i.e.
uniform global rules for shipping)
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Design & Operational measures only?
Market Based Mechanisms added?
Global (UNFCCC) or IMO controlled MBM?
New IMO Convention or amendments to
MARPOL Annex VI? (is CO2 a pollutant?)
EEDI – Proposed Regulation
• Applies: Tankers, Bulk Carriers, Gas
Tankers, Container Ships, General Cargo
Ships & Refrigerated Cargo Carriers
• All ships: have a Ship Energy Efficiency
Management Plan
• For new tankers of > 4,000 DWT
• Attained EEDI < Required EEDI
• Initial Required EEDI value is calculated
with data on ships delivered since 1998 =
Reference Line
• Required EEDI value will be reduced in time
EEDI REQUIRED
TANKERS >20,000 DWT
Reference Line = Phase 0 = no reduction (2013 & 2014)
EEDI
IMO impact analysis
Phase 1
2015 - 2019
10%
20%
Phase 2
2020 - 2024
30%
Phase 3
on and after 2025
DWT
ISSUES ISTEC WOULD CONSIDER
• Proposed regulation (lower size limit for
application, definition of ”Major
Conversion”, PSC inspections, IEE
Certificate form)
• Issues related to Guideliens (safety
aspects due to cap on installed power &
cap on speed, whether some specific
designs would potentially be opted out,
”what if” scenarios, e.g. new built non
compliant with the required EEDI)
MARKET BASED MECHANISMS
PROPOSALS TO IMO
IMO Expert Group on MBMs
REMARKS on MBM SCHEMES
• Puropose unclear: emission reduction or
collecting funds?
• Proposals at different level of maturity
• All proposals need further development
• All lack policy details with regard to
– enforcement
– administration
– carbon leakage
– fraud
– vessels registered with non-party flags
– harmonisation
MBM PROPOSALS
• Out of shipping sector mechanisms
– International GHG Fund (Denmark et al.)
– Emission Trading Scheme (Norway et al.)
– Rebate Mechanisms (IUCN)
• In shipping sector mechanisms
– Leverage Incentive Scheme (Japan)
– Ship efficiency & Credit Trading (USA)
– Vessel Efficiency System (WSC)
– Port State Levy (Jamaica)
– Penalty on Trade and Development (Bahamas)
MEPC 61 – VIEWS ON MBMs
• Opposing MBM - contrary to the CBDR
• Opposing ALL proposed schemes but
not directly opposing the MBM concept
(e.g. China may submit own MBM)
• Not opposing the MBM concept but
urging further studies on the proposed
MBM schemes with particular attention to
assessment of cost-impact
• Agreeing with the MBM concept but
suggesting to narrow down the number
of such schemes
IMO INTERSESSIONAL ON MBMs
• Examine and provide opinion on the
compelling need and purpose of MBM as a
possible mechanism to reduce GHG
• Group the proposed MBMs in accordance with
the reduction mechanism they use (e.g. insector/out-of-sector, etc.)
• Identify and list strengths and weaknesses for
each of the MBM groups
• Examine the MBM proposals' relation to the
principles and provisions of relevant
conventions such as the UNFCCC and its
Kyoto Protocol, as well as their compatibility
with the WTO Rules and customary
international law, as depicted in UNCLOS
ISTEC ACTIVITY
• Assess the proposed regulation for
EEDI & SEEMP
• Actively participate to further
developments of associated
Guidelines for: the EEDI formula,
calculation of Reference Line and
the EEDI verification scheme
• Follow further developments on
MBMs and explore additional details
of such schemes
TIME LINE FOR RULE DEVELOPMENT
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27 Sep. - 1 Oct.
10/11 Oct.
12/13 Oct.
29 Nov. – 10 Dec.
Feb/March 2011
March/April 2011
May 2011
July 2011
Dec 2011
IMO MEPC 61
ISTEC meeting
INTERTANKO Council
UNFCCC (COP16)
ISTEC meeting
IMO intersessional on MBMs
INTERTANKO Council
IMO MEPC 62
EU deadline for IMO action
INDUSTRY INITIATIVES
- TEEMP – Tanker Energy Efficiency
Management Plan
- Virtual Arrival
- Industry Study – RT, OCIMF, WSC
- OCIMF Trajectory Study
INDUSTRY STUDY
• Scope: Seek to assess potential
reductions of CO2 emissions on a
realistic business scenario for 2030
• Realistic scenario: realistic uptake of
new technologies and practices
• Marginal abatement cost curve vs cost of
averting a tonne of CO2 equivalent
heating (MACC)
• 2009 fleet split in 59 segments
• Scrapping and new building assumed
• 28 reduction measures
Possible Abatement Measures
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Gas fuelled engines
Electronic engine control
Waste heat recovery
Air cavity lubrication
Contra-rotating propeller
Fuels cells as auxiliary
engines
Frequency converters
Exhaust gas boilers on
auxiliary engines
Energy efficient light
systems
Wing generator
Wind power – kite
Wind power – fixed sails or
wings
Solar panels
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Trim/draft optimising
Weather routing
Voyage execution
Steam plant operational
improvements
Speed reduction due to port
efficiency
Propeller condition
Speed reduction due to fleet
increase
Hull condition
Propulsion efficiency devices
Cold ironing
Engine monitoring
Reduced auxiliary power
usage
OUTCOME (example only)
INDUSTRY STUDY
• Final results to be assess by industry
participants
• INTERTANKO and OCIMF should made a
joint assessment on results for tankers
• Compare with Trajectory Project results
• Decision at executive level on the usage
of results (go public or not)
• Agreement with other stakeholders
(including DNV) on how to use the final
results
Kyoto Protocol Annex I Countries
Inventory 1990 - 2007
• 41 Annex I Parties
• Total aggregate GHG emissions excluding emissions /
removals from land use, land-use change and forestry
(LULUCF) decreased by 3.9%
• GHG emissions / removals including LULUCF
decreased by 5.2 %
• For Annex I Parties with economies in transition
(Annex I EIT Parties), GHG emissions:
– excluding LULUCF decreased by 37%
– including LULUCF decreased by 42.2%
• For Annex I non-EIT Parties, GHG emissions
– excluding LULUCF increased by 11.2
– including LULUCF increased by 12.8%
Kyoto Protocol Annex I Countries
Inventory 1990 - 2007
Kyoto Protocol Annex I Countries
Inventory 1990 - 2007
COUNCIL IS INVITED TO AGREE
• ISTEC overviews the proposed EEDI regulation
• ISTEC continues its investigations on the associated
guidelines to the EEDI regulation
• INTERTANKO participates in the IMO correspondence
group
• INTERTANKO continues to monitor developments on
MBMs and attends the IMO intersessional meeting
• INTERTANKO continues to cooperate with OCIMF on
the Trajectory Project and with other stakeholders for
assesement of poetential CO2 emissions reductions.
• Secretariat reports at the next meeting when The
Council may revisit and eventually update the
INTERTANKO Policies on these matters.
THANK YOU!
• Government's view of the economy
could be summed up in a few short
phrases:
– If it moves, tax it.
– If it keeps moving, regulate it.
– And if it stops moving, subsidize it.
Ronald Reagan (1986)
THANK YOU
For more information please visit
www.intertanko.com
dragos.rauta@intertanko.com
EEDI REQUIRED
TANKERS >20,000 DWT
Reference Line = Phase 0 = no reduction (2013 & 2014)
EEDI
Phase 1
2015 - 2019
10%
For tankers between 4,000 & 20,000 dwt
Linear progression from 0% to:
10% (Phase 1)
20% (Pahse 2)
30% (Phase 3)
20%
Phase 2
2020 - 2024
IMO impact analysis
30%
Phase 3
on and after 2025
DWT
WHY ARE MBMs PROPOSED
• Shipping will become more efficient
• IMO will adopt technical measures for new
ships (EEDI)
• Existing ships will improve their efficiency
BUT
• CO2 emissions reductions achieved through
technical and operational measures may not be
sufficient and their effect would not be seen in
the near future
• Increasing demand for transportation at sea
would actually lead to increase of net CO2
emissions from ships even though each ship
may become more efficient.
INTERNATIONAL GHG FUND
EMISSION TRADING SCHEME
BAU
ETS UNFCCC FUNDS
LEVERAGE INCENTIVE SCHEME
BASED ON GHG FUND
OFFSETING + INCENTIVES
LEVY HIGHER
NEW BUILDING
5
EEDI
Attained
Ship 1
Req. EEDI 1
0%
Req. EEDI 2
50%
Ship 2
Req. EEDI 3
100%
50%
Ship 3
5 YEARS
5 YEARS
SHIP 1 WILL PAY ENTIRE LEVY
SHIP 2 WILL RECEIVE 50 % DISCOUNT ON LEVY FIRST 5 YEARS
SHIP 3 WILL RECEIVE - 100% DISCOUNT ON LEVY FOR THE FIRST 5 YEARS
- 50% DISCOUNT ON LEVY FOR NEXT 5 YEARS
LEVERAGE INCENTIVE SCHEME
EEOI
benchmark
PATERN 1
Actual
Initial EEOI
PATERN 2
Reduced EEOI
EXISTING SHIPS
SHIP EFFICIENCY & CREDIT
IN SECTOR ONLY
SUFFICIENT CREDITS?
US EEDI (EIr)
Existing ship (EIa)
Efficiency Credit = (EIr – EIa) x Activity
Efficient Credit >0 = Sells Credits
Efficient Credit < 0 = Buys Credits
New ship EEDI (US EIa)
IMO EEDI
WORLD SHIPPING COUNCIL
VESSEL EFFICIENCY SYSTEM (VES)
• Combination of GHG FUND & US MBM
• Emission targets for non EEDI compliant
ships only
• Sets a reference line less stringent than EEDI
• Ship’s efficiency calculated on a formula
similar to EEDI
• Ships meeting the target = no charges
• Less efficient ships = charges/tonne of fuel
consumed over the target
• IMO establish a Fund to collect charges
• Charges proportional to shipping contribution
to the total man-made CO2 emissions
ATTAINED EEDI
ENVIRONMENTAL COST POWER x SFC
Attained EEDI 

 ENERGY SAVINGS
BENEFIT FOR SOCIETY Capacityx Vref
- Cost: Emission of CO2
- Benefit: Cargo capacity transported at a certain distance
(Relates to a seagoing maximum condition)
- Final Verification at sea trails
INTERTANKO COUNCIL POLICY
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INTERTANKO supports the IMO process to
develop real and sustainable regulations to
reduce GHG emissions from ships that will not
hinder international commerce
INTERTANKO supports that the GHG
regulations should be "ship neutral" as the
only way to address a global environmental issue.
Differentiating vessels' GHG obligations on the
basis of a vessel's flag would fail to make a
meaningful environmental improvement
INTERTANKO supports the adoption of the
EEDI as soon as possible. INTERTANKO also
encourages the IMO to use the EEDI formulae
for an early establishment of target levels for
CO2 emission reductions for new ships
INTERTANKO COUNCIL POLICY
•
•
Shipping is a service industry whose activity
increases or contracts with the demands of
society. Therefore, INTERTANKO believes that
GHG emission reduction targets should give
due regard to optimising the supply chain.
INTERTANKO believes it is essential that
stakeholders and regulators discuss and assess
targeting levels for reducing GHG emissions
from shipping, on a short- and long-term basis.
The target levels should be ambitious, but
they should also give realistic predictions
and thus provide incentive for sustainable
efforts to achieve them.
MBI – INTERTANKO CRITERIA
1 Governed by the IMO and be specific for the shipping industry
2 Effective in contributing to the reduction of total GHG emissions:
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–
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any funds collected should be used as “offsets”
should stimulate leading energy efficiency technologies
should provide incentives for further innovation and R&D
should stimulate stakeholders, such as charterers and ports, to
employ ships in the most effective manner to reduce GHG emissions
3 Environmentally sustainable without negative impact on global
trade and growth
– should be cost effective
– should not lead to competitive distortion
– should not disadvantage operators or ships which have already taken
actions resulting in GHG reductions
4 Efficient and credible enforcement and monitoring
– should be binding and equally applicable to all ships
– should be practical, transparent, fraud-free and easy to administer by
the governing authority
– should enable compliance to be demonstrated through proper
monitoring
– should ensure certainty and predictability