Are Tankers GreenMaritime Outlook Middle East
Abu Dhabi 7 April 2009
Manager Research and Projects
Tanker shipping serving some of the world’s biggest companies
BP’s approach to managing the environmental impact of its operations is underpinned by the goal of continuous performance improvement
We strive to conduct business in a manner that is protective of the environment, and that is compatible with the environmental and economic needs of the communities in which we operate.
Meeting the world’s growing energy needs and protecting the environment requires new technology, new partnerships and new ways of operating.
How to produce energy in environmentally responsible ways
Are tankers Green? Challenges
Life cycle Building to Decommissioning/recycling
ODS = OzoneDepleting Substances(cooling medium)
NOx, SOx, PMAnnex VI
Sewage
Garbage
Accidental oil pollution Ballast water
ToxicAntifouling
CO2/GHG emission
VOC = VolatileOrganicCompounds
Environmental challenges in shippingCleaner seas, cleaner air, a sound mother earth
Cleaner air• Annex VI implemented
GHG reduction• Currently the biggest challenge
Cleaner seas• Oil pollution• Acidification of oceans• Anti-fouling Systems• Garbage, other pollutions into the sea
Invasive spices – ballast water management
Emission to air?
The Challenges
• The world demands greener shipping
• Emission from shipping is dirty and harmful for the health and the environment
• GHGs emission from shipping is not directly regulated under the Kyoto protocol
• IMO assumed to regulate GHG emission
• Shipping must react
7
CO2 Emissions per Unit Loadby Transport Mode
Source:Ministry of Land, Infrastructure and Transport (Japan): The Survey on Transport Energy 2001/2002 MOL (Japan): Environmental and Social Report 2004
Large Tanker
Large Containership
Railway
Coastal Carrier
Small-size Commercial Truck
Airplane
Standard-size Commercial Truck
100 200 300 400
398
226
49
11
6
3
1
0
Units Relative
Shipping energy efficient
Engine break specific fuel consumption
160
180
200
220
240
260
280
1910 1930 1950 1970 1990 2010
First ocean going diesel ship - MS Selandia
Oil crises 1973
Engine BSFC assumed constant for years 2000-2008
Source: Lloyd’s Register
g per kWhg per kWh
Fuel efficiency in shipping has has improved
Trends – Co2 emission, energy use, global trade
Source: Fearnleys/INTERTANKO
IndexIndex
80
100
120
140
160
180
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
Population
Energy use
Seaborne trade
CO2 emission
There has been strong growth in shipping
World primary oil demand IEA the Reference Scenario
Source: IEA
mbdmbd
0
5
10
15
20
25
1980 2000 2007 2015 2030
N America
Europe
Pacific
E.Euro/Eurasia
Other asia
China
India
Middle East
Africa
L America
Marine bunkers
World primary energy demand IEA the Reference Scenario
Source: IEA
1000 million tonnes oil equivalents1000 million tonnes oil equivalents
0
1
2
3
4
5
1980 2000 2006 2015 2030
Coal +2%
Oil +1%
Gas +1.8%
Nuclear +0.9%
Hydro +1.9%
Biomass +1.4%**
Renewables +1.6%
MARPOL Annex VI
Reducing harmful emission to air from shipping
• Emission regulated by MARPOL Annex VI:• SOx• NOx• un-combusted hydrocarbon• Heavy metals• Soot• Volatile Organic Compounds - VOC
The Annex VI package
All ships above 400GTReduction SOx, NOx, + PMCompliance through fuel specification orEquivalent measures accepted
Assumes supply of low sulphur fuel*Bunker Delivery Note BDN important **
* Ships not punished if required fuel not available
**Guidelines to asses compliance if BDN data is challenged by PSC or lab test results
The world is moving away from HFOOil consumption by product - % share
Source: INTERTANKO/BP Review
% share mbd
11%
16%
21%
26%
31%
36%
1965
1966
1967
1968
1969
1970
1971
1972
1973
1974
1975
1976
1977
1978
1979
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
5
21
37
53
69
85
Mdl distil. - % share
Fuel oil - % share
Total - ts
Why not scrubbers?Why not scrubbers?
• Still under testing (3 ship limited scale)
• Large • Expensive• Difficult (impossible?) to install• CO2 emission (buffering effect)• leaves hazardous waste onboard which no-one wants• Tonnes of seawater need to be pumped through the ship and processed
We are involved in transportation – not waste treatment
New measures adopted at MEPC 58: SOx emissions
Emission Control Area (ECA) 1.0% limit
2010 2012 2015 202520202018
Global 3.5% limit
ECA 0.1% limit:
IMO review
Global 0.5% limit
Extension?
No measures against ships that do not receive adequate supply
New measures adopted at MEPC 58: NOx emissions
Current regulation Tier I: existing ships built after 2000, base line
2010 2011 2016
Tier I: ships built 1990s engine>5000 kWh, cylinders = >90 ltrs
Tier II: 15.5% - - 21.8% reduction
ships built on, after 1 Jan 2011
Many preconditions: engine rating, fuel consumption, durability, cost/benefit, availability of efficient upgrading system , upgrading at
the ship’s first renewal survey
Tier II: 80% reduction ships built on, after 1 Jan 2016
Power output > 750 kWIn Emission Control Areas (ECAs) ONLY
Switching to distillates will Switching to distillates will
Cleaner, Simpler and more Efficient ships
Reduce global emissions• SO2 - 60-80%,• PM - 80-90%• NOx -15%• No heavy metals, less soot
Improve conditions for crew and dockworkers
Cause no safety problem in connectionCause no safety problem in connection with with fuel switching fuels entering ECAsfuel switching fuels entering ECAs
Causes less engine breakdowns and Causes less engine breakdowns and potential pollution accidentspotential pollution accidents
Cause far less pollution when spilled Provides opportunity for the development of Provides opportunity for the development of more efficient engines (w. less emission) more efficient engines (w. less emission)
Fit all ships and current engines Fit all ships and current engines Be easy for authorities to control Be easy for authorities to control ChallengeChallenge to produce sufficient clean fuel to produce sufficient clean fuel
GHG emission
Shipping’s tools to reduce GHGs?
• Indices• Design• Operational
• Market instruments • Emission trading Scheme
(ETS), to stimulate entrepreneurship?
• Levy, equal to tax?• Offset charges (ref IOPC)?
• Ship Efficiency Management Plan
No general agreement on how to regulate GHG emission from
shipping
CO2 reduction
Reference
World Fleet Energy Consumption
World Fleet Energy Consumption
On-shore targetOn-shore target
40 - 80 % increase ifno efficiencymeasures taken
20 - 30 % absolute reduction onshore
Bridgeable gap??
2006 2010 2025
The Stern Report
Conclusions
Climate change may initially have small positive effect, but longer term the effects will be very damaging Benefits of strong, early action outweigh the costs.
Policy of action to be based on 3 elements: Carbon pricing Technology Behavioural change
Lord Stern of Brentford Later the situation is said to be much more serious that outlined in The Stern Report
Energy efficiency design index (EEDI)
Will mandate a minimum acceptable fuel efficiency for new shipsDeliver real, sustainable CO2 reductions based on an agreed emissions reduction trajectory.Wide support in IMO, exceptSome developing countries*Initial EEDI will form the baseline for the most efficient ships today
To be based on, installed power, specific fuel consumption, correction factors to account for specific design elements, speed, dwt, the contribution from auxiliary machinery
Sea trial Esther Spirit
* Wants “common but differentiated responsibilities” agreed under UNFCCC and the Kyoto Protocol.
The CO2 operational index
An instrument for evaluating quantitatively the effect of operational fuel efficiency measures, such as speed reduction or optimum navigation
Charterers greatest influence
Not immediately mandatory
No direct link to design index
A Market Based Instruments (MBI) should
Reduce CO2 emission levels in real terms by additional amounts to normal reductions by stimulating
• The development of better technology or improved operation, or• Buying credits to reduce emission in other sectors
Be easy to administer, monitor and enforce. Ensure simple allocations of emission allowances Not unduly distort competition and be non-
discriminating of ship types and flags Be difficult to evade Be legally, politically and
institutionally acceptable Preferably be global and
regulated by IMO
Aviation ETS scheme
*smallest planes excluded** Reduction target based of average emissions 2004-06
All* flights to/from EU included as of 2012
Reduction 2012 3%, later 5% cut p.a.** Operators must submit plans by 30.03.11 Use of revenues generated by auctioning
allowances decided by EU by members Complemented by technical/
operational CO2 reducing measures Further unilateral and other
agreements on global measures to reduce greenhouse gas emissions from aviation.
On 7 October the Environment Committee of the European Parliament called for shipping to be included in the revision of the European Union's Emissions Trading Scheme (EU-ETS).
Europe basis for shore based ETS - decided aviation ETS - shipping?
Cap-and-trade
On the "Cap and Trade" system was easy to On the "Cap and Trade" system was easy to implement for major sources of emissions, but implement for major sources of emissions, but harder to implement for the multitude of small sources. It It is also giving rise to distortions and transactions is also giving rise to distortions and transactions costs. A key issue is how to allocate emission rights, costs. A key issue is how to allocate emission rights, which are a which are a valuable asset, worth perhaps $2 trillion annually (or 5% of global GDP). This issue annually (or 5% of global GDP). This issue has become a major stumbling block in reaching a has become a major stumbling block in reaching a global agreement, and the attempt to avoid taking on global agreement, and the attempt to avoid taking on full implications of this issue is one of the reasons for full implications of this issue is one of the reasons for distortionary policies (or for carbon in different uses distortionary policies (or for carbon in different uses being priced differently).being priced differently).
Joseph Stiglitz Nobel prize economics
Professor at Columbia University (United States) Formerly Chief Economist at the World Bank
Cap-and-trade
The quotas system has already The quotas system has already contributed with contributed with investments in the non-Annex I countries which will reduce of CO2 emission by 1,800 m tonnes (1.2% annually) for the period (1.2% annually) for the period 2008-122008-12
Word emission 2004 27,000 m ts, Word emission 2004 27,000 m ts, today some 30,000 m tstoday some 30,000 m ts Carbon Point
Levy on bunkers
• Little support from governments
• Sympathy from some ship owners organisations
• Regarded as taxation
The 400% increase in bunker prices over the last 4 years untilAug 2008 provided the shipping industry with a significant economic driver to improve its energy efficiency and thus reduce CO2 emission
Prices HFO 380 CST, Fujairah
0
100
200
300
400
500
600
700
Aug
-00
Aug
-02
Aug
-04
Aug
-06
Aug
-08
Gasoline price at the pump
0.00
0.30
0.60
0.90
1.20
1.50
USA Japan Germany UK
Long haul freightratesMarketing*
Oil price
Tax
Cost elements making up the gasoline price:
* Refining/marketing and profit. Based on Dec 08/Jan 09 figures from IEA and the Baltic Exchange
Dollar per litreDollar per litre
LevyLevy
Accidental oil pollution into the sea
Tanker Incidents and accidental pollution
Number incidentsNumber incidents
0
210
420
630
840
1050
78
79
80
81
82
83
84
85
86
87
88
89
90
91
92
93
94
95
96
97
98
99
00
01
02
03
04
05
06
07
08
0
120
240
360
480
600
Misc
Security
Fire/Expl
Hull & Machinery
Grounded
Coll/Contact
Oil pollution
2009 is a projection based on 68 days
’’000 ts pollution000 ts pollution
Source: INTERTANKO, based on data from LMIU, ITOPF + othersSource: INTERTANKO, based on data from LMIU, ITOPF + others
Accidental oil spills from tankers 1978-2008
’’000 ts pollution000 ts pollution
Source: ITOPF + othersSource: ITOPF + others
0
10
20
30
40
50
60
707
0
72
74
76
78
80
82
84
86
88
90
92
94
96
98
00
02
04
06
08
Year Tanker Ts spill1991 ABT Summer 260,0001991 Haven 144,0001991 Kirki 17,7001992 Agean Sea 74,0001992 Katina P 72,0001993 Braer 85,0001997 Nakhodka 14,0001996 Sea Empress 72,0001999 Erika 20,0002002 Prestige 63,0002003 Tasman Spirit 30,0002004 Al Samidoon 9,0002005 DBL 152 9,4652006 Bright Artemise 4,5002007 Hebei Spirit 10,5002008 Tintomara 1,400
Largest spills in each year: 2004 - 2008
Accidental oil pollution into the sea and tanker trade
Source: INTERTANKO/ITOPF/Fearnleys
10001000ts spiltts spilt
bn bn tonne-milestonne-miles
0.0
0.7
1.4
2.1
2.8
3.5
1970s 1980s 1990s PR00s
0
21
42
63
84
105
1000 ts spilt
'0000 bntonne-miles
- 63% -6% -85%
Incidents attended by ITOPF over the past 5 years
NumberNumber
Source: ITOPFSource: ITOPF
2
89147 1317121014
0
3
6
9
12
15
18
2004 2005 2006 2007 2008
Tankers: 40 Non tanker: 66
Or have necessary measure been implemented to ensure that catastrophes do not repeat themselves?
Lack of good incident data prevent us from doing accurate analysis.
Let’s look at some indications
Will history repeat itself?
Will history repeat itself?Hull failure (?) (?)Tanker Year Spill ts LocationKirki 1991 17,280 Pacific, West Australia Lost bow Lost bowWorld Horizon 1991 850 Off South Africa Lost bowWorld Horizon 1991 850 Off South Africa Lost bowKatina P 1992 74,000 off MozambiqueTochal 1994 200 NW of Cape Town Lost bow Lost bow Thanassis A 1994 20,000 700 km off Hong KongNakhodka 1997 17,500 JapanErika 1999 20,000 Off Britanny Prestige 2002 63,000 Spain
New regulations/precautions:• Enhanced Special Periodical Survey Programme - adopted by the 18th session of the IMO Assembly in November 1993 • DH requirements• Common Structural Rules (initiated by INTERTANKO)• Stricter vetting, age discrimination after ERIKA
Recorded hull failures/incidents:2002 7 (Prestige) + 2 minor spills 2006 3 1 2,000 ts spill2003 6 1 minor spill 2007 9 1 minor spill2004 4 1 minor spill 2008 3 zero spills2005 3 1 minor spill 1Q09 1 zero spills
Segregated Ballast Tank Coated Areas260,000 ton VLCCHULL TYPE Square Meterspre-Marpol 25,000Marpol 80,000Double Hull 225,000
Will history repeat itself?Collision/Grounding/ContactTanker Year Spill ts LocationBT Nautilus 19901990 1,000 New York (contact reef bottom) - HFO 1,000 New York (contact reef bottom) - HFOAthos I 2004 850 Delaware River ( (contact object btm)contact object btm)Al SamidoonAl Samidoon 20042004 9,000 9,000 Suez Canal (HFO) (HFO)Grigoroussa I 2006 3,000 Suez Canal (HFO) (HFO)Bright Artemis 2006 4,500 East Indian Ocean (contact/rescue)Hebei Spirit 2007 11,000 Off Korea (rammed by crane)SKS Satilla DH 20092009 zero Outside Galveston (Outside Galveston (ctct object btm)ctct object btm)
New regulations• INTERTANKO US Port and Terminal Safety Study 1996/2002• INTERTANKO Terminal Vetting Database• DH requirements
Traffic separation schemes and other ship routeing systems have now been established in most of the major congested, shipping areas of the world, and the number of collisions and groundings has often been dramatically reduced.
Will history repeat itself?
Place of refuge Tanker Year Spill ts LocationErika 1999 20,000 Off Britanny Prestige 2002 63,000 SpainCastor* 2000 zero Western Mediterranean Sea.
New initiatives• IMO Resolution A.949(23) after after INTERTANKO initiative• EU directive• Under discussion in the US
*The ABS said the conclusions have implications for how ships are inspected and wider implications for how the new generation of double-hulled tankers should be built and maintained. At the least, the ABS said, rules should be amended regarding how and when ships are inspected and what surveyors should look for.
Will history repeat itself?
Human failure On March 24, 1989, the tanker Exxon Valdez, en route from Valdez, Alaska to Los Angeles, California, ran aground on Bligh Reef in Prince William Sound, Alaska spilling 35,000 tonnes of Prudhoe Bay crude oil. Failure of navigation, deviation from separation zones (got permission to use inbound lane), inexperienced and tired officer on the Bridge, Captain who was in his cabin had been drinking alcohol.
People do not work in a vacuum and the company culture, training, systems, procedures and technology has to be take into account that mistakes will be made.
INTERTANKO Human Element Committee• Guidance booklet on Seafarers’ Hours of work and Rest - 2008• Best Practice - Cadet Berths • Tanker Officers Training Standards (TOTS)Tanker Officers Training Standards (TOTS).
Will history repeat itself?
Fire and explosions Tanker Year Spill ts LocationKhark 5* 1989 80,000 185 km off MoroccoABT summer ** 1991 260,000 coast of Angola. Most important tanekr safety measure:Inert Gas Stems IGS
• Inerting double hull spaces in emergency situations
* Explosion following ballast tank leak**Explosion due to leak from cargo tanks
Kashmir due Jebel Ali after collision
Will history repeat itself?
PilotageTanker Year Spill ts LocationAegean Sea* 1992 74,000 La Coruna harbor, SpainSea Empress** 1996 72,000 entrance to Milford Haven, Wales.
New initiatives• INTERTANKO/BIMCO/ICS International Best Practices for Maritime Pilotage
* Grounded following loss of steering in bad weather**Pilot misjudged tide (similar to Torrey Canyon 18 March 1967)
Other challenges
• Chemical Pollution– Tin-based antifouling caused:
• Shell fish sex-changes, male to female• Thinning of oyster shells, collapse of oyster fisheries• Hormone changes in higher sea mammals
• Anti-fouling Systems (AFS) Convention– Entered into force 17 September 2008– Tin-based systems banned– Mechanism to ban other biocides in the future
• INTERTANKO– Move towards biocide-free systems– Comparison of silicon systems
Anti-fouling
• Biological Pollution– Invasive species issue– Organisms on ‘niche’ areas of the hull– Air emissions issue?
• Biofouling Management– IMO Voluntary Guidelines under development
• INTERTANKO– Good practice
• Reduce invasive species• Improve vessel performance – reduce air emissions
– Support management guidelines– Ports must allow hull management operations
Biofouling
Ballast Water Management
• Biological Pollution– Invasive species
• IMO Ballast Water Convention– Question over entry into force– Will the technology work?– Regional rules
• INTERTANKO– Share information on experience with new technology– Management plans as standard practice for over 5 years– Understand and Implement the IMO guidelines– Ensure compliance by sharing information on regional and national
regulations
Environmental challenges
Even in a bad market
High standards – a precondition for good risk management
Ms Littlefield (IUMI president) said there were strong
signs that the safety culture at sea was taking root. But she warned Ship operators are being buffeted from all sides in the growing economic crisis. But to cut corners on maintenance or training can only have one result in the long term: more casualties, higher claims on insurers, and higher premium and deductible levels for shipowners.
IUMI, in its first snapshot of 2008
Cypriot oil tanker "Haven" burning in the Gulf of Genoa
The sea get sick, but it never dies
Healing is a matter of time,
But also of opportunity
Greek proverbs
Thank you