Transcript Reducing GHG Emissions from Shipping

Asian Panel
3 December 2010
Hong Kong
Reducing GHG
Emissions from Shipping
Peter M. Swift
Climate Change Challenges
For shipping:
Protection of the Marine
Environment includes Atmospheric
Environment
GHG emissions – principally
CO2 emissions
Shipping is energy efficient
- environmentally responsible, reliable and cost efficient
Transport distance for 1 ton cargo per kg GHG emissions
Air plane
1,9
Heavy truck
9,0
Ro-ro ship
29,8
Freight train
40,5
Container ship
53,8
General cargo ship
72,6
Product tanker
91,2
Bulk carrier
217,1
VLCC tanker
235,9
0
50
100
150
km
Source: Danish Shipowners Association
200
250
Shipping is energy efficient, BUT…
CO2 emissions by country (2007)
CO2 emissions from shipping 2.7% of global total (2007)
and predicted to grow as trade expands
Reducing GHG Emissions from Shipping
Regulatory Processes & Timetables
• UNFCCC Programme
• IMO Programme
• Industry Initiatives
The Regulatory Processes
• UNFCCC 1992
• IMO since 1997
• Kyoto Protocol, adopted 1997 entered into force 2005
• Copenhagen Accord 2009
UNFCCC = United Nations Framework Convention on Climate Change
Kyoto Protocol
• Established under UN Framework Convention on Climate
Change (UNFCCC) – adopted in 1997
• Ratified by 181 countries – not the USA
• Categorises Annex 1 (Developed) Countries and NonAnnex 1 (Developing) Countries
• Annex 1 Countries are committed to make GHG reductions
with set targets, but also flexible mechanisms
• Runs through to 2012, - Conference of Parties
endeavouring to develop a successor
• Kyoto recognises “common but differentiated
responsibilities”, i.e. developed countries produce more
GHGs and should be more “responsible” for reductions
• Kyoto looks to IMO to address Shipping and ICAO to
address Aviation, and as such these emissions are
currently excluded from Kyoto targets
Recent and future timetable
Selected Key Dates
12/2009
UNFCCC COP15 Meeting, Copenhagen
3/2010
IMO MEPC 60
2010
IMO MEPC MBM-Expert Group
IMO MEPC Intersessional (EEDI)
UNFCC Intersessional meetings
2010
9/2010
-----------11/2010
------------
IMO MEPC 61
3/2011
IMO MEPC MBM Intersessional
5/2011
INTERTANKO Council
7/2011
IMO MEPC 62
UNFCCC COP16 Meeting, Cancun
11/2011UNFCCC COP17 Meeting, South Africa
12/2011
EU Deadline for IMO/International Agreement
2012
Kyoto Protocol expires
IMO – UNFCCC
Conflicting principles - a major issue
IMO Principle:
“No More Favourable Treatment”
Versus
Kyoto Protocol principle:
“Common But Differentiated Responsibility”
UNFCCC - COP15
The outcome:
• NO targets
• NO resolution of Kyoto/IMO Treaty conflict
• NO direct reference to international shipping in the
non-binding Copenhagen Accord
BUT subsequently:
• International Aviation and Shipping should be
regulated via UNFCCC and have targets as per other
industries (EU Parliament)
• Shipping should make its “contribution” to Climate
Change measures with $$$$ (UN Advisory Group)
• ICAO and IATA agree a package of reduction measures
IMO Programme
IMO (MEPC) developing:
• Technical Measure (EEDI for new ships)
• Operational Measure (SEEMP & EEOI
for new and existing ships)
• Market Based Measure (if needed)
Technical Measures
Energy Efficiency Design Index (EEDI)
Environmen tal cost
Attained energy efficiency design index 
Benefit for society
Environmental cost = Emission of CO2
Benefit = Cargo capacity transported a certain distance
• measures energy efficiency of new ships
• encourages design and technical developments
Technical Measures
Energy Efficiency Design Index (EEDI)
EEDI =
(g/tonne mile)
CO2 factor x SFC[FOC] (g/kW h) x Engine Power (kW)
----- ---------------------------------------------------------------Capacity (tonne) x Speed (mile/h)
Initially only the calculation of the Attained EEDI was planned to
be mandatory, but the drive is to establish a mandated
requirement, such that the Attained EEDI < Required EEDI
EEDI Required
[ Tankers>20,000 DWT ]
Reference Line = Phase 0 = no reduction (2013 & 2014)
EEDI
Phase 1
2015 - 2019
Attained EEDI < Required EEDI
10%
20%
Phase 2
2020 - 2024
30%
Phase 3
on and after 2025
DWT
Operational Measures
• Ship Energy Efficiency Managment Plan (SEEMP)
– encourages improvement energy efficiency of ships in
operation
– best measurable practices on operational procedures
setting goals
– plan implementation strategy
– monitoring – Energy Efficiency Operational Indicator (EEOI)
– procedures for self-evaluation and improvement towards
set goals
• Energy Efficiency Operational Indicator (EEOI) =
CO2 emitted per unit of transport work
CO2 emitted measured from fuel consumption
Transport work = cargo mass x distance (nm)
EEOI is “voluntary” – a management tool
Operational Measures
Energy Efficiency Operational Indicator (EEOI)
CO2 factor x [FOC] (g)
EEOI (g/tonne mile) = ---------------------------------------------------------------Cargo Mass (tonne) x Sailed Distance (mile)
Market Based Measures
MBMs under review at MEPC
• Emissions Trading Schemes
• GHG Fund and Leveraged Incentive Schemes
• Ship Efficiency & Credit Trading
and Vessel Efficiency System
• Rebate Mechanism
Some would require all ships to pay a contribution
Some provide rewards to more energy efficient ships
Most include a support mechanism to developing countries
Why are MBMs Proposed ?
• To incentivise or reward owners
or
• To penalise inefficient ships
or
• To fill the gap between what is expected and
what is delivered
Why are MBMs Proposed ?
• Ships have a long life – EEDI takes time / operational measures
not readily quantifiable; further “incentives” may be needed
• International trade and shipping will continue to grow
• A deemed “need” to fund offsetting in other sectors
or ETS
or other
MBM
Application of the GHG Fund
EEDI
BAU
Offset (out of sector)
Target line
Actual emissions
Application of ETS
EEDI
BAU
Offsetting (in sector & out sector)
Target line
Actual emissions
Funds to UNFCCC
Future Means of Reducing GHG
Emissions from Shipping
Industry activities and initiatives
Means of Reducing GHG
Emissions from Shipping
Industry initiatives:
• Work on EEDI – formula and reference line (workshops)
• Developing and assessing additional GHG reduction
measures for new and existing ships (workshops)
• Developing Marginal Abatement Cost Curves
- to determine what is achievable (study groups)
• Developing and implementing operational measures, such
as “Optimal speed” (Liners) and “Virtual Arrival” (Tankers
and Bulkers)
• Developing industry SEEMPs, such as INTERTANKO’s
TEEMP – Tanker Energy Efficiency Management Plan
plus
• Active participation in MBM Expert Group
Technical and Operational Mitigation
Measures
Technical and Operational Mitigation
Measures
Marginal Abatement Cost Curves
PRELIMINARY
DRAFT,
Not for circulation
Developed in conjunction with DNV
Virtual Arrival
OCIMF / INTERTANKO project
THE CONCEPT:
Virtual arrival is about identifying delays at
discharging ports, then managing the vessel’s
arrival time at that port/terminal through well
managed passage speed, resulting in reduced
emissions but not reducing capacity.
It is NOT not about blanket speed reduction to match
current market conditions.
Virtual Arrival is all about managing time and
managing speed.
Virtual Arrival
OCIMF / INTERTANKO project
THE MECHANICS:
• Cooperation agreement between Charterer (Terminal
Operator) and Owner
• Speed is “optimised” when ship’s estimated arrival is
before the terminal is ready
• Owners and Charterers agree a speed adjustment
• May use an independent 3rd party to calculate / audit
adjustment
• Owners retain demurrage, while fuel savings and any
carbon credits are split between parties
Virtual Arrival
- additional benefits
In addition to directly reduced emissions, other benefits
include:
• Reduced congestion & toxic emissions in the port area
• Improved reliability/safety
• Potentially increased use of weather routing
Important pre-conditions:
• The safety of the vessel remains paramount
• The authority of the vessel’s Master remains unchanged
• The basic terms of trade remain the same
Is an MBM needed for Shipping ?
With bunker costs frequently 60-80 % of total
operating costs, does shipping need any further
market incentive to reduce GHG emissions ?
1400
USD/tonne
1200
Bunker prices 2000 – 2010 [USD/tonne]
HFO 380 cst / MDO / MGO*, Fujairah
1000
MDO/MGO*
800
600
*MGO since Dec 2008
400
HFO
Source: Bunkerworld
Sep-10
May-10
Jan-10
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May-09
Jan-09
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May-08
Jan-08
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May-04
Jan-04
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May-03
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May-02
Jan-02
Sep-01
May-01
Jan-01
0
Sep-00
200
THANK YOU
For more information, please visit:
www.intertanko.com
www.shipping-facts.com
www.maritimeindustryfoundation.com
Application of the
Leverage Incentive Scheme
EEDI
Attained
Ship 1
Ship 2
Ship 3
Req. EEDI 1
0%
Req. EEDI 2
50%
Req. EEDI 3
100%
50%
EEOI
NEW BUILDING
benchmark
PATERN 1
Actual
Initial EEOI
PATERN 2
EXISTING SHIPS
Reduced EEOI
Application of the
Ship Efficiency and Credit Scheme
Efficiency Credit = (EIr – EIa) x Activity
US EEDI (EIr)
Efficient Credit >0 = Sells Credits
Efficient Credit < 0 = Buys Credits
Existing hip (EIa)
New ship IMO EEDI (US EIa)
IMO EEDI