The INTERTANKO options to meet marine environmental challenges

byErik.Ranheim@INTERTANKO.com

Manager Research and ProjectsGlobal Forum Strategic Planning Workshop

Nice, January 2008

‘

International Association of Independent Tanker Owners

For safe transport, cleaner seas and free competition

Trade association established in Oslo in 1970 Spokesman, information service, meeting place

Membership280 Members40+ countries

2,800+ tankers230 million dwt

75% of independent tanker fleet300 Associate Members

INTERTANKO

Safety performamce

Accidental oil pollution into the sea

Source: ITOPF/Fearnleys

10001000ts spiltts spilt

bn bn tonne-mtonne-m

0

400

800

1,200

1,600

1971-76 1977-82 1983-88 1989-94 1995-00 2001-06-8,000

11,000

30,000

49,000

68,000

Accidental pollution

Tonne-miles

+97%

-52 %

+50 % -26%-80%

Pollution rate 1000 ts spilt per bn tonne miles carried

Source: Fearnleys/INTERTANKO

IndexIndex

90

100

110

120

130

140

150

160

170

180

1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004

CO2 emission Energy use PopulationSeaborne trade

Shipping and the environment

• 60,000 ships (above 400 GT)

• 7,507,000,000 ts goods • average distance 4,400 miles• + 90% of total world trade

• Consumes 10% of world oil • Emits 4.5% of global CO2

• Economics of scale:One VLCC = 8,000 trucks

but

Shipping and air emission

Shipping and the environment

• Shipping is fuelled by the dirties part of the barrel• The oil residues used by shipping contain:• SO2

• NOx• VOC• Heavy metals• Soot

Reducing harmful emissions from ships

• Onboard abatement technology– Still undergoing testing

• SECAs/NECAs– Air pollution recognises no borders

• Type and quality of fuel – The KEY to ultimate control of air emission

The world is moving away from HFOOil consumption by product - % share

12%

17%

22%

27%

32%

37%19

6519

6719

6919

7119

7319

7519

7719

7919

8119

8319

8519

8719

8919

9119

9319

9519

9719

9920

0120

0320

05

25

37

49

61

73

85

Middle distillates

Fuel oil

Total

Source: BP Review

% share m ts

Modern refiners do not produce HFO

• The new line at Neste’ Porvoo refinery will use residue oil to produce 1 m ts per year sulphur-free, clean motor fuels, particularly diesel fuel.

• The fuel will meet the latest environmental requirements in Europe and N America. The refinery will be capable of considerably increasing the refining of very profitable products, such as sulphur-free diesel fuel.

INTERTANKO Study

• No ships =>400 GT:58,859• HFO consumption: 350 m ts• MDO consumption: 60 m ts• CO2 emission w. HFO: 1,246 m ts• SOx emission: 20.1 m ts

Why not scrubbers?Why not scrubbers?• Still under testing• Large, expensive and difficult (or impossible?) to install• Wastewater react with seawater and cause CO2 emission• Up to 100 kg per day of hazardous sludge • For a 20 MW main engine up to 22,000 ts/day seawater needs to be processed *•*

* Source: Krystallon

We are involved in transportation – not waste treatment

Why not SECAs?Why not SECAs?• Air pollution knows no borders• International shipping needs global regulations• The most dense shipping areas are close to shore the North Sea, the Mediterranean, the Gulf of Mexico and South East Asia• Switching fuels – a safety problem

Sulphur Emission Control Areas, the Baltic and the North Sea

• LSFO availability “ ..refineries have a clear incentive for further conversion of its entire residual streams to distillate products compared to residue desulphurisation to produce more LSFO”

May 2006c

Nov 2007

seCasConfusions, Complexities,

Criminalisation ?

Why switching to distillates? Why switching to distillates? • A simple solution that:

1. Gives a global reduction of emission• SOX, - 60-80%,• PM, - 80-90%,• NOx, - 15%………………

2. Leaves no onboard waste3. Provides a more healthy environment

for crew and dockworkers4. Reduces overall fuel consumption5. Gives no control or monitoring

problems6. Causes far less pollution when spilled7. Provides opportunity for the

development of more efficient engines (w. less emission)

8. Applies to all ships and all current engines

Cleaner, Simpler and more Efficient ships

Switching to distillates CO2 balance

IMO Group of Experts will provide figures

• +CO2 emission when continuing to burn HFO:• buffering from scrubbers• higher fuel consumption• running of scrubbers• heating of HFO• burning handling of waste• more abatement equipment

• +CO2 emission when burning distillates:• conversion of HFO to distillates• construction of conversion plants• handling of waste from conversion plants

Potentials pollution reduction

Reduction of excess Fuel consumption by utilisation of waste heat and reduction of losses

Use of MDO as fuel – Saving 31.5 million tonnes

Reducing Sulphur content of fuel – less “buffering” and release of CO2 from the Oceans – potential saving 27 million tonnes

Reduction of leakage of refrigerants - makes it possible to develop more efficient engines diminish bunker pollution to sea

Fleet utilization - reduction in ballast time Slow steaming In creasing ships size Indexing of ships Engine improvements

Shipping and the environment

Shipping represents a small part of pollution into the sea Regulated by IMO Shipping exposed to multilevel control system

Flag state Port State Classification Societies Charterers (market forces), insurers, banks

Air emission regulated as from 2005, but Stricter requirements required

Want to learn and improve

Long term practicable measures to reduce emission necessary

Shipping is energy efficient - but burning the dirties part of the barrel cause pollution- acidification

The oil industry is moving towards cleaner fuels

Needs to be regulated to create even playing field

Large investments necessary over a prolonged period - no matter solution

Cleaner shipping