Clean Fuels for Ships Practical Solution for MARPOL Annex VI and GHG Emissions Reduction

1. Clean Fuels for ShipsPractical Solution forMARPOL Annex VI and GHG Emissions Reduction MARTECMA Seminar 21 January 2008 Athens Dragos Rauta - INTERTANKO

2. Transport Mode Efficiency(assumes Aframax Tanker burning 2.6% Sulfur Fuelwith return voyage in ballast) • Shipping is the most efficient mode for moving cargo Source: Herbert Engineering, April 2007

3. Transport Mode Efficiency One litre of fuel used to move one tonne of oil on a VLCC more than 2,500 km.’ This is more than twice a 20 years ago.

4. Sulphur limits in modes of transportations 4.50% 1.50% 0.1% 0.001% Source: European Environmental Agency

5. Sulphur limits in land transportation Source: IEA MEDIUM-TERM Oil Market Report – July 2007

6. The choices to MARPOL Annex VI Solution • HFO with abatement technologies • Cleaner fuels = LSFO or Distillate Application • Globally* • Locally/regionally *No SECAs, no fuel switch over, no complicated bunker storage systems, no responsibility to find the right fuel for the right region, no responsibility to prove compliance on fuel switch over or on operating abatement technologies and disposal of waste, no fuel treatment: minimal sludge, little to incinerate & minimal waste to handle and dispose

7. HFO supply – constant decrease HFO demand – constant growth ?

8. REFINERY PRODRUCT STREAMS Source: Shell Guide ~7% ~8% to supply the additional MDO

9. Exhaust Gas ScrubberCase Study • Scrubbers installed only on 50% (18 MW) of the engines onboard • Dimensions • ME 12 MW: 3.80 m diameter x 11.2 m height • AE 3.2 MW: 1.85 m diameter x 5.98 m height • AE 2.4 MW: 1.40 m diameter x 4.90 m height • New funnel • Cost • US$5.6 m for equipment • US$0.5 m transportation cost of the units • US$1,3 m for installation • US$0.9 m/year operational costs

10. Exhaust Gas Scrubber DevelopmentCase Study • 260 kW to run the scrubbers – more CO2 • Scrubbing water - 16 t/h/MW to remove 1.0%S • Key factor is "back pressure"; the main engine is utilised with an economizer and placing the scrubber behind/before this economizer would generate too much back pressure for the main engine thus the economizer would need to be removed • SECA operations: • 1.0% S cap = HFO to be used < 2.5% S • 0.5% S cap = HFO to be used < 1.25% S • 14,000 t/day of seawater + > 5,000 t/day for dilution to restore the water pH

11. Distillates – The Benefits • Applies to existing ships/engines, as well as new • With no other measure, immediately reduces: • - SOx emissions by 80 to 90 % • - PM emissions by 90 % • - NOx emissions by 10 to 15 % • Facilitates further NOx reductions by in-engine modifications (for IMO’s Tier II & III) • Facilitates further improvements in energy efficiency (and GHG reductions) • Improves engine reliability • Reduces onboard fuel generated waste Cleaner, Simpler and more Efficient ships

12. Distillates – The Benefits • Reduces onboard plant and maintenance • Reduces workload for ER crew by 70% • Provides safer working environment for ships’ staff and shore side workers • Avoids carriage of multi-fuels and fuel blending/switching problems • Reduces control and monitoring requirements • Lessens harmful impact of bunker spills • Lowers burden for crew Cleaner, Simpler and more Efficient ships

13. CARBON NEGATIVE SOx deposits in Ocean CO2 buffering by sea water (scrubbing or not) Energy required to run scrubbers Energy required to produce LSFO/Distillates CARBON POSITIVE Burning Distillate vs HFO Low sulphur – little or no CO2 from buffering Lower fuel consumption No pre-treatment No post-treatment required of fuel wastes No sludge, no incineration Fuel efficient new engines The CO2 Equation

14. The Cost Issue MDO/DMB grade 0.5%S • Refineries investment for distillate globally US$126 bn (2020) • For 10 year recovery + associate costs = US$40 to US$80/t • Premium paid today: US$300/t • Refinery efficiency = Less HFO supply SCRUBBERS • 60,000 ships x US$5m/ship = US$300 bn. • Large installations = retrofitting not possible • Time to retrofit = 7 years or more

15. Conclusions on Global 0.5% S MDO • Solid platform of requirements • Long term and positive reduction of air emissions from ships • Long term and a predictable regulatory regime • Prevent fragmented regulations • A global standard for at sea, coastal and at berth operations (no SECAs) • Realistic and feasible solution

16. Conclusions on Global 0.5% S MDO • Regulations based on a fuel standard rather than an emissions performance standard only • At least carbon neutral, probably carbon positive, i.e. net beneficial effect • Leaves open options for better solutions for NOx and CO2 emissions • Better to deal with the cause of a problem than to concentrate on the effects only!

17. QUALITY PROBLEMS WITHRESIDUAL MARINE FUEL OILS • HIGH ABRASIVE FUELS • HIGH ASH • LOW FLASH POINT • HIGH SEDIMENTS • HIGH DENSITY • FUELS CONTAINING USED LUBE OILS • POLYETHYLENE CONTAMINATION • POLYSTYRENE CONTAMINATION • HIGH CALCIUM & HIGH SODIUM • HIGH WATER CONTENT • CONTAMINATED FUELS • INCOMPATIBILITY OF BLENDS ALL these avoided with use of MDO

18. GHG Emissions • GHG emssions & solutions • HFC: reduce use & no leakages • O3 (NOx & VOC): • NOx: MDO + in-engne solutions • VOC: KVOC + VOCON valve/procedure • CO2: • MDO – higher energy/kg than in HFO • Measure to minimise the energy used • GWP (gobal warming potential) • CO2 = 1; - O3 = ~ 20; - N2O = 310; • HFC-23 = 12,000; - HFC-134a = 3,830

19. Measures for GHG Redcution • Reduce heat losses • No unecessary operations, e.g. no tank cleaning between same cargo • Cargo filling – 98% • Minimise/no waiting time in port • Reduce ballast legs • Carbon capture

20. Measures for GHG Redcution • Larger ships • More efficient engines – LS MDO/MGO required • Smoother hull surfaces - (silica/nano-technology, air skirts; seachests shape; hull weld protrusions, other protrusions) • Reduced wave resistance • Reduced hull resistance (non biocidal AF paints are proposed - they slime bad; the cost of slime in terms of drag is under researched; hard hull cleaning versus soft slime brushing ... benefits, cost and drawbacks .. )

21. Measures for GHG Redcution • Improved propulsive efficiency (propellers, smoothness, cleaning ... position ; rudders, shape ... position .... relation to position of propeller ..) • Composite materials • "Air friction" to reduce drag - WAIP (Wing Air Induction Pipe) technology (would the degree of drag reduction due to air bubbles be sufficient to overcome the increase of drag by injectors/protrusions of such a system?)

22. Questions? dragos.rauta@intertanko.com

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