CO2 emissions from ships – The latest IMO regulatory developments and what they mean for bulk carriers

Source Hellenic Shipping News vom 28.12.2011

A new International Energy Efficiency Certificate (IEC) will be introduced for all vessels, and this includes a supplement recording particulars related to the ship’s energy efficiency, such as the propulsion system, the Attained EEDI for new builds, and the presence of a SEEMP. The EEDI requirements will apply to new ships above 400 GT only, where “new ship” means a ship: for which the building contract is placed on or after 1 January 2013; or in the absence of a building contract, the keel of which is laid or which is at a similar stage of construction on or after 1 July 2013; or the delivery of which is on or after 1 July 2015. The yard, designer or a consultant will have to develop an EEDI technical file containing the necessary documentation and calculations. Verification will be done in two stages: a preliminary verification at the design stage based on tank tests, manufacturers’ data and design particulars. During the speed trial the speed will be measured and the technical file will be updated, together with engine certificates and other necessary documentation. The EEDI technical file will then be verified by a flag administration or Recognized Organisation and the IEC will be issued. The regulation differentiates between ship types which are required to calculate an Attained EEDI and those that must have an Attained EEDI below a certain Required EEDI. In order to address concerns raised by developing countries, the regulations include a clause allowing any Administration to waive the EEDI requirements for ships flying its flag for a period of up to four years (linked to the contract date), or six years and six months (linked to the delivery date) after 1 January 2013. However, the preliminary indications are that the major flag states will be reluctant to invoke the waiver clause. No changes were made to the SEEMP at MEPC 62, but its inclusion in the Annex VI amendments makes it mandatory for all ships– both new and existing - after it enters into force. The presence of a SEEMP will be checked during the first intermediate or renewal survey for the IAP certificate, at which point the IEC will be issued. The EEDI will not be calculated for existing vessels and thus not included in the IEC. The adoption of the amendments is a significant step towards the regulation of GHG emissions by IMO. Nevertheless, the EU is likely to consider it insufficient in light of its own ambitions. The EU process for establishing a regional CO2 emission reduction mechanism for shipping is therefore expected to continue. Other parts of the international community also consider these regulations insufficient. There is therefore a strong political drive to regulate shipping further, e.g. through regional or international. Proposals under review range from a contribution or levy on CO2 emissions from shipping, via emission trading systems to schemes based on ship efficiency. If agreed, MBMs may appear towards the end of this decade. Commercial energy efficiency requirements are becoming increasingly important. The creation of various voluntary schemes for rating environmental performance, including CO2 performance, is providing tools that allow charterers and cargo owners to use only ships that satisfy their environmental requirements. These rating schemes must be based on robust methods and verifiable data in order to create a level playing field for the ship owner. Typical bulk carriers can fall into one of three categories in the MARPOL Annex VI amendments: bulk carriers, combination carriers and general cargo ships. A ship covered by the definition of a bulk carrier in SOLAS chapter XII, which includes ships “…primarily designed to carry dry cargo in bulk..”, will be measured against the bulk carrier reference line. Some dedicated ship types carrying woodchips, cement, fly ash or sugar are excluded from this definition and should, together with open hatch carriers, be considered general cargo ships when applying the requirements. As can be seen from the chart above, the reference line for general cargo ships is higher than that for bulk carriers so that the requirement will be lower for these ships. A ship which can load 100% deadweight with both liquid and dry cargo is considered to be a combination carrier and can use the reference line used by tankers. Any measure considered for reducing the EEDI must affect one or more of the parameters in the EEDI equation. In addition, there will be compensation when using shaft generators (PPTO) and applying ice strengthening (fj). Other correction factors, for example for voluntary structural enhancement, are under development. Some proposed measures, such as kites or solar panels, cannot provide power all the time and will not enable the main engine power and thus the EEDI to be reduced. At the moment, there are no guidelines for how such measures can be applied to reduce the EEDI, but these are expected to be developed at a later stage, most likely through the Peff parameter. Propulsion efficiency devices, such as Mewis ducts or propeller boss cap fins, are not expected to reduce the main engine power, but will enable the ship to obtain a higher speed (Vref). Further, the use of biofuels is not covered by the current framework as the carbon content cannot easily be determined. There are no indications regarding if and when this will be developed. A number of guidelines are going to be developed during the next few years, with the most important being issued before the entry into force in 2013: February 2012 – MEPC 63: Guidelines for minimum propulsion power October 2012 – MEPC 64: Guidelines on voluntary structural enhancement July 2013 – MEPC 65: Guidelines for CO2 abatement technologies March 2014 – MEPC 66: Guidelines for calculation of EEDI for roro, passenger, diesel-electric and hybrid propulsion ships The requirements and dates are subject to two reviews: the first is on the requirements for small ships and large bulkers and tankers and is due in July 2013. The second review allows for a discussion of both the requirements and the timeline for when Phases 2 and 3 are to enter into force, and is due in January 2015.

The Unintended Consequences of the Sulphur Cap

Source BIMCO vom 02.11.2011

New regulations really need to be thought over carefully and exposed to the most rigorous cost-benefit analysis. It is often said that legislation concocted in haste will be inevitably regretted by its recipients and that those making regulations need always to consider “the Law of Unintended Consequences”, which will often catch out those who have allowed their enthusiasm for legislation to get the better of them. Perhaps it has been taking rather too long to build up a head of steam, but the opposition to the proposed EU 0.1% sulphur cap due to take effect in 2015 within the European Emission Control Areas seems to be growing very fast. Ferry and short sea operators in particular have been doing their research and are, as a result, better equipped to forecast the consequences of this drastic reduction of sulphur content in fuel oil, due to become mandatory. Speaking to the UK House of Commons Transport Committee recently, the UK interest group Maritime UK told MPs that the proposals are likely to increase bunker costs by nearly 90% and will almost certainly add some GBP 3.6 billion per annum to the operating costs of shipping around north Europe. There have been submissions from owners’ representatives and from ferry operators such as Stena, DFDS and Grimaldi, all of which anticipate that the consequences will be to see hard-won freight diverted from the ships back to the cheaper roads. The real irony of this is not just that the consequences of this regulatory change will end up harming the environment far more than the growth of marine traffic would do, were this sulphur cap not put in place on a regional basis. It is also significant that the ferry companies seeking another look at this unwanted change are all operators which are investing heavily in the cleanest, most environmentally sustainable, new tonnage that it is possible to buy. These are all companies which are in the van of the green shipping movement, all with plans for ever greener tonnage. Grimaldi, for instance, plans to spend no less than EUR 3 billion over the next three years in new ferries and Ro/Ro tonnage to upgrade its routes. P&O Ferries are taking delivery of two of the biggest ferries in the world for their English Channel operations, which have been designed with extraordinary thought for every practicable environmental improvement. Stena and DFDS both operate fleet being continuously modernised, with immense effort going into the reduction of harmful atmospheric emissions and the conservation of fuel. Many of these companies operate “cold ironing” systems to ensure that the ships are on shore power when in port. In short, these ships are run by people doing the very best for the environment, and the consequences of the proposed 0.5% sulphur cap is likely to do them severe economic harm. So far there has been little indication that the economic and even environmental consequences of the sulphur cap have been fully comprehended by the regulators, despite the efforts of shipping interests. There seems to have been a notion that the use of LNG will become widespread, or that the price and availability of low-sulphur will make this an attractive option, or that scrubbers will become cheaper to install to existing ferries. It is the “unintended consequences” of this hoped-for environmental improvement and the lack of any lasting benefit for horrendous potential costs, which are causing concern. Articles written by the Watchkeeper and other outside contributors do not necessarily reflect the views or policy of BIMCO.

ClassNK Issues First Ever Statement of Fact for Tier III NOx Emissions for an SCR-equipped Diesel Engine

Source Hellenic Shipping News 30.12.2011

ClassNK announced today that it had awarded its first ever Statement of Fact for Tier III nitrogen oxide (NOx) reductions to a marine diesel engine incorporating a Selective Catalytic Reduction (SCR) system. The document, issued on 1 November 2011, verifies that the NOx emission measurement results　for the engine, fitted with a pre-turbocharger SCR system developed by Hitachi Zosen Corporation, meets the NOx Tier III emission limits stipulated in amendments to Annex VI of the International Convention for the Prevention of Pollution from Ships 1973 (MARPOL). The engine in question was fitted as the propulsion system for MV “SANTA VISTA”, a 37,800 dwt general cargo ship, built by Naikai Zosen Corporation for Nissho Shipping Co., Ltd., which entered service on 31 October 2011.Not only is this the first time that ClassNK has issued such a document for a marine diesel engine fitted with an SCR system, it is also the first statement of fact issued by the Society for Tier III NOx reduction compliance of any kind. SCR systems, currently a hot topic as industry looks for solutions to strengthening NOx regulation, offer the potential for independent reductions in emissions of more than the 80% required under Annex VI. Anticipating a growing interest in this technology and its applications in the near future, ClassNK released new guidelines, Guideline for SCR (Selective Catalytic Reduction) Systems and Reductant Agent Supply Systems, to assist manufacturers, shipyards, and owners in installing such systems on their commercial vessels.

Concept study for large LNG containership

Source Company of Master Mariners of Australia vom 18.12.2011

CLASSIFICATION society Germanischer Lloyd (GL) and Japanese shipbuilder IHI Marine United Inc (IHIMU) have signed an agreement to investigate and develop solutions for large LNG-fuelled containerships. GL and IHIMU will work together on a concept study for a 13,000-TEU ship fuelled by LNG. "IHIMU shares GL's assumption that LNG will be a key technology for addressing the challenges the maritime industry faces in terms of reducing emission to the air and reducing its contribution to global climate change," said Pierre Sames, GL senior vice president and head of strategic research and development in a statement from LNG Solutions. The study will focus on the eFuture 13000C, a LNG-fuelled 13,000-TEU ship concept design first launched by IHIMU in 2010. IHIMU claims the eFuture 13000C design boasts a 30 per cent reduction in environmental impact and fuel consumption compared with conventional ships and features a twin-skeg (two-keel) hull and high-capacity batteries to store energy generated by solar panels. The new joint development project will focus on the LNG fuelling system, consisting of the bunker station, tanks, gas preparation and gas lines. IHIMU will design the key structures of the system with GL providing design review, hazard identification and upon the successful completion of the project, approval in principle of the design. Assessment of the safety performance of the gas supply system will be the key aspect of GL's contribution to the project.

First commercial scrubber delivered

Source motorship.com vom 15.12.2011

Hamworthy Krystallon says that the first of four vessels on which its seawater scrubbers are being installed, a ro-ro newbuilding for Italian ship owner Ignazio Messina, is now on line. The company claims that this is the first ever vessel to operate commercially with a scrubber system, enabling Linea Messina to meet 0.1% sulphur emissions regulations in EU ports, as well as ‘future-proofing’ the vessel for the impending 0.1% ECA sulphur limit that will be imposed in 2015. “This is a landmark moment, not just for Hamworthy Krystallon, but the entire shipping industry,” said Sigurd Jenssen, managing director, Hamworthy Krystallon. “Bringing Linea Messina on line highlights the validity of scrubbing technology as a viable and cost-effective solution to meet the stringent sulphur emissions regulations, that are serving to transform the shipping industry. By 2015, ship owners and operators operating in ECAs will have a simple choice - either pay the $300 to $400 price differential for costly distillate fuel or install a scrubber, which typically has a payback of less than twoyears. Messina has shown what the smart choice is.” continued Jenssen. Ignazio Messina placed the first commercial order for seawater scrubbers in 2010, to be installed on four new 45,000dwt ro-ro vessels. Each ship features five scrubbers, consisting of four units for the auxiliary engines (each 2MW) and one unit for the auxiliary boiler (2.5 tons steam per hour). All the scrubbers will be housed within the ship funnel casings. Equipment will include a control system, combined wash-water treatment plant and a new range of super duplex stainless steel pumps supplied by Hamworthy’s Singapore plant. All emissions will be continuously monitored. The delivery of the equipment for Linea Messina took place in January 2011, followed by installation throughout the summer. DNV approved the installation during testing in October 2011, and it has also achieved RINA classification; all vessels being the first of their type to gain RINA’s Green Plus notation. Additionally the system is MED certified. Linea Messina will operate along the African coast as well as in Italian waters. Enrico Allieri, Ignazio Messina's new buildings programme technical director, commented: “Installing Hamworthy Krystallon’s scrubber system was the right commercial and environmental decision. The shipping industry is changing dramatically and it will continue to do so, particularly in relation to the environment, and we wanted to be ready for these new challenges.” “We can now comply with the 0.1% sulphur regulation in EU ports, while burning residual fuel oil and we are now prepared for the 2015 regulation, which will have a significant impact on the industry. What has been clear is that preparation is key as the solutions take time to install and test. But we are now ready and have a competitive advantage in looking to seize the opportunities that change will inevitably bring. The first vessel Jolly Diamante was delivered on 9 December and is now on its maiden voyage to Mediterranean Sea. We will continue to participate in Hamworthy Krystallon’s R&D program which will closely monitor the scrubbers during operations, as a means of continuously improving the characteristics of the scrubbing systems,” concluded Allieri.”

Shipping confidence picks up despite Eurozone fears

Source Moore Stephen vom 13.12.2011

Overall confidence levels and the likelihood of major new investments in the shipping industry in the next twelve months picked up in the three months ended November 2011, according to the latest shipping confidence survey by leading accountant and shipping adviser Moore Stephens. This was tempered by an expectation of a rise in finance costs. Respondents also continued to exhibit a high level of concern about the negative impact of overtonnaging on the market amid continuing fears about the global economic climate, and the eurozone crisis in particular. In November 2011, the average confidence level expressed by respondents in the markets in which they operate was 5.4 on a scale of 1 (low) to 10 (high). This is up on the figure of 5.3 recorded in our August 2011 survey. Confidence was highest among managers, unchanged at 5.6. Europe at 5.1 was the least confident of all geographic regions covered by the survey. In May 2008, confidence in Europe was at a high of 6.6, and as recently as August 2010 was running at 6.1. Respondents were more optimistic of making a major investment or significant development over the next twelve months, with the likelihood rising to 5.2 from 5.1 in the last survey. Owners (up from 5.3 to 5.5), managers (5.2 to 5.4) and charterers (5.7 to 5.8) were all more confident. Expectations were unchanged in Asia at 5.2, but were up in Europe, from 5.0 to 5.1. 24% of respondents (up from 22%) cited demand trends as the most significant factor affecting business performance in the next twelve months, with 17% opting for competition (unchanged from last time) and finance costs (up from 16% last time). Fuel costs were down from 12% to 9%, while tonnage supply increased by one percentage point to 13%. There was a five percentage point increase this time (from 52% to 57%) in expectations of an increase in finance costs. Owners (up from 53% to 57%) and managers (up four percentage points to 56%) joined in believing that finance costs would rise. There was an increase in the numbers of respondents in both Asia and Europe who thought finance costs would rise (up from 50% to 54%, and from 53% to 61%, respectively). In the tanker sector, the number of respondents expecting rates to increase over the coming year fell from 34% to 30%. But, there was a 19 percentage point increase (from 21% to 40%) in the number of charterers who thought rates would go up. There was also a corresponding 19 percentage point fall (from 26% to 7%) in the number of charterers expecting tanker rates to fall. Not for the first time, the chartering sector seems to know something that other parts of the market do not. For the first time in three years, those predicting a decline in rates in the dry bulk sector exceeded the total of those who thought they would increase. The percentage expecting an increase fell from 27% to 23%, a new all-time low in the life of the survey. Meanwhile, 31% thought that rates would go down; the highest level since the 43% recorded in October 2008. In the container ship market, the number of respondents overall expecting a decline in rates was higher than the number anticipating rate increases. Overall, just 23% of respondents (compared to 28% last time) expected rates to go up, the second-lowest figure since the survey began, behind only the 20% recorded in October 2008. Meanwhile, 31% thought that rates would go down, the highest figure since the 36% recorded in February 2009. Moore Stephens shipping partner, Richard Greiner, says, “It says a great deal for the resilience of the shipping industry that, despite the problems facing the sector, and notwithstanding the acute difficulties bedevilling the world economy, our survey showed a small increase in confidence. Like a boxer who refuses to lie down, shipping is fighting to ride the punches and to bounce back off the ropes. There was even an increased expectation that respondents would be making a major investment over the coming twelve months. This is encouraging, and supports the belief that now is a good time to buy for those who have access to funding. “Nevertheless, it is undeniable that shipping is struggling on a number of fronts. Seldom, if ever, can classic problems within the industry have coincided with such a severe economic downturn and acute debt crisis. Overtonnaging is the issue dominating responses to our survey and, even when other concerns are raised, overtonnaging is still the elephant in the room. It will doubtless remain so for some time, but the situation could be eased in the shorter-term by sensible renegotiation and resourceful financing. “Meanwhile, operating costs are set to rise, with a recent Moore Stephens survey predicting a 3.7% increase in 2012. Shipping is an expensive business in which to operate, and the returns currently available through the freight markets are generally not sufficient to offset operating costs and leave any prospect of a return on investment. “These are challenging times. The shipping industry which emerges intact from the current downturn will be stronger than the one which entered it. The loss of some good, well-run companies is the sad but inevitable result of the singular economic conditions currently prevailing throughout the world. But the loss of short-termist, inadequately funded companies will leave the industry in much better shape than it was before the indicators started to point in the wrong direction.”

SOx emission rules being avoided

Source Lloyd’s List vom 19.12.2011

A significant minority of about a fifth of ships are not complying with European requirements on sulphur emissions, according to research by the Seafarers' International Research Centre at Cardiff University, which has called for more effective enforcement of sulphur regulations. This is among the findings of an interim report on the effectiveness of international regulation of pollution controls: the case of the governance of ship emissions funded by the UK Economic & Social Research Council and supported by the UK Maritime & Coastguard Agency. The research is based on ships calling at ports in the UK and Sweden. The research project continues through to the end of 2012. The report says that, based on its evidence, it is clear that a minority of berthing ships in the UK and Sweden are continuing to burn non-compliant fuel. Its estimate of 18% non-compliance for western Europe and the Baltic is mostly due to the supply of off-spec fuel, rather than conscious regulatory avoidance, but there is evidence of some deliberate avoidance. It notes ships deliberately avoiding compliance are unlikely to send samples for testing. There could be some additional inadvertent non-compliance of vessels with single service tanks operating an inadequate changeover procedure. It suggests the proportion of non-compliant ships varies considerably and for ships transiting UK and Swedish waters, but not calling there, the figure could be higher. In fact, fuel testing by Swedish authorities in Swedish ports revealed non-compliance of just 4%. This low figure could be due to longstanding financial incentives there to burn low-sulphur fuel, with an established fuel-sampling programme, for the high proportion of ships calling in Swedish ports that operate continuously in the Baltic and North Sea emissions control areas. It warns of the danger the shipping industry's culture of compliance could break down in this regulatory area, due to the substantial cost savings from running on non-compliant fuel. This supports the need for effective enforcement measures. “A reliance solely on visual checking of documents does not seem appropriate to this need for particularly effective enforcement," the report says. "If the EU 0.1% sulphur pot fuel regulations are not to appear toothless, non-compliant vessels need to be named and shamed on the Equasis website." Among its recommendations are that the MCA pilots the use of fuel sampling and testing kits, similar to those already in use in Sweden, German and the Netherlands, in conjunction with laboratory testing. All EU countries should inform the European Commission of vessels found to be non-compliant. Agreement should be sought at the International Maritime Organization for a new format of bunker fuel delivery note in English that should state the sulphur content and the deliverer of the fuel.