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World shipyards have a record order backlog. What effect will the global credit crunch have?

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Cancellation of many exisiting orders

Marine Log

April 8, 2008

INTERTANKO welcomes (and explains) MEPC 57 package

INTERTANKO, the International Association of Independent Tanker Owners, has provided a very useful summary of the main elements of the package of amendments and revisions to MARPOL Annex VI (Prevention of Air Pollution from Ships) agreed last week.

INTERTANKO welcomed what it called "an historic agreement" reached by IMO's Marine Environmental Protection Committee (MEPC 57). Subject to formal adoption at MEPC 58 in October 2008, it will enter into force through the tacit amendment procedure in February 2010.

These measures address regional and global concerns on sulfur oxide (SOx), nitrogen oxide (NOx) and Particulate Matter (PM) emissions from both new and existing ships in an integrated manner, and will remove the pressure for regional legislation with its resulting complexities and complications for owners and administrations.

INTERTANKO believes the measures meet the goals set by its Council, namely that the revisions should:

ensure a solid platform of requirements,

be realistic and feasible,

seek a global, long-term and positive reduction of air emissions from ships,

contribute to a long-term and predictable global regulatory regime.

INTERTANKO's proactive proposals in 2006 struck at the root cause of SOx, NOx and PM emissions, calling for a phased introduction of low sulfur cleaner fuels, and leading to furious debate across the industry. The original INTERTANKO submission provided a focus that brought about a more radical approach to the revision process and to the need to find global solutions to increasing regional pressures.

The formal draft text of the Report from MEPC 57's Working Group on Annex VI and the NOx Technical Code is now available. The following INTERTANKO-provided summary, however, provides a summary of the principal measures:

SOx and PM emissions:

Regulation 14 of MARPOL Annex VI has been significantly revised. The new draft addresses compliance with SOx and PM regulations through the sulfur content of the fuel oils to be used.

For the Global Cap, the sulfur content limits are as follows:

4.5% prior to 1 January 2012

3.50% on and after 1 January 2012

0.50% on and after 1 January 2020

For the Emission Control Areas, the sulfur content will be as follows:

1.50% prior to 1 March 2010

1.00% on and after 1 March 2010

0.10% on and after 1 January 2015

The existing Emission Control Areas are the North Sea and the Baltic Sea. It is up to the individual Governments or group of Governments to justify and declare other Emission Control Areas.

The amended Regulation 14 has a "review provision" which requires the IMO to complete by 2018 a review of the availability of the 0.50% sulfur content fuel. Based on the results of such a review, the Parties to MARPOL Annex VI will decide whether the global cap of 0.50% can be enforced from 1 January 2020. If not, the 0.50% sulfur global cap will be enforced on 1 January 2025 without any additional review.

Abatement Technologies

Reference to any abatement technology is now placed in the amended Regulation 4 of the revised Annex VI as "equivalent measures".

An Administration may allow the fitting of abatement technologies onboard ships, but they have to acknowledge that these are at least as effective in terms of air emissions as required under the relevant regulations for SOx, PM and NOx emissions, that they operate within the parameters established under the relevant IMO guidelines and finally, and importantly, that the use of the abatement technologies does not harm the environment.

From a ship operators' point of view, this last element is very important since under the current Annex VI provisions, it is the ship's obligation to demonstrate that the use of a abatement technology is not harmful to the environment.

NOx emissions

Regulation 13 of the revised MARPOL Annex VI carries the following new elements:

Existing engines onboard ships constructed between 1 January 1990 and 31 December 1999, with a power output of more than 5,000 kW and a per cylinder displacement at or above 90 liters, will have to adopt modifications to meet the Tier I NOx emission limitations (as for the engines onboard ships constructed on and after 1 January 2000).

There are several important steps for the application of this retroactive provision:

Tier I standards.

If the engine already meets Tier I NOx emission limits, then a simple certification is sufficient.

If the engine does not meet the Tier I NOx emission limitations, it is subject to measures ONLY:

- if there is an upgrading system certified by an Administration and the certification identifies that such a system ensures a reduction to the Tier I limits of that particular engine;

- the upgrading system is considered commercially available 12 months after an Administration deposits the notification on certification to IMO;

- the engine would need to be upgraded at the ship's first renewal survey after the upgrading system becomes commercially available.

In case the upgrading system is not available at the time of completion of the renewal survey (ship owner has to document that), the flag would give an extension until the next Annual Survey.

As part of the certification, the Administration should check that the upgrading system does not decrease the engine rating by more than 1%, increase the fuel consumption by more than 2% (consumption according to the test cycle set for the NOx Technical Code) and that it has no other adverse effect on the durability or reliability of the engine.

Finally, in order to relate the upgrading to an acceptable cost/benefit level, this provision will use a formula on limiting the "cost" of the upgrading system in relation to the reduction of NOx emission (reduction is considered the difference between the initial emission level of the engine and the Tier I limit respectively). The formula will be further assessed and probably concluded at MEPC 58 in October 2008 when the approved revision is scheduled for final adoption.

For new engines/ships, there is a two-step of NOx emissions reductions as follows:

Tier II standards would apply to engines installed on ships constructed on and after 1 January 2011. Depending on the engine type, the reductions are between 15.5% and 22% from the Tier I NOx emissions limits

Tier III standards would apply to ships built after 1 January 2016 but they would apply only when these ships would enter an Emission Control Area (ECA). The NOx emission limits are set at 80% lower than the Tier I limits. In simple words, outside ECAs, the NOx limits will still be according to Tier II but inside ECAs, ships built from 1 January 2016 need to be fitted with systems to reduce the NOx emissions to Tier III levels.

Fuel Availability

There will be new provisions in Regulation 18 stating that:

- each Party shall take reasonable steps to ensure proper supply of compliant fuel;

- should a ship be able to demonstrate it was unable to buy compliant fuel, then there should be no

penalty measures taken against it.

The ship will have to notify its Administration and the relevant port of call each time it cannot find compliant fuel.

Fuel Oil Quality

The two important amendments are:

- a standard fuel verification procedure of fuel samples for compliance (this is in response to many reports from ship operators on inconsistencies between the data contained in the Bunker Delivery Note and the test results from commercial samples):

- a decision that the IMO sends a letter to inviting ISO to revisit the ISO 8217 standard for marine fuels.


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