Memorandum submitted by SEAaT (EMS08)

1.0 Introduction

SEAaT is a cross-industry, pro-active and self-funding group, whose mission is to encourage and facilitate efficient reduction of harmful emissions to air from shipping.

SEAaT believes the shipping industry, should be given the maximum freedom to achieve defined outcomes, using whatever environmentally acceptable solutions it finds appropriate and cost effective. There is potential for the reduction of emissions of shipping by innovation, in improving the energy efficiency of ships by the use of abatement technologies and performance improvements, both at an operational level and in the supply chain. However these potentials will only be realised if there is financial benefit for making the changes and a regulatory framework enables 'goal based' solutions to flourish. To this end, SEAaT encourages the use of the market based instrument of emissions trading to facilitate performance improvement.

1.1 Summary

Shipping CO2 emissions estimated:

o at between 0.8 and 1.2 billion tonnes of CO2 annually.

o to contribute to a mean figure of 2.7% of global anthropogenic emissions.

o estimated growth factor of 2.3 to 3.5 times compared to the 2007 emissions inventory.

o growth may be restricted by current global economic slowdown.

Allocation of UK shipping emissions to UK emissions budget not considered to be appropriate.

Negative environmental and economic consequences may result from policies that do not properly consider the differences in shipping sectors.

Prospects of international agreement on shipping emissions reductions are unclear

Measures and controls being considered are:

o New build design index

o Recommended best practices

o Market based instruments

Bunker levy

Emissions trading (cap and trade)

SEAaT considers emissions trading (cap and trade) to be the most effective market based instrument

Established technologies and operational measures exist to reduce emissions from ships by up to 30 to 40%, including :

o Waste heat recovery

o Propeller design

o Hull forms

o Weather and tide routing

o Paint systems such as silicon coatings

o Trim optimisation tools

In addition, innovative technologies are being developed which may reduce emissions:

o Sky sails

o Air cavity systems (air lubrication)

o Twin propellers

UK Government support for a global emissions trading (cap and trade) will facilitate its adoption

2.0 Responses to Strategic Issues as Identified by the Committee

2.1 How significant is global shipping's contribution to climate change?  How is this projected to change in the future?

The most significant gas emissions from ships contributing to climate change are from combustion processes and VOCs (volatile organic compounds) from tank venting on tankers. The emission under the greatest consideration at the United Nations' body the International Maritime Organisation (IMO), with respect to reducing the contribution to climate change by shipping, is CO2.

Verified release data from across the world's shipping fleet is not collated and is thus not analysed. However data from a fleet of tankers suggests that the proportion of emissions is 97% from combustion and 3% from tank venting.

The quantity of CO2 produced by a ship's power plant is in direct proportion to the quantity of fuel burnt. For every tonne of fuel consumed approximately 3 tonnes of CO2 are produced.

The estimate of shipping's contribution to the total CO2 emissions from shipping submitted to the IMO, as part of the expert group study report2 on the revision of MARPOL Annex VI, established a figure of 1.2 billion tonnes per annum. A more recent study by Norwegian think-tank Marintec, for the IMO, whose preliminary report was presented to the IMO Green House Gas Working Group in June 2008, estimated the emissions from shipping as approx 0.8 billion tonnes per annum. Both these estimates were established using a top down approach and are based on ship size, engine size and an assumption of days steaming. A bottom up estimation using actual fuel consumption data is currently not possible,as there is no external reporting of fuel consumption data.

The Marintec report estimates the contribution of shipping to to be 2.7% of the global total emissions.

Estimations of change in contribution are directly proportional to changes in trading activity. The Marintec report estimated a growth factor of 2.3 to 3.5 compared to the 2007 emissions inventory. The recent reductions in economic growth may result in these estimates being reduced.

2.2 How should the UK's share of international maritime emissions be measured and included in UK carbon budgets?  How fast could this be done?

2.2.1 Deep Sea Shipping

The international nature of shipping makes it inappropriate to allocate "shares" of international shipping emissions to any particular nation. The trade in raw materials and finished goods often means that material is imported, value is added, and the resultant goods then exported. If the allocation was targeted at goods arriving at UK ports then use of UK ports as European 'entry ports' may be jeopardised. It is more appropriate for the international shipping industry to be considered as a contributing entity in its own right, in much the same way as nation states are considered. Nevertheless, the European Union has made it clear they will act autonomously if the IMO do not provide acceptable measures for the reduction of CO2 for shipping.

2.2.2 Short Sea Shipping

If it was decided to try to allocate shipping emissions to the UK, one of the unintended negative consequences of any emissions controls may be to drive modal shift from short sea shipping (another less CO2 efficient transport mode). The table below gives a comparison of the various modes of transport.

CO2 -EFFICIENCY OF TRANSPORT MODES

Source: Swedish Network for Transport and the Environment and Danish Shipowners' Association.

A further negative consequence might be the development of ports outside the UK at which the journey is broken. The purpose of this would be to reduce the mileage between the "last port" and the UK. Although this might reduce the amount of CO2, the UK accounting for it would not contribute to the reduction of global CO2 emissions and may, depending on the vessels used to bring goods to the UK, actually cause an increase.

 

2.3 What are the prospects of international agreements to control and reduce carbon emissions from global shipping, or to bring it within wider emissions trading schemes?  How well is the UK Government playing a role in developing such agreements?

It is necessary to consider agreements concerning measures to reduce carbon emissions separately from agreements to control carbon emissions.

2.3.1 Measures to reduce carbon emissions

Currently the IMO is considering two main measures to bring about a reduction in carbon emissions from global shipping. The first measure is a design index for new buildings. The index is generated from a formula, taking into account a vessels size, installed engine power, and a number of other factors establishing a theoretical emissions index . All new ships from an implementation date would be required to conform to or better this index. The second measure is a list of best practices which when implemented will reduce the emissions from ships. These best practices, include both technical and operations aspects of vessel operation. SEAaT supports these two IMO initiatives.

2.3.2 Measures to Control Carbon Emissions

The IMO is considering market based instruments to achieve control of emissions reduction. Two basic types of instrument are currently being looked at. One is a bunker levy, acting in effect as a Pigovian tax, to drive operational behaviour to reduce emissions. The other is an emissions cap and trade system. A preference for either system amongst the parties to the IMO is not presently clear.

The prospect of agreement to the adoption of any mandatory measure to reduce and control carbon emissions from shipping on a global basis appears, on the evidence of the outcome of the IMO Green House Gas Working Group held in Oslo in June 2008, to be unclear. The discussion to a large extent was dominated by the issue of the Kyoto Protocol's common but differentiated responsibilities. Some non Kyoto Annex 1 countries feel strongly that any measures to reduce and control emissions from ships should not apply to them. This is at variance with the views of the IMO Secretary General, who feels that in order to maintain a level playing field with international shipping all reduction measures and controls should apply to all shipping regardless of flag.

The UK government is ably represented at the IMO by staff from the Maritime Coastguard Agency and the Department of Transport.

 

2.4 What are the prospects for developing new engine technologies and fuels, as well as more fuel-efficient operations?  What more could the Government do to assist these developments?

In terms of thermal efficiency the most commonly used engine type in international shipping, the slow speed marine two stroke engine, is approaching its theoretical maximum. These engines have a thermal efficiency of approximately 53%. No other current propulsive power plant configurations can match this. Of the developing technologies there appears to be none that can match the slow speed marine two stroke engine for its particular application. Fuel cell technology producing power on the scale required for marine propulsion appears to be a considerable distance away. Nuclear power, although proven to work in the 1960's, would not be commercially viable or socially acceptable. If nuclear power was to be considered it may be more acceptable and efficient to use this power to synthesise marine fuels on shore.

The best technological prospect for increasing the overall fuel efficiency of ships is to focus on waste heat recovery systems; hull forms and coatings; and propeller designs. However, take up of these units by the world shipping fleets is limited by costs of purchase and installation. These technologies are well known in the industry. Take up tends to be limited by cost of purchase and installation, and, up until present fuel cost rises, the poor return on investment these technologies represent.

The table below from IMO Bulk Liquid Gases Report, P.16, Dec. 2007 According to research commissioned by the IMO, technologies could reduce fuel consumption and oil usage by up to '30-40%'.

 

 

 

 

 

However, some of these measures have been adopted by industry and results have reportedly not been meeting expectations.

There are non-conventional technologies currently being appraised for applicability, such as the sky sail concept, twin propeller and the under hull air cushion.

The developer of a kite system asserts their system may reduce a ship's fuel consumption by 10-35% on annual average, depending on wind conditions. Although recent tests have the mark at the lower end of the spread. Under optimal wind conditions, fuel consumption can temporarily be reduced by up to 50%. Developers of innovative propeller technology estimate a reduction in fuel consumption of up to 17% on some vessel types - considerably more than the IMO advisory group's estimation of 5-8%. A system to blow air bubbles under the ships hull to reduce fuel is said to cut fuel consumption by between 8 and 15%. The patented "Air Cavity System" improves the fuel efficiency of ships by reducing the frictional resistance of the hull surface.

With respect to alternative fuels, only liquefied natural gas is a serious contender for supplanting traditional fuels. The complexity of on vessel storage and containment systems and the shore-side infrastructure required for resupply severely limits the adoption of this fuel. The operational range of vessels using LNG is limited by the fuel tank size and boil off rates. LNG is considered by industry to be more suitable for short sea traffic than the deep sea trade. Indeed, some ferry routes with dedicated supply and shore-side infrastructure in Scandinavia currently use LNG for main propulsion fuel.

The shipping industry is a diverse one, and provides many different services to society. This spread of services militates against the adoption of proscriptive solutions targeted at the industry as a whole. Such a policy may have unintended negative consequences. There is a real possibility that requiring reductions of emissions from short sea shipping, causing increases in operating costs, will result in modal shift to land transport. This would increase rather than reduce emissions of transport related CO2.

A recent fire in the Channel Tunnel, demonstrates the need for a strategic mix of transport modes. Should environmental policies create modal shift away from short sea shipping, bring about a loss of capacity, then any restriction of use of the tunnel would not be as easy to mitigate as is currently the case. The result on the UK economy would be negative.

It is for this reason SEAaT considers it vital the issue of emissions from shipping, and their reduction, is considered in terms of social utility, the various sectors provide and their position in the supply chain. Failure to do this may result in damage to a vital industry and an overall negative environmental outcome.

2.5 SEAaT Proposal

The members of SEAaT believe market based instruments in the form of a "cap and trade scheme"; applied where appropriate; will provide additional financial incentives to shipping companies to adopt the emission reduction measures most suitable to their sector of the business.

The design of such a trading system is vital to its success. SEAaT advocates a global, open trading system, with an emissions reduction trajectory linked to global emissions reductions aspirations. The initial emissions cap being set by historical emissions levels. The allocation method is recommended to be initially a free allocation based on historical data with a gradual transition to an auction allocation system over a number of years.

In supporting a global emissions trading scheme for the appropriate sectors of the shipping industry, the UK government would aid the effort to establish an emissions reduction facilitation tool that encourages change and rewards improved environmental improvement.

3.0 SOx, NOx and Particulates Emissions from Shipping

SOx, NOx and Particulates Emissions from shipping sources differ from CO2; in that it creates localised environmental impacts where as CO2 is a uniformly mixed emission and acts globally.

 

3.1 Sulphur Oxides

Sulphur oxides (SOx) are major air pollutants and precursors for secondary particle formation in coastal areas. The emissions quantity is directly proportional to the sulphur content in marine fuel.

 

Reductions in SOx emissions can be achieved by either reducing the sulphur content of the fuel used, or by removing SOx from the exhaust stream by using scrubbing technologies. Both approaches are permitted by MARPOL Annex VI. Switching to a lower sulphur content fuel, although the simplest option incurs cost penalties related to the differential between high sulphur and low sulphur marine fuels. Abatement by scrubbing allows cheaper high sulphur fuel to be used but incurs installation and operational costs.

 

A UK scrubber manufacturer estimates that 50% of the current tanker fleet could find scrubbing more economical than a diesel switch, which equates to a potential tanker market opportunity of 5,893 ships by 2015 for scrubber manufacturers. For vessel owners looking to future-proof their vessels against future regulation at new build stage, the economics of fitting a scrubber could be attractive.

According to the manufacturer, as many as 23,905 vessels from a global fleet target total of 71,758 could find scrubbing to be a more viable option than switching to diesel fuel by 2015 - equating to a potential market of over $7 billion based on average scrubber size and costs.

 

Other developing scrubbing systems include the use of chemicals such as caustic soda in their cleansing process.

A benefit of the use of scrubbing technologies is that they also abate the emission of particulates.

3.2 Particulate Emissions

The combustion of all fuels leads to the emissions of particulate matter to a greater or lesser extent. Particulates associated with shipping emissions are soot and ash, polycyclic aromatic hydrocarbons, and SOx aerosols. These emissions have an adverse effect on the health of exposed populations, with residents in port areas being the most exposed. Reduction of particulate emissions can be achieved by burning lower sulphur fuel and/or using exhaust gas scrubbing technologies.

3.3 NOx Emissions

These emissions are subject to the controls imposed by the NOx regulations contained in MARPOL Annex VI. A phased reduction of NOx emissions is required by these regulations. Early phase reductions may be achieved by using in engine technologies where as the later phase reductions will require the use of exhaust gas or combustion air technologies such as scrubbing using catalysts in exhaust gas or adding water vapour to the combustion air.

 

 

22 September 2008