1

July, 2009

Climate Change :A Challenge for Engineers !

2

What is the greenhouse effect?

3

What is causing global warming?

The six greenhouse gases with the highest warming potential are:

•Carbon dioxide - CO2

•Methane - CH4

•Nitrous oxide - N2O

•Hydro fluorocarbons - HFCs

•Per fluorocarbons - PFCs

•Sulphur hexafluoride - SF6

Of these gases, CO2 is by far the most abundant

4

The impact:

- Increased temperature

- Sea level rise due to melting of permanent ice caps and glaciers

-More violent and frequent weather phenomena

4 CLIMATE CHANGE Source: IPCC FAR 2007

5

NASA 2006

Time is running out …

Climate Change is already experienced worldwide

6

ANDY TRANSPORT DESIGNAUTOMOTIVE, RAIL, SHIP, FERRY, VLCC, PPFUEL SAVED 6 Bn$/Day ROYALTY 20 Bn$,10 CENTERS.

CER 12 BnT/Yr…INV CAP 150 … WC 1500…WORK….3500 Bn$/YrDOUBLE SPEED for SAME TON-HP-ENGINE by ANDY BEARING1/3 FUEL for SAME HP Nor Asp by ANDY ROTARY ENGINECOMBINED gets 1/3 FUEL, 1/3 CO2e, 2/3 CER for SAME TON-HPROYALTY 20 Bn$, 10 CENTERSANDY ENGINE ROTARY NO BOILER, NO TURBINE

OD cm 60 70 90 120 150 200 250 900 1150

Thk cm 12 14 18 24 30 40 50 180 230

HP 1200 2400 6000 12000 24,000 60K 120K 6Mn 12Mn

Fuel T/hr 40kg 80kg 0.2 0.4 0.8 2 4 200 400

7

CO2e OIL = 2.9 T/T ; COAL = 2.33 T/TCER = 15,048 – 5,016 = 10,032 MnT/Yr

VEHICLEFUEL MnTT/Day…T/

YrTYPE

NOW CO2e

ANDY CO2e

CERMnT/

Yr

INBn

$

WCBn$

Automotive

3 1080 OIL 3132 1011 2022 30 300

RAIL 2 720 OIL 2088 696 1392 20 200

SHIP 7 2520 F.OIL 7308 2436 4872 70 700

PP 3 1080 COAL 2520 840 1680 30 300

TOTAL 15 5400 MnT 15.048

5,016 10,032

150 1500

FERRY DESIGN NEW DOUBLE SPEEDFuel 4 Lit/hr/1000 CC; HP 120/ 1000 cc ; CO2e T/yr = 16.74* L/hrFare $1/100 km ; Freight $2/100 km /TSSSS SAME SPEED; DSDS DOUBLE SPEED DLDL DOUBLE LOAD

DESIGN Vessel Ton, Speed HP, VolFuel L/hr

Co2e T/Yr

FAREMn$

FuelMn$

NetMn$

CostMn$

NOW Ferry 1000,16 kn,1200,30 L 120 502 1.3 0.86 0.44 2

NORMAL Ferry 1000,330kn,24k,600L 2400 40,176 43.2 8.64 34.5 2

ANDY.SS Ferry 1000,330kn,12k,100L 400 6,696 43.2 1.44 41.4 2

ANDY.DS Ferry 1000,660kn,24k,200L 800 13,392 86.4 2.88 82.8 3

ANDY.DL Ferry 2000,330kn,24k,200L 800 13,392 86.4 2.88 82.8 5

8

* Millions are suffering from ever more violent and frequent hurricanes in Asia and the Americas

• millions are suffering from too much water• millions are suffering from too little water• millions are suffering from poor water

Are things getting worse already?

9

FUEL SAVED 10 MnT/Day… COST 6.48 Bn$/Day

NET INCOME 15.8 Bn$ / Day

VEHICLETYPE

RATE$/T

FUEL MnT/DayNOW......ANDY

FUEL SAVED/DayQty….. VALUE

AUTOMOTIVE OIL 1000 3 1.0 2.0  2000.

RAIL OIL 1000 2 0.66 1.33  1333.

SHIP F.OIL 500 7 2.32 4.68  2340.

PP COAL 200 3 1.0 2.0  400.

TOTAL 15 5.0 10 MnT 6073 Mn$.TOTAL INV 150+1500= 1650 Bn$…REPAID in 100 DaysCDM 10*25 = 300 ; WORK 3500; FUEL 6 Bn$/YrNET = 300 + 3500 + 2160 = 5960 Bn$/Yr…..RoI = 361 %REPAID in 5960/360= 16.5 Bn$/Day; 1650/16.5= 100Days

10

What is the world community doing?

First step: Adoption of the United Nations Framework Convention on Climate Change (UNFCCC) in 1992.

- Aimed at stabilizing atmospheric concentrations of greenhouse gases to avoid “dangerous anthropogenic interference” with the climate system.

Second step: Adoption of the Kyoto Protocol in 1997

- Commits developed countries (Annex I Parties) to reduce their overall emissions by an average of 5.2% below 1990 levels between 2008-2012.

11

What is the world community doing?(continued)

Third step: The Bali Conference in 2007- Adopted the Bali Action Plan to meet the immediate challenges of climate change, namely; adaptation, mitigation, technology transfer and financing.

Fourth step: The Copenhagen Conference in 2009

- Expected to adopt more drastic reductions effective from 2012, through a “post-Kyoto” treaty.

12

IPCC Fourth Assessment Report (FAR)

# 1ºC to 2C increase in temperature above 1990 levels will place many unique and threatened systems, including many biodiversity hotspots, at significant risk.

# A global mean temperature increase of more that 2C will lead to increasing risk of species extinction and climate havoc

# The CO2 concentration must not exceed 450 ppm to keep the global warming within 2C above 1990 level by 2100

To avoid this, CO2 emissions must peak within 10 –15 years maximum

What is the consensus view of the world’s most eminent

scientists?

150

200

250

300

350

400

450

500

550

600

650

700

Years Before Present(B.P. -- 1950)

CO

2 C

on

cen

tra

tio

n (

pp

mv)

Current(2001)

0100,000200,000300,000400,000

Increasing CO2

concentration

150

200

250

300

350

400

450

500

550

600

650

700

150

200

250

300

350

400

450

500

550

600

650

700

2005

Expected in 2100

Source: IPCC FAR 2007

To put it graphically….

14

So, to what extent is shipping to blame?At present, CO2 emissions from

international shipping amount to less that 3% of the total world’s emissions from all sources.

A very modest contribution, but in recent years it has been targeted by the media with the perception that, collectively, ships emit as much CO2 as some individual industrialized countries,

Often ignoring some facts …

15

e.g. that Shipping:

• Carries 90%+ of world trade:– Raw materials and

commodities– Finished goods– Foodstuffs– Fuel

• Underpins global economy and is essential for sustainable development

• Is safe, secure and the most environmentally- friendly and fuel-efficient of all modes of transport

16

CO2 emissions by different Transport modes

To illustrate this…

17

Are we merely reacting to the press?

IMO’s determination to address climate change comes from a deep and genuine concern for the environment and the future of the planet

As a former British Prime Minister put it, we have no right to “live at the expense of future generations”

Governments, industry as a whole and each and everyone of us individually have a duty of care towards the environment

So, shipping is expected to contribute, however modestly, to the wider efforts being made to arrest global warming

18

Has UNO taken any action already?

IMO has been working on this issue for more than ten years

1991: Resolution A.719(17) – Recognized the need of establishing a policy on prevention of air pollution from ships 1997: MARPOL Conference: Resolution 8 – CO2 emissions from ships2000: IMO Study on Greenhouse Gas Emissions from Ships2003: Assembly resolution A.963(23) – IMO Policies and practices related to the reduction of greenhouse gas emissions from ships 2005: MEPC/Circ.471 – Interim Guidelines for voluntary ship CO2 Emission Indexing for use in trials 2005: MEPC 55 – Work plan to identify and develop the mechanisms needed to achieve the limitation or reduction of CO2 emissions from international shipping 2007: MEPC 56 – Timeframe and Terms of Reference for updating the 2000 IMO Study on Greenhouse Gas Emissions from Ships2008: MEPC 57 – Fundamental principles underlying IMO policies on GHG emissions from ships2008: June - Intersessional meeting of the Working Group on GHG emissions from ships in Oslo

19

Where are we now?

Regulatory package for all ships nearing completion.

In accordance with the approved Work Plan, MEPC 58 is expected to agree to the following:

Technical measures:

-New Ship CO2 Design Index

Operational measures:

-Revised CO2 Operational Index and associated guidelines

-Guidance on best practices for the fuel-efficient operation of Ships

MEPC 58 to continue developing market-based measures.

20

In a bit more detail…

The new ship CO2 Design Index:

# A formula that will enable ship designers and builders to design and construct ships of the future for maximum efficiency and thus, minimum GHG emissions# A baseline will limit the level of emissions according to ship type, size, speed, power, design etc.

# To be made mandatory, probably under MARPOL Annex VI

21

In a bit more detail…

The CO2 Operational Index:

# Intended to measure the operational efficiency of an existing ship

# It allows efficiency comparisons between similar ships on similar routes and enables the operator to introduce further efficiency measures

# With its associated Guidelines, it is meant to be voluntary in nature

22

In a bit more detail…

The Guidance on Best Practices:

# Will provide existing ship operators with practical advice as to the technical and operational means at their disposal to make their ships more efficient

# Being developed in close collaboration with the shipping industry

# Meant to be voluntary in nature# Conceived as an efficiency management tool for ship operators

23

Examples of efficiency measures:Technical:

-Improved fuel consumption – Hull and engines

-More efficient propellers and rudders

-Shore power – “cold ironing”

-Wind power

-Alternative fuels

Operational:

-Energy management

-Vessel speed reduction

-Improved routeing & less waiting

-Enhanced fleet management

24

Will these reductions be enough?

They probably would if demand for international shipping stopped growing. BUT…

-World trade is likely to keep increasing, even during a global economic crisis

-Emerging economies, such as China, India, Brazil and others generate a growing need for shipping

-Many developing countries depend on sea transport for food and basic commodities

So, the reductions achieved by applying technical and operational measures may be offset by an increase in shipping activity over time.

That’s why we may need market-based measures

25

Market-based measures?

Basically, these are economic mechanisms that enable those who emit more CO2 than an established limit or “cap” to buy “credits” earned by those who emit less than the limit. There are two main modalities being considered for shipping:

-Emission Trading Scheme (ETS)

-Fuel Levy

This subject is very complex and merits a dedicated presentation. Perhaps next year.

The introduction of these measures may necessitate a self-standing treaty instrument, along the lines of the IOPC Fund Convention

26

Are there any serious obstacles?

We hope there will not be major problems in regulating the technical or operational measures. However, a number of countries continue invoking the UNFCCC’s principle of “common but differentiated responsibilities”

They argue that industrialized countries (Annex I Parties) should be the ones to take action in reducing greenhouse gas emissions from any source

This principle is applied to shipping under article 2.2 of the Kyoto Protocol, which states that “The Parties included in Annex I shall pursue limitation or reduction of emissions of greenhouse gases not controlled by the Montreal Protocol from aviation and marine bunker fuels, working trough ICAO and IMO, respectively.”

27

This seems fair; what is the problem?

The principle is fair if applied to land-based industries subject to national controls, such as power generation, cement production or land transport.

However, if applied to shipping, the effect would be that ships flagged in Annex I (industrialized) countries (25% of the world fleet) would be obliged to reduce their emissions, whereas ships flagged in non-industrialized countries (the vast majority of the world fleet) would not.

This is contrary to the spirit of all IMO Conventions, which apply equally to all ships, regardless of flag.

Any such regime would eliminate the “level playing field” principle and would introduce unfair competition and flag hopping.

28

Is there a solution in sight?

The Secretary-General, while emphasizing the need to keep IMO Membership united, is spearheading a high-level campaign, advocating the following two principles:

-Any IMO regulatory regime should be applicable to all ships engaged in international trade, regardless of flag

-The development and enactment of such a regulatory regime should be the responsibility of IMO, not the UNFCCC

Administrations are being provided with sound arguments, both procedural and legal.

29

How can this work in practice?e.g. by separating the technical/operational measures from the market-based measures, such that:

Technical / Operational measures

-Mandatory provisions (CO2 Design Index) may be adopted under MARPOL Annex VI at MEPC 59

-Non-mandatory provisions (CO2 Operational Index and Best Practices) may be adopted by MEPC resolution

-Both of these would apply to all ships.

Market-based measures

-Continue developing an acceptable global mechanism (Emission Trading Scheme/Fuel Levy/Hybrid)

-Applicable to all ships but revenues to be used with common but differentiated responsibilities in mind.

30

Finally, will UNFCCC accept the plan?

Hopefully…But it has to be adopted by IMO Members first!

The Secretary-General intends to present a position paper to the Conference of Parties to the UNFCCC (COP 15) to be held in Copenhagen in December 2009

In the post-Kyoto instrument to be adopted by COP 15, ideally, there should be an article merely stating that:

“The Parties shall pursue limitation or reduction of emissions of greenhouse gases not controlled by the Montreal Protocol from marine bunker fuels, working through IMO.”

With no IMO regime in place, regional and unilateral action may proliferate (EU; USA; Japan; Australia)

31

Summing up•If shipping is to have a positive impact on climate change, it needs a global regime developed and enacted by IMO and applied to all ships engaged in international trade, giving due consideration to the needs of developing countries

•IMO will continue to work hard, in co-operation with the industry, the UNFCCC Secretariat and other relevant UN organizations, to achieve that noble objective

32

Thank you for your attention!

Venture Cap Fund us $

M A APPAN M E, Mb 9109840463337Vehicle Bearin

g Engine Both

Automotive RD,FD

200,000

200,000

400,000

Rail 1000T 600 kph

3 Mn 2 Mn 5 Mn

Ship 1000 T, 330 kn

3 Mn 2 Mn 5 Mn

Ferry 500 T, 660 kn

3 Mn 2 Mn 5 Mn

VLCC 10kT, 330 kn

16 Mn 4 Mn 20 Mn

Total 25.2 Mn

10.2 Mn

35.4 Mn