Anti-Trust/Competition Law Compliance Statement

Anti-Trust/Competition Law Compliance Statement

INTERTANKO’s policy is to be firmly committed to maintaining a fair and competitive environment in the world tanker trade, and to adhering to all

applicable laws which regulate INTERTANKO’s and its members’ activities in these markets. These laws include the anti-trust/competition laws which the

United States, the European Union and many nations of the world have adopted to preserve the free enterprise system, promote competition and protect the public from monopolistic and other restrictive trade practices.

INTERTANKO’s activities will be conducted in compliance with its Anti-trust/Competition Law Guidelines.

IMO GHG REGULATIONS

COUNCIL MeetingLondon

5. October 2011

GHG – EEDI/SEEMP Regulation• Part of the MARPOL Convention• EEDI applies to new: Tankers, Bulk Carriers, Gas

Tankers, Container Ships, General Cargo Ships, Refrigerated Cargo Carriers

• EEDI does not apply to: ships with diesel-electric propulsion, turbine propulsion or hybrid propulsion systems

• New tankers (> 400 GT): – building contract from 1 January 2013 and– delivery not later than 30 June 2015

• SEEMP required for ALL ships

5000

2000

035

00050

00065

00080

00095

000

1100

00

1250

00

1400

00

1550

00

1700

00

1850

00

2000

00

2150

00

2300

00

2450

00

2600

00

2750

00

2900

00

3050

00

3200

00

3350

00

3500

00

3650

00

3800

00

3950

000.0

2.0

4.0

6.0

8.0

10.0

12.0

14.0

16.0

18.0

20.0

EEDI IMPLEMENTATION

DWT

EED

I

PHASE 0 (2013 – 2014) – IMO Reference LinePHASE 1 (2015 – 2019) – 10% lower than IMO Ref LinePHASE 2 (2020 – 2024) – 20% lower than IMO Ref LinePHASE 3 (2025 & after) - 30% lower than IMO Ref Line

Attained EEDI < Required EEDI value

X

Required EEDI = IMO Reference Line x Y%

IMO Reference Line tankers =1218.80 x DWT -0.488

attained EEDI

GHG – EEDI/SEEMP Regulation• Administrations may delay the

enforcement of EEDI application with up to 4 years. (i.e. building contract before 1 January 2017)

• Parties to MARPOL Annex VI have agreed to allow ships with such waivers to call at their ports

IMO Guidelines

• Method for EEDI calculation• Survey and Certification of the EEDI• Interim Guidelines for determining

minimum propulsion power and speed to enable safe manoeuvring in adverse weather conditions

• EEDI for larger size segments of tankers and bulk carriers

• Cubic capacity correction factor for chemical tankers

CONCLUSIONS

• INTERTANKO policy achieved• Phase 0: many designs are compliant• Phase 1: first 2 years possible waiver at

owner’s request & Flag agreement• No waivers from 1 January 2017• Lower speed design – easiest “solution” • Intent of EEDI: better designs ~ less fuel

necessary to transport same amount of cargo at the same speed as today

COUNCIL INVITED TO• Consider INTERTANKO’s views on options to

waive the application of EEDI up to 4 years• If not in favour of such waivers – membership

criterion? (e.g. all tankers contracted from 1 Jan 2013 EEDI compliant)

• Whether INTERTANKO may express any view with regard to use of lower design speed as means of compliance

RECOMMENDED INTERTANKO POSITION:

1. INTERTANKO welcomes the adoption by IMO of amendments to the MARPOL Convention mandating energy efficiency measures (EEDI/SEEMP regulations) on ships.

2. INTERTANKO believes that: a) In the implementation of the EEDI requirements, there should

be a “level playing field” and that the EEDI requirements should apply equally to all applicable ships on the same effective date

b) Compliance with EEDI should focus on improved hull design, propulsion efficiency and energy optimisation, rather than predominantly on reduced speed designs

c) Any measures taken to comply with EEDI shall not jeopardise nor have an adverse effect on the safety of the ship

MARKET BASED MEASURES

COUNCIL MEETINGLondon

5. October 2011

QUESTIONS TO COUNCIL• Would INTERTANKO see any justification

for a MBM? • No matter justified or not, should

INTERTANKO support/be involved in development of the MBM legislation?

• If involved in IMO MBMs, which model should be supported?

• Alternatively, should a “fund free” alternative be supported? i.e. direct targeted emissions reduction from ships in operation

MARKET BASED MEASURES & ONE ALTERNATIVE

• Nine MBM proposals + one alternative• The possible runners up:

– International GHG FUND (Denmark)– Emissions Trading Scheme (Norway; UK;

Germany and France) – EU ETS !!– Vessel Efficiency Incentive Scheme (EIS)

(Japan/WSC)– Mandatory CO2 emission cut targets through

technical and operational measures (Bahamas)

GHG FUND ETS

UNFCCC IMO GHG FUND

SHIP

MARKET IMO/ETS

SHIP

Levy v

s. Cred

its

OFFSETTING

BU

YIN

G C

RED

ITS

SUBMIT CREDITS

CONTORLSE L

LIN

G

GHG FUND ETS• centralised system• CO2 credit vs. Levy• sets a target• ship not trading CO2• better predictability

of costs• no guarantee against

increase levy levels• Charterers involved• World Scale

• sets a target• credits up to the cap

– free or auctioning• additional credits –

open market ( cap)• ships trade• “good ships” can sell• no international

market• EU market very small• cruise lines like ETS

VESSEL EFFICIENCY INCENTIVE SCHEME (EIS)

No fee for ships meeting or exceeding applicable standard

Fee applied if not meeting standard =

($Y/t fuel) x total tons of fuel

Y = f (Δ) from the standard

CO2 emissions cut targets• Technical and operational measures only• No penalties to pay, no rewards to be

given, no funds to be collected• New ships (EEDI compliant)

• Existing ships – targeted reductions

• No compliance – no trade

Age (years) Up to 15 15 – 20 20 - 25 25+Cut 20% 15% 10% 5%

Delivered < 2 years from rule enforcement

> 2 years from rule enforcement

Cut 20% 25%

EIS TARGETING

• direct reductions• rewards efficiency• EEDI relevant for

operational efficiency?• VA not accounted for• slow steaming only if ME

derated• difficult to establish

target cut levels• limitation in using EEOI • fee level (improve or

pay?)• monitoring/reporting

• measures actual GHG emissions

• targets each ship• no fund collection• Virtual Arrival & slow

steaming will count• caps ship’s activity• ships stop trading?• difficult to establish

target cut levels• monitoring/reporting

2007

2009

2011

2013

2015

2017

2019

2021

2023

2025

2027

2029

0

200

400

600

800

1000

1200

1400

1600

1800

2000

CO2 mt (increase 3.3%/ year)CO2 mt (increase 2%/ year)CO2 mt (actual)*

YEAR

CO2

EMIS

SIO

NS (M

T)

Reference point

870MT

CO2 EMISSIONS PREDICTIONS

3.3% p.a.

2% p.a.

2% p.a.

1,836 MT

1,425 MT

979 MT

Trade

+ 111%??

+25%

+ 64%?

IMPACT ON SHIPPING

• GHG FUND: 5% increased voyage costs*• ETS: 11% increased voyage costs*• MBMs high admin costs –who benefits?• Shipping cannot absorb all cost increase• MBM targets set just to collect funds?

• If the MBM scope is , limit the cost!

* PwC Study – An analysis of the future impact of carbon regulations on environment and industry

CONCLUSIONS• IMO will continue to discuss MBMs• Choices: (a) collecting funds; (b) direct

measures on ships in operations; or both• Monitoring/verification of CO2 emissions

from each ship would be necessary• Shipping fuel consumption: not known!• Shipping lacks mechanism for proper

recording of performance in operations• Lack of such allows other parties to

initiate ship indexing

CONCLUSIONS• Class Societies developing models to

assess/measure environmental efficiency• Ports’ and charterers’ various Indexes • Others (e.g. CWR) ship index calculators• Shipowners may consider action• Ships in operations (pre- & post-EEDI)

would need to evaluate, demonstrate and report their energy efficiency

• Ships have necessary data (from SEEMP/EEOI, SOx, NOx and VOC)

QUESTIONS TO COUNCIL• Is there justification for MBMs? • If so, which MBM scheme? . . . . . or • “in operation” indexing? • Industry indexing model?• Industry to measure andreport its ?

• If so, what and where to report?• Please, discuss and decide !

RECOMMENDED INTERTANKO POSITION:• An MBM is not justified at this time. The

industry is already incentivised by high fuel prices

• If an MBM should be required, then this should:– be implemented through an international regime– be simple to enforce and to monitor– drive the right behaviour– provide sufficient transparency to maintain the

current level playing filed– not be an unnecessary financial and operational

burden on the industry

RECOMMENDED INTERTANKO POSITION

• Out the current proposals, the GHG FUND seems to be by far the simplest and most transparent from a ship owner point of view. INTERTANKO is not in favour of a trading scheme to reduce GHG emissions.