Short Sea Shipping Focal points meeting Brussels 18

Short Sea Shipping Focal points meeting Brussels -18 -03 -2010 Arnaud Leroy Senior Project Officer 1

Outline - A proven methodology - Environmental benefits - Technical issues - A maturing legal framework - Possible way forward 2

The current and foreseeable fleet • As of yet 33 LNG-powered ships (excluding LNG tankers) are in operation, all based in Norway. The range of ship types varies and includes ferries, Ro. Ro, supply vessels, coast guard vessels. • Outside Europe: M/V Ivete Sangalo, (Ro. Pax 75 cars and 600 passengers) fitted with a Caterpillar dual fuel engine, was commissioned in Brazil in 2008. • Two LNG Ro. Ro have been ordered and will be delivered in 2011 3

Looking forward 4 • • Number of ships using LNG as fuel growth scenario (period 2008 -2020, source Marintek) 15% market share in 2020 of the bunkering activity (in volume) It also estimated that 15% of ships will be built to use LNG as fuels. A number of ships types have been considered in this respect (Navy ships , Oil Tankers, freight ships 120 -150 / 80 -100 m); fishing vessels (>60 and 45 -50 m) FPSO; ROPAX (220 m); Supply vessels and Ferries).

Environmental benefits One of the main advantages of LNG is that it addresses quite a number of the existing environmental concerns for shipping. In particular, when compared to conventional fuel oil, it produces: – 85% lower NOX • Lean burn concept (high air-fuel ratio). This means that LNG engines already meet the stringent Tier III standards of the NOx requirements of the amended Marpol Annex VI. – No SOX emissions • This is a key benefit of LNG, not least in view of the concerns relating to availability and price following from the recent strengthening of the Marpol requirements, and the EU: s forthcoming maximum of 0. 1 % S in fuel for ships while at berth in EU ports (as from 1. 1. 2010). 5

Environmental benefits II – 20 -25% lower CO 2 LNG has a lower Carbon to Hydrogen ratio; the ‘slip’ of unburned fuel, notably including methane, somewhat mitigates this reduction, but engine manufacturers claim that this ‘slip’ can be addressed relatively easily at source. In addition: the use of LNG brings also: • 98% lower PM Particulates • It does not produce any sludge 6

EEDI-Case study Ship type: Capacity: Service Speed: Main Engine: Propeller: PTO: Fuel: Ice Class: NB Cost: Ro. Ro 11, 300 dwt 20 kn @ 75%MCR 2 x 9450 k. W MCR CPP 2 x 1200 k. We HFO FS 1 A 20 M€ EEDI: 29, 41 g. CO 2/t*nm 7

Clearly a « bad » ship 8

Interesting Results • LNG will change carbon conversion factor from 3, 1144 to 2, 75. Heat value of LNG is also higher than for HFO. These two issues give about -20% benefit in specific CO 2 emission. Cost: Benefit: 4, 000 € -6 units EEDI: 29, 4 -> 23, 4 (target: 25, 3) 9

Cost / Benefit 10

A cost benefit solutions also on the longer run - Bunker fuel prices (10/200603/2009) 11

Technical issues Ship side • Not all ships are suitable for LNG propulsion. It is mostly suitable for coastal (short sea shipping) and in view of the limited shore infrastructure, it is mostly suitable for ships on regular trade, in the early phases at least. 12 • Given the technical requirements the option to shift for LNG is finally more suitable for newbuildings than by means of a large-scale conversion of existing ships. • The extra investment needed for a new ship is generally indicated in terms of a fixed sum, rather than a percentage of the total cost of the ship. Broadly speaking this figure lies between € 1 and 3 million. • Focus and more crew training

Technical issues II On shore • A main challenge for making LNG a viable alternative to conventional fuels is to ensure that this type of fuel is available for ships. This is not generally the case today. • Design of the bunker station: Capacity: 2 x 500 m 3 LNG transferred by pump - Filling time for the large LNG ferries about two hours. Standard issue and legal requirements across EU needs also to be considered. • Legal certainty and harmonization needed. 13

Bunker station Ship type Kw Engine Ro Ro 12000 Ro Pax 20000 Super Fast 25000 Source Magalog M 3 LNG per week 400 700 900 14

A maturing legal framework at IMO • The discussions on gas fuelled ships are currently being held at BLG through a correspondence group co-ordinated by Norway. (Finland, France, Germany, Sweden, Turkey, the Community of European Shipyards Association (CESA). 15 • A two-step approach has been favoured at IMO. The first step consists of the development of Interim Guidelines on safety for gas-fuelled installations in ships (finalised in 2009). The second step will be the development and finalisation of the International Code of Safety for Gas-fuelled Ships (IGF Code) by 2014. The IGF Code is intended to address not only natural gas but also other gas fuel types, such as butane, hydrogen, propane.

Next steps • Implementation of the Interim Guidelines. Following the completion and adoption of the IMO interim guidelines, an expert meeting could be organised in order to discuss their implementation, notably the provisions which are left to the discretion of the national maritime administrations. 16 • Promotion an harmonized approach on the requirements for small scale LNG bunker station (legal certainty needed for investors). • Establishing a focus group at EU level (DG Move, DG ENV, DG ENTR, DG CLIM and related agencies (EMSA, Trans-European Transport Network Executive Agency), notably to identify the best possible way to promote and ensure the development of LNG propelled ships in EU waters. EMSA is ready to play an active role in such a group.

Conclusions • A proven and promising technology with several environmental benefit; • A new step in the so-called “green shipping”; • A key issue for the future of SSS in Europe and an important element for EU yards; • Interest among stakeholders to go further… 17

Thanks for your attention Contact: Arnaud Leroy Senior Project Officer Environmental Protection European Maritime Safety Agency (EMSA) Tel: +351 21 1209 242 Arnaud. leroy@emsa. europa. eu 18