Container Ship - How to reduce effect on Climate and Pollution

Legal notice Disclaimer This presentation contains forward-looking statements as of the date of such statements. Such forward looking statements involved known and unknown risks, uncertainties and other fars which may cause the actual results, financial conditions, performance or achievements of the company, or industry results, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Given these uncertainties, any person to whom the current presentation is addressed is cautioned not to place any undue reliance on such forward-looking statements and to review and analyse the same with its legal, financial and economic advisors. Such forward-looking statement therefore do not constitute in any manner an undertaking and/or commitment or guarantee as to the future business of the Company. 2 ©2008 DK GROUP NETHERLANDS BV ALL RIGHTS RESERVED

Presentation overview 1 Shipping's emission legacy 2 SOx and NOx reduction 3 CO2 reduction 4 The Air Cavity System 5 Major emissions reductions 6 New builds and new technologies 7 Shipping vs. Aviation 8 Conclusion: Shipping can lead the way Q&A 5 ©2008 DK GROUP NETHERLANDS BV ALL RIGHTS RESERVED

Shipping’s emission legacy A reality check for shipping • In 2007 it was established that the maritime industry accounted for emission of approx. 1,2 billion metric tons of CO2 annually. This is based on the present world wide fleet (1st quarter 2007). This is almost 100% higher than earlier estimates. • Latest figures indicates that the shipping industry will be responsible for emitting at least 1.5 billion metric tons of CO2 annually by 2010 and in 2015 the annual emissions will be substantially over 2 billion ton. This is 67% more than today’s emission. • On top of these figures the maritime industry will emit 20 million tons of SOx and 37 million tons of NOx annually. These emissions will increase just as drastically as CO2- emissions. • There is a massive new building program underway, and in the next 20-25 years we will have these ships on the oceans. Should they be build without using well known The Guardian, 13 February 20 technology? 08 7 ©2008 DK GROUP NETHERLANDS BV ALL RIGHTS RESERVED

Shipping’s emission legacy 60.000 death’s annually • A study published in the American Chemical Society journal Environmental Science and Technology by James Corbett (et al) in November 2007 shows, that shipping is responsible for 60,000 premature deaths a year. • For a long time there has been a perception that because ship emissions are out in the ocean, then they doesn't really affect anyone on land, but as this study shows - this is clearly false. • The report did not take into account additional health impacts such as bronchitis and asthma. It is also estimated the toll of premature deaths in North America, mostly on the West Coast, as numbering 9,000 per year. • The report said the 60,000 premature death’s a year were from heart and lung-related cancers. Corbett predicted the number could rise by 40% in the next five years because of an increase in shipping activity. • US Lawyers will not wait for long before they act. Ship owners should NOT forget that they are under US law when in port. 8 ©2008 DK GROUP NETHERLANDS BV ALL RIGHTS RESERVED

Shipping’s emission legacy Where will these deaths occur? Corbett, J. J.; Winebrake, J. J.; Green, E. H.; Kasibhatla, P.; Eyring, V.; Lauer, A., Mortality from Ship Emissions: A Global Assessment. Environmental Science & Technology 2007,41, (24), 8512–8518 9 ©2008 DK GROUP NETHERLANDS BV ALL RIGHTS RESERVED

Shipping’s emission legacy 60% of the world’s bee population is dead • It’s not only humans that are dying from the effects of pollution. 60% of the worlds bees are already dead. • Commercial beehives pollinate over a third of the worlds crops and that web of nourishment encompasses everything from fruits like peaches, apples, cherries, strawberries and more • Without this pollination those crops would be history - to say nothing of the honey bees produce or the flowers they also fertilize If the bees are dying – what is happening to the fish and other marine life? 10 ©2008 DK GROUP NETHERLANDS BV ALL RIGHTS RESERVED

Shipping’s emission legacy Ship emissions harms the oceans • Cecilie Mauritzen, a senior scientist of the climate division of Norwegian Meteorological Institute, says emissions from ships that are far from land cannot be ignored. • According to Mauritzen, small particles, or particulate matter, carried in ships' exhaust gases scatter and absorb solar and thermal radiation, indirectly changing cloud properties. ''These aerosols have a cooling effect on the earth, in that they reflect incoming shortwave radiation from the sun,'' Mauritzen told Bunkerworld on November 8, 2007. Cecilie Maurti tzen • The cooling effect might sound positive, given concern about global warning, but Mauritzen said the aerosols were having a damaging impact. The particulate matter carrying aerosols did not reach as far into the atmosphere, and typically rained out after just a day or two, sending the particles into the oceans, she explained. • In shipping lanes, she said, ship after ship was emitting the aerosols, contributing to an almost constant presence of particles in the atmosphere close to the lanes. One impact was to increase rainfall in the area of the lanes, which in turn sent larger volume of particles into the oceans. 11 ©2008 DK GROUP NETHERLANDS BV ALL RIGHTS RESERVED

Shipping’s emission legacy Concentration in global shipping lanes Corbett, J. J.; Winebrake, J. J.; Green, E. H.; Kasibhatla, P.; Eyring, V.; Lauer, A., Mortality from Ship Emissions: A Global Assessment. Environmental Science & Technology 2007,41, (24), 8512–8518 • In the global shipping lanes ship emissions are • Could the early discharge of rainwater over contributing to an almost constant presence of shipping lanes, which Cecilie Mauritzen found, be particles in the atmosphere close to the lanes the cause of the severe draughts seen on land? 13 ©2008 DK GROUP NETHERLANDS BV ALL RIGHTS RESERVED

Shipping’s emission legacy Jellyfish population explosion warning • Off the Northern Ireland coast a 10 mile wide, 13 meter deep swarm of jellyfish attacked a salmon farm wiping out over £1million worth of stock. • Billions of small jellyfish, known as Mauve Stingers, flooded into the cages about a mile into the Irish Sea, off Glenarm Bay and Cushendun. • Swimming bans were imposed at beaches across the Mediterranean because of an influx of stinging jellyfish along coastlines from Spain to Sicily. • The Red Cross organizations across the Mediterranean region treated 50,000 people for stings in the summer of 2008, almost triple the figure for the previous year. 14 ©2008 DK GROUP NETHERLANDS BV ALL RIGHTS RESERVED

Shipping’s emission legacy Soot-infused snow responsible for Arctic warming • Researchers at the University of California, Irvine, believe that while the threat of greenhouse emissions exists, soot- infused or dirty snow also contributes majorly to global warming. • According to Charlie Zender, an Associate Professor of Earth System Science at the UCI and co-author of the study, dirty snow contributes to a third or more of Arctic warming. • SECA’s are not enough. Earth could be headed for catastrophic sea level rise in the next few centuries if SOx & NOx pollution at sea continue at present levels. 15 ©2008 DK GROUP NETHERLANDS BV ALL RIGHTS RESERVED

Shipping’s emission legacy Shipping pollutes as much as 195 billion cars In other words; Shipping is by far the biggest transport polluter in the world compared to road- and air transport. *Beginning in 1990 the sulphur in diesel fuel for cars has been steadily and drastically reduced from 5.000 PPM to reach 50 PPM now and a further reduction to 10 PPM (same as 0,001%) in 2009. 16 ©2008 DK GROUP NETHERLANDS BV ALL RIGHTS RESERVED

Shipping’s emission legacy The hypocrisy of shipping • A 20 foot container (1 TEU) shipped from Shanghai to Hamburg emits 37 kilos of sulphur. This is the same as 3.950 cars emit at the same time. • A whole ship at 8.000 TEU sailing from from Shanghai to Hamburg, emits as much sulphur as 31,6 million cars emits during its 28 days at sea. • This means that only 24 of 8.000 TEU containerships emit as much sulphur, as the entire world wide car fleet. 17 ©2008 DK GROUP NETHERLANDS BV ALL RIGHTS RESERVED

SOx and NOx reduction Distillates vs. Scrubbers • Scrubbers will reduce SOx by 99% NOx and particulate matter by 85%. Distillates will reduce SOx by 80% and particulate matter by 35%. • The cost of introducing Distillates is estimated to USD 250 billion or more and it will take 20 years to implement. And where will we make 382 (IMO own conservative figure for 2020) million tons of Distillates? Where is the Refinery capacity to do this? • CO2 levels from Refining 382 million tons of Distillates would rise by 20%. • With sestillates ship owners will end up paying from 1100 $ or more per ton fuel. Why do this when they can stay at USD 560$ with a scrubber? • Using todays prices the industry is paying USD 200 billion per year for fuel. A switch to destillates would boost that to USD 400 billion. An extra USD 200 billion per year. • Retro-Fitting the existing Commercial Fleet of over 25.000 dwt would take only 5 years and cost approx. USD 50 billion. All wiith no rise in CO2 levels and no rise in Global fuel prices due to change of fuel. Why should we pay USD 250 billion for distillates when we can have scrubbing for USD 50 Billion which will cover 99% and take only 5 years to implement as a more effective measure against SO? 19 ©2008 DK GROUP NETHERLANDS BV ALL RIGHTS RESERVED

SOx and NOx reduction Future evolution of oil products consumption 67% 4,5% 56% 29% 8% 2015 2020 2025 2005 2010 Provided present oil production *Includes LPG, NGL, ethane 21 ©2008 DK GROUP NETHERLANDS BV ALL RIGHTS RESERVED

SOx and NOx reduction Scrubbing installed Example: • Cape Size Bulk Container • 18MW scrubber main engine fitted into the funnel • Main propulsion, auxiliary & boiler 22 ©2008 DK GROUP NETHERLANDS BV ALL RIGHTS RESERVED

CO2 reduction Using technology to reduce emissions Containerships • Propeller technology Tanker vessels – Contra rotating propellers – Twin propellers – twin engines USD 45m+ USD 40m+ 5,500 TEU Panamax – Propeller Boss Fin Cap – High-effeciency propellers USD 60m+ USD 3,500 TEU • Heat recovery system 110m+ Suezmax 8,000 TEU • Block co-efficient. Handymax • Air Cavity System - reducing the Aframax USD USD 7,000 TEU 1,700 TEU friction resistance of the hull. 120m 150m+ VLCC 10,000 TEU+ • Other design modifications. VLBC LNG USD USD 95m 215m Handymax LPG Capesize Gas vessels Bulk carriers USD 90m+ USD 60m Panamax USD 30m+ 27 ©2008 DK GROUP NETHERLANDS BV ALL RIGHTS RESERVED

CO2 reduction Propeller technology Contra Rotating Propellers Twin-propellers – twin engines 10 % improvement depending on relation Reduces fuel burn by 5% to 10% between main engine and thruster High-efficiency propellers Propeller Boss Fin Cap (Kappel) Fuel saving up to approximately 4% Fuel saving up to approximately 4% 28 ©2008 DK GROUP NETHERLANDS BV ALL RIGHTS RESERVED

CO2 reduction Reducing block co-efficient Vessel type Block co-efficient CO2 reduction Lighter 0.90 5-10% Bulk carrier 0.80-0.85 12-17% Tanker 0.80-0.85 12-16% General cargo 0.55-0.75 13-22% Containership 0.50-0.70 14-26% Example: 115,000 dwt AFRAMAX tanker with a lightweight of 18,900 tons. • Increasing the lightweight by 15% (2,900 ton steel at USD 8.7 mill) would reduce fuel burn by 4,200 ton per year • This adds up to USD 1.5 mill. annually or USD 30 mill. over 20 years • The Co2 reduction amounts to 12,600 ton per year or 252,000 ton over a period of 20 years 30 ©2008 DK GROUP NETHERLANDS BV ALL RIGHTS RESERVED

The Air Cavity System Weight increase: Marginal to a traditional vessel Additional Shell Plating Additional Floor Plating Area equivalent to basis vessel 33 ©2008 DK GROUP NETHERLANDS BV ALL RIGHTS RESERVED

The Air Cavity System Case Study: 280,000 DWT VLCC Principal Dimensions Length over all 333.30 m Length between pp 318.00 m Breadth, moulded 59.90 m Depth, moulded 32.10 m Design draught 21.06 m Speed, service, 15 % s.m. 15.9 kn Propulsion power, 85 % MCR: ~21.000 kW Fuel consumption: 90 t/day ACS area Consumables 9,000 m2 Heavy fuel oil 8600 m3 Marine diesel oil 375 m3 Lubricating oil 300 m3 Fresh water 500 m3 Ballast water 99,000 m3 Cargo capacity Cargo tanks 1 to 5, P+S 340,000 m3 Slop tanks P+S 10,100 m3 Deadweight Deadweight at design draught with air in cavity: 283,125 t 34 ©2008 DK GROUP NETHERLANDS BV ALL RIGHTS RESERVED

The Air Cavity System Case Study: 280,000 DWT VLCC Air supply system • Double air compressors – 2 x 5.000 m3/h @ 2.2 bar delivery • Common air feed pipe / redundant distribution system • Air supply rate to cavity, normal operational conditions: 1.500 m3/h • Power consumption at normal operational conditions: 150 kW ACS area 9,000 m2 35 ©2008 DK GROUP NETHERLANDS BV ALL RIGHTS RESERVED

The Air Cavity System Case Study: 280,000 DWT VLCC Pe (kW) Tank Test result of Effective Power at Design Speed Speed and power (HSVA full-scale extrapolation) • Speed and power curve 14000 ~ 0.4 knot for reference vessel (A) vs. ACS vessel (B) 12000 • No sea margin included ~ 15 % 10000 8000 6000 4000 BASIS VLCC 2000 ACS VLCC Speed (kn) 0 6.0 8.0 10.0 12.0 14.0 16.0 36 ©2008 DK GROUP NETHERLANDS BV ALL RIGHTS RESERVED

The Air Cavity System ACS Demonstrator sea trial • Sea trials conducted with and without ACS • FORCE and Germanischer Lloydperformed sea trials in accordance with standard procedures • ACS demonstrator tests to included: – Speed trials in calm water – Speed tests in waves – Maneuvering tests • Environmental conditions of waves and ocean documented by wave buoy. • Based on the sea trial data with ACS, the scaling procedure for ACS will be made and reliable results for large ocean-going ships will be made. 38 ©2008 DK GROUP NETHERLANDS BV ALL RIGHTS RESERVED

Major emissions reductions Major emissions reductions • According to a report from IMO’s Technology Maximum fuel savings subcommittee on bulk liquids and gases Propeller technology: (BLG) published in December 2007, a Contra rotating propellers 10% 10% reduction in fuel burn for existing Twin propellers – twin engines 5-10% ships and 30-40% or more for new Propeller Boss Fin Cap 4% buildings are achievable High-efficiency propellers 4% • ACS combined with other technologies Heat recovery system 8% can reduce shipping's CO2 emissions TODAY by a minimum of 10% to a Block co-efficient. 15-25% maximum of 50% depending on vessel Air Cavity System - reducing the friction 15% type. resistance of the hull. Speed reduction 30% Other design modifications. 10% Total for bulker and tankers 50% Total for containerships 36% 40 ©2008 DK GROUP NETHERLANDS BV ALL RIGHTS RESERVED

Major emissions reductions Fuel burn reduction on a 12.000 TEU containership Reducing fuel burn on a 12.000 TEU containership by 20% Assuming current new build price: USD 175 million US. Assuming fuel cost: USD 560 pr ton. Currently Savings Per day Annually Over 20 years Fuel burn 380 tons pr day 76 tons 29.680 tons 59.4 million tons In USD USD 171.000 per day USD 42.560 USD 11.9 million USD 238 million CO2-emssion 1.216 tons of CO2 pr. day 243 tons 68.040 tons 1.36 million tons 41 ©2008 DK GROUP NETHERLANDS BV ALL RIGHTS RESERVED

Major emissions reductions We need Western innovation at Asian costs • Moving ship building to Asia may have gotten ship owners vessels at a lower cost, but the innovation traditionally embedded in western shipbuilding was lost in the process. • For generations shipbuilding skills has been refined by European & US shipbuilders resulting in more and more efficient ship designs. • For hundreds of years they western shipmakers have succeeded in annually making more efficient ships for shipowners to race other shipowners • The maritime industry needs to get back on the innovation track for the sake of the environment, public health, global economy and their own shareholders. • There is nothing that prevents Western innovation at Asian costs. 42 ©2008 DK GROUP NETHERLANDS BV ALL RIGHTS RESERVED

Major emissions reductions Mega-boxship rush • Asian shipyards have adapted to new ’mega-designs’, but have repeatedly stated that new ‘environmental’ technology designs are ‘unrealistic’ • How is this possible, when in six months, Asian shipyards have adapted technology to build ships as much as twice as big as ever before – 250 meters to 450 meters • Asian shipyards are among the most technologically advanced in the world 43 ©2008 DK GROUP NETHERLANDS BV ALL RIGHTS RESERVED

New builds and new… 3.693 new builds in the book • There are currently 3.692 orders for new ocean-going vessels the in excess of 150 meters on the books of shipbuilders – just for the coming 3 years - 2008-2010 • Taking average fuel burn figures for these 3.692 vessels (mainly bulk carriers, containerships andt ankers) those vessels alone will burn more than 63 million metric tons of bunker fuel per year – generating 202 million tons of CO2, 3,3 million tons of SOx and 6,2 tons of NOx per year. These ships alone will increase present emission by 16% - in 3 years only. • During these vessels total lifespan of estimated 20 years, it will result in emission of 4 billion tons of CO2, 66 million tons of SOx and 124 million tons of NOx. • Because these vessels have no equipment installed (Scrubbers) to reduce SOx, this would mean the same as launching a staggering 29 billion new cars or - 39 times the total world car fleet of 750 million cars 45 ©2008 DK GROUP NETHERLANDS BV ALL RIGHTS RESERVED

New builds and new… Environmental savings on new builds • ACS and other technologies can All figures in Annually Over 20 years significantly reduce CO2, SOx and NOx metric ton emissions from new builds. CO2 60,6 mill. 1,2 billion • A minimum emission reduction of 30% is NOx 1,86 mill. 37 mill. recognised by IMO in its BLG report from December 2007 though the various SOx 1 mill. 20 mill. technical measures are described as ‘voluntary’. • Introducing scrubbing would reduce NOx and SOx BY 98& and 99% respectively equalling the removal of 29 billion cars from the worlds roads. 46 ©2008 DK GROUP NETHERLANDS BV ALL RIGHTS RESERVED

New builds and new… Cost savings on new builds If all 3.692 new builds on order were fitted with technologies recognized in the IMO BLOG report, saving 30% of fuel, operating costs could be lowered significantly. 19 million ton of fuel at USD 560 per tonne equals an annual saving of USD 10.6 billion per year or USD 212 billion over 20 years. And this is only for new builds produced in the next 3 years. How can shipping say that the environment doesn’t pay? One scrubber (reducing SOx by 99%) would cost less than $1.5 million - or equivalent to less than 15 days of vessel charter. So far only equipped on 1 ship. Existing ‘denox’ systems can remove NOx by 95% but only equipped on 20 ships. 47 ©2008 DK GROUP NETHERLANDS BV ALL RIGHTS RESERVED

New builds and new… Will they say no to $200 billion in cost savings? If all 3.692 new builds on order, would follow the IMO Voluntary reduction of 30-40%, 10 billion USD could be saved annually in the current new building program. How can shipping say that charters and banks don’t care about losses of over 200 billion over 20 years? 49 ©2008 DK GROUP NETHERLANDS BV ALL RIGHTS RESERVED

Shipping vs. aviation Shipping vs. aviation • Shipping investors looking at the numbers of new builds on order and rising oil prices must question why shipping companies are not investing in new technologies that can save millions of dollars, as the aviation industry has. • Boeing unveiled the 777 Dreamliner plane to great applause because it will reduce fuel consumption and CO2 emission by 20% • The Boeing 747/8 is an revamped design on the old jumbo that has slashed CO2 emissions by 15% in under 3 years • Boeing boasts record orders as the likes of Virgin Atlantic look to provide savings as airlines look to reduce CO2 emissions by 30%. 51 ©2008 DK GROUP NETHERLANDS BV ALL RIGHTS RESERVED

Shipping vs. aviation What can be done now? Wing tips & propellers • Danish airline Sterling has introduced wing tips – saving 4% fuel costs and CO2. • High-efficiency ship propellers (eg. Kappel blades) have been available for 20 years but not used • The blades could save 4% fuel and CO2 equaling 48 million ton per year • This could be translated into saving 16 mill. ton of bunker fuel at USD 5.6 billion annually Kappel Blade: 4% fuel saving 52 ©2008 DK GROUP NETHERLANDS BV ALL RIGHTS RESERVED

Conclusion Conclusion • Voluntary recommendations from IMO BLG reducing CO2 emissions by 30-40% report should be made mandatory • There is little time available to address the issue of climate change and air pollution • Shipping is by far the biggest transport polluter in the world emitting as much as 260 time more SOx than all the worlds cares put together • Mandatory SCRUBBER Retro FIT program for ships with more than 10 years of life. • Technologies are widely available NOW..! • Shipping needs to look at the aviation industry where fuel costs and Co2, NOx and SOxsavings through ingenuity are encouraged and heavily financed • “SEABUS” Large scale Ship building has to be moved back to the EU & US over the next 20 year, making environmental & efficient ships based on and protected by IP. • We ask you to incorporate ACS and other fuel efficiency and scrubbing technologies into state, federal and international regulations. 54 ©2008 DK GROUP NETHERLANDS BV ALL RIGHTS RESERVED

Q&A Thank you for your attention “We are using the knowledge we already have to make a difference. That is our duty. What is yours?” - DK Group Founder Jørn P. Winkler 55 ©2008 DK GROUP NETHERLANDS BV ALL RIGHTS RESERVED

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Container Ship - How to reduce effect on Climate and Pollution

by Glenn Klith Andersen

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Container Ship - How to reduce effect on Climate and Pollution Presentation Transcript