INATECH ALOK SHARMA vf - International Bunker Industry

ECA Compliance
The facts, the options, the solutions
Alok SHARMA
IBIA Annual Convention, Hamburg 2014
“Transforming shipping and bunkering through intelligent fuel management systems”
Agenda
Context:
Known and unknown
What to expect on Fuel Quality when
the regulations change?
What is the planned enforcement
regime in US and EU?
What does “Continuous Compliance”
mean?
Key elements of good compliance
Management solution
The landscape has been and
will change significantly in future
HIGH CRUDE
PRICES
ENVIRONMENTAL
REGULATIONS
HIGH BUNKER
PRICES
MORE INVESTMENTS
(Buyers and Suppliers)
NEW LOW
SULPHUR FUELS
SWITCH TO
DISTILLATES
LOW DEMAND
SLOW STEAMING
IMPROVED
INDUSTRY IMAGE
CLEAN
ENVIRONMENT
Emissions Regulations on the horizon
0.5% global sulphur cap
(2020/2025)*
Date 180 pending review
by end 2018 latest
EEDI
Phase 1
0.1%
ECA
Sulphur Limit
2015
0.5% EU Sulphur Cap
Nox tier III
for new
builds
All EU Waters: EEZ (200NM)
EEDI Phase 2
2016
2018
2020
Global CO2 MRV
EU CO2 MRV
Operational
Requirements
On Co2
Additional ECAS
Established
EEDI
phase 3
2025
BC and VOC
regulation
Regulatory
Unknowns
The timetable for the
development of Nox/Sox regs
New ECA’s – Japan,
Hong Kong, Mediterranean,
Singapore, New Zealand ??
In port regulations –
particularly US
Enforcement Regimes
and Penalties
- US EPA (FONARs)
Regulations for use of
LNG as bunkers
CO2 Regulations
(Greenhouse Gas emissions)
ECA Compliance
key factors
Continuous
Compliance
Variable fuel
quality
Emission Control
Regulations
Enforcement
Change in Regulation has a direct
impact on fuel quality
Impact of Regulation on Quality of Fuel
01
Legislative change has a knock on effect
on quality of product available.
02
Data shows a direct correlation
between legislative change and increased
number of off spec fuels.
03
Issues usually witnessed immediately
before, during & after a significant
legislative change.
ECA Compliance
key factors
Continuous
Compliance
Variable fuel
quality
Emission Control
Regulations
Enforcement
EU Policy Framework
Emphasis on Implementation by MS
through binding guidelines
(Implementing Acts to be adopted by
the end of 2014) –
Directive 2012/33/EC adopted in
Nov. 2012, transposed by Member
States 18 June 2014
•
1.00% until December 2014
and 0.10% as from January
2015 for SECAs
•
3,50% as of June 2014 and
0,50% as of January 2020
•
0,10% sulphur content for
ships at berth and 1,50% for
passenger ships on
•
regular service (maintained
outside SECAs) including
cruise ships
•
strengthening of monitoring
of compliance and
enforcement to reach
environmental objectives
while preserving shipping
market sustainability
•
Member States should notify
the provisions on penalties to
the Commission
Consequences of infractions
What are the legal consequences
of non- compliance by ships being
considered
EU Member states
are discussing
level of penalties
• Administrative fines: 15 Member States
• Criminal penalties: 8 Member States
• Ship Detention: 15 Member States
• Denial of entry to ports: 4 Member States
US Enforcement is
beginning to lead the way
US EPA steps up ECA enforcement efforts
Focus to date been on checking the
relevant documentation, such As
the bunker delivery note and the
ship’s log of fuel changeover
Timing and procedures.
Taking fuel samples from ships to
test for compliance with the
relevant sulphur
Ship detention is ‘an
effective Sanction’
6th October 2014 13:17 GMT
The
EPA
has
also
been
experimenting with flyovers, whereby
a plane files through a ship’s plume
and measures the sulphur dioxide
(SO2) to carbon dioxide (CO2) ratio
to calculate the fuel sulphur content
EU : Electronic reporting requirements are to be
expected
How compliance
is checked today?
By inspectors: Documentation,
Statutory Samples and ad hoc on
board Sampling and Analysis, or
continuous monitoring data for ships
using EAMs
By the Commission: yearly, based on
Reporting by MSs each 30 June
And after
1/1/2015?
By inspectors: Additional
mandatory frequency for
sampling fixed by the EU
targeting and monitoring
progress)
Criteria on board
harmonised
tool (in
By the Commission: Electronic
Reporting by MSs can be virtually
checked real-time, more exchange of
information MS
In EU: MRV approach relies on
monitoring vessels trading to/from EU
The European Commission's Proposal for Monitoring,
Reporting and Verification (MRV) of CO2 Emissions from Ships
Bunker
Delivery Note
Tank
Sounding
Monitoring
Plan
Flow
Meters
Annual
Emission
Report
Emission
Measurement
Verification
Central
Database
ECA Compliance
– key factors
Continuous
Compliance
Variable fuel
quality
Emission Control
Regulations
Enforcement
Key
Procurement
Drivers
Demand
Projection
Buying
Strategy
Buyer
Performance
(Benchmarks)
Procurement
Drivers
Supplier
Management
Ship
Performance
Compliance
Hedging
A lot of moving parts in the process
which is fine when things go smooth
MKT PRICE
PROVIDERS
SUPPLIERS/
TRADERS/
BROKERS
Vessel
Regulation
Department
Finance
INTERNAL
Technical
Department
SURVEYORS
LABORATORIES
SHIP AGENTS
Bunker
Department
Fleet
Management
EXTERNAL
REGULATOR
Continuous compliance monitoring mechanism should
have three pillars
ACCURACY
ENFORCEABILITY
The data collected
should reflect as
closely as possible
the real emissions
of the ship.
Practical and robust
enforcement can only
be guaranteed if
emissions data is
easy to collect, survey
and verify.
The procedure for data
verification should be
simple and rapid.
TRANSPARENCY
Transparency would
lead to better
decisions and could
possibly improve
energy efficiency
Port State Control
activity
Source : Practical Options for Emissions monitoring Transport Environment, 2014
Continuous Compliance – salient points
TRACK
Vessel entry, exit ,
and ECA steaming
Auto log switchover
positions
Auto record of ECA
Fuel BDN and Labs
Statutory Reporting
(TBC)
Store SEEMP’s ,
BDN and other docs
ALERT
CONTROL
Ensure that ship and
shore are alerted on
every change in status
of ECA Fuel
Log ECA fuel
consumptions and
measure against
baseline
Allow Vessel/ Voyage/
Region specific
“safe zones” to allow
for difference in
switchover
Ensure ECA cost is
built into Yield
Calculations and BAF
Ensure that company
procedures are followed
Calculate Voyage
“Compliance Cost”
to highlight CSR
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