An International Fund for

Greenhouse Gas Emissions from Ships

INTERTANKO

ISTEC & Executive Committees

Dubai, 20 -21 January 2009

Christian BREINHOLTDirector

Danish Maritime Authority

• IMO

- The Specialised Agency

- No More Favourable Treatment

• UNFCCC

- A new global agreement in 2009 (COP 15)

- Common but Differentiated Responsibilities

What is the situation?

• Nine fundamental principles

• Technical measures

• Operational measures

• Market based measures

IMO action on GHG emissions from ships

Nine fundamental principles

• Effective in contributing to the reduction of total global GHG emissions• Binding & equally applicable to all flag States• Cost-effective• Able to limit or effectively minimize competitive distortion• Based on sustainable environmental development without penalizing

global trade and growth• Based on a goal-based approach and not prescribe specific methods• Supportive of promoting and facilitating technical innovation and R&D

in the entire shipping sector• Accommodating to leading technologies in the field of energy

efficiency • Practical, transparent, fraud free and easy to administer

Principal debate in IMO

• IMO or UNFCCC principles?

• Before or after COP 15?

• Mandatory or voluntary?

• Technical and/or market based?

• IMO GHG WG II: 9-13 March 2009

• MEPC 59: 13-17 July 2009

• Assembly: 23 November - 4 December

• COP 15: 1- 18 December 2009

Future work in IMO

An International GHG Fund - rationale for the proposal

• Long life of ships

• Growth in international shipping

• Contributions from all sectors

• Offsetting GHG emissions

• Bunker fuel contribution:

- Mandatory registration of Bunker Fuel Suppliers

- Based on the Bunker Delivery Note as evidence

- Collection by registered Bunker Fuel Suppliers

- Direct transfer to the International GHG Fund

- Ships in international trade – all marine fuels

• Revenues:

- Mitigation, Adaption and Technology Projects

- Non-vessel Specific R&D Projects

- Technological Cooperation within IMO

• A global, binding, separate legal entity – a new Convention

An International GHG Fund – Key Elements

The Ship Owners/Operators:• Purchase fuel from registered Bunker Fuel Suppliers• Keep the Bunker Delivery Note on board

The Bunker Fuel Suppliers:• Mandatory/voluntary registration• Provide a certified Bunker Delivery Note• Collect and transfer directly to the International GHG Fund• Electronic report and recordkeeping of bunker fuel sold

The States Parties:• Port State Control• Inspections of Bunker Fuel Suppliers

An International GHG Fund - Obligations

Legal Structure based on the IOPC Funds:• Assembly• Secretariat

Tasks and responsibilities:• Receive, record and monitor information • Maintain and allocate revenues• Keep a ship specific registry• Keep a global registry of Bunker Fuel Suppliers• Submit an annual report

An International GHG Fund - Organisation and Administration

CO2 offsetting impacts through a contributionKey figuresTotal emissions from international shipping: approx. 1,100 Mt. CO2 (BLG 12/6/1)Consumed bunker fuel: approx. 365 million tonsActual price for a JI/CDM-credit: approx. EUR 10-15 (approx. $15 -22.5)Expected future price for JI/CDM credit: approx. EUR 20-30 (approx $30-45)

Different scenarios

GHG contribution at a given US dollar per ton bunker fuel:

Contribution size

in USD per ton bunker

fuel

Collected contribution

in USD (million)/yr

JI/CDM (MT CO2 eq.)

at 15 USD.

JI/CDM (MT CO2 eq.)

at 30 USD

JI/CDM (MT CO2 eq.)

at 45 USD

7.5 2,738 183 91 61

15 5,475 365 183 122

30 10,950 730 365 243

45 16,425 1,095 548 365

An International GHG Fund - Virtues

• Meet all nine fundamental principles:

- Contribute to reductions in global GHG emissions

- Equally applicable to ships – regardless of flag

- Allow growth in international shipping

- Support technical innovation and R&D

- Easy to administer• Assist solving the challenges of climate change• Revenues for the benefit of developing countries• Embrace Common but Differentiated Responsibilities (States)

and respect No More Favourable Treatment (ships)• Emission baseline established for free• Eliminates any need for allocating GHG emissions• Rely on well-established conceptual approaches

An International GHG Fund

Main points of concern addressed by INTERTANKO:

• Kyoto compatibility?• GHG reductions through offsetting?• Varying contributions according to bunker fuel?• Enforcement mechanisms for Bunker fuel suppliers?• Non-compliance by ships and/or Bunker Fuel Suppliers?• Practicality of the existing Bunker Delivery Note System?