Air Quality Regulation in California

1. Air Quality Regulation in California Critical Issues in Greenhouse Gases, Stationary Sources & Mobil Source Emissions January 12, 2007 Jim Flanagan

2. Dirtiest mode of transport Uses high sulfur fuel Engines not designed to minimize emissions Cleanest mode of transport Efficient use of energy resources Lowest drag on movement Two views of marine transport

3. How should we measure and track environmental performance? • Reduction from baseline • High baseline  reductions appear less meaningful • Per container (TEU) shipped per mile • To track performance and for comparisons • Consider entire environmental footprint Good business planning reduces emissions

4. Air Emissions in Marine Transportation Energy Use  Air Emissions Consider the full transportation chain footprint • Ocean going vessels • Main engine emissions • Dockside auxiliary engine emissions • Harbor craft: tugs, pilot vessels, etc. • Container loading and unloading • Movement off-site

5. Pollution Prevention: Increasing Efficiency Reduces Emissions and Costs • Pollution prevention and waste minimization – Redesign of processes and practices to reduce or eliminate emissions or waste. • Reuse of materials and converting wastes to new uses. • Recycling. • End-of-pipe treatment (such as catalytic reduction). • Disposal (includes shifting emissions or impacts to other areas) Best Worst

6. Energy efficiency for container vessels compared with other modes of transport

7. Shipping by water is most energy efficient

8. Bigger ships are more efficient

9. Larger vessels are more efficient g CO2/TEU.km = grams carbon dioxide emitted per twenty-foot container unit transported one kilometre.

10. Shipping efficiencies through technology Maersk Line energy optimization initiatives include: • Waste heat recovery systems reduce fuel use 10%. • Slide valves • Computer systems improve cargo, route & speed efficiency • Waste oil clarification decanters separate burnable liquids from waste oil, water, and sludge mixtures • New cylinder lubrication systems use less oil • Efficient hull and propeller maintenance • Hull coatings

11. Shipping Gets More Efficient Results Our efforts to reduce CO2 emissions have led to a significant 5.6 per cent decrease in fuel consumption and reduction in emissions per tonne of cargo. This corresponds to a total reduction in CO2 emissions of 1.81 million tonnes during the period 2002 to 2006*. • *First half of 2006

12. Port area air quality options • Is shore-side power a solution? • Stresses shoreside electrical networks • Significant capital costs and time required • Compatibility issues from port to port • Only reduces emissions while at dock • Safety issues • Other options include • Cleaner fuels while near ports • Cleaner engines • On-board control technologies: SCR, PM filtration, etc.

13. Reduces emissions: Total: over 400 tons/yr SOx: 92% PM: 73% NOx: at least 10%

14. Vessel Loading and Unloading • Minimize container movement • Mathematical models used to minimize moves to load and unload vessels • On-dock rail where feasible • Inland mode choices • Rail for minimum drag and resistance • Trucks for greatest flexibility • Pollution prevention • Potential for electrification for new sites • Minimize sulfur content of fuels • Newest feasible engines

15. Shipper Challenge #1Uncoordinated Regulation • Different governments want different outcomes • Europe is concerned about GHGs, SOx and fine particulate; whereas California is concerned about diesel particulate and ozone • Different issues  Different approaches to solutions • Measurements and models vary • Quality Our Vessels Travel the World

16. Shipper Challenge #2The Law of Unintended Consequences • Improvements in one area can lead to problems in other areas • Tests on SCR showed increasing particulates • Restriction of at-sea dumping increases fuel use • Newer vessels result in old-vessel recycling issues • Scrubbing generates acid water • Be careful what you measure • Choice of metric • Data quality • Monitor vs. model

17. The Maersk Challenge • Being a good world-wide corporate citizen • Reducing our GHG footprint  reducing overall energy use • Consider world-wide operational impacts • Harmonizing world-wide concerns • Getting cargo where it needs to be on time and at competitive cost

18. Environmental Trends: Air Quality • Increasing focus on health impacts of diesel emissions • SOx, NOx and PM (particles) • Ships, CHE, trucks, rail • Air quality in many ports exceeds standards. • Governments and customers are concerned about “Greenhouse Gases” (CO2) • Regulatory actions will include • Tighter fuel standards world-wide (cost factor) • Need for new technologies: AMP, SCR, PM filters

19. Maersk’s Air Quality Program • Reduce sulfur in fuel where it impacts shoreside air quality • Develop mobile solutions for mobile sources • Replace not retrofit port cargo handling equipment • Implement management systems to ensure consistent evaluation of issues • Use good science and metrics • Test thoroughly before committing • Data-based decisions • Work with shippers, other carriers and governments on metrics, reductions and technologies • Clean Cargo Working Group

20. Thank you