U.S. Marine Emissions Regulations &

Compliance Initiatives & Assessments

Futures Watch Presentation

Lovejoy-McAuley & Company

November 2015

U.S. Share of Global Maritime Emissions

U.S. Department of

Energy’s Argonne National

Laboratory GHG estimate:

Range of 1–12%

Either the world’s largest

or one of the world’s

largest

See: http://www.nrel.gov/docs/fy13osti/55637.pdf

U.S. Maritime Emissions Regulations

U.S. Environmental

Protection Agency

(EPA) 2012 regulation

enforcing International

Maritime Organization’s

North American ECA

rule is driving marine

vessel and port

operations strategies.

North American ECA applies to 200 nautical miles [370.4 km] of U.S. coasts

Expected ECA Benefits

Impact of regulations

projected to extend

from U.S. ECA waters

and coastline into

nation’s interior.

Projected 2020 Ozone Reductions

Source: EPA

North American ECA applies to 200 nautical miles [370.4 km] of U.S. coasts

Ocean Going Vessel Compliance Strategies

U.S. Department of Energy’s 2012-2040 Assessment

Major Strategies:

Exhaust Controls - SOX &

NOX

Engine-based Controls – Tier

3 Emissions Levels;

LNG-fueled Vessels

No Near-term Market

Potential:

Alternative fuels

Biofuels

Water Injection

Technologies

See: http://www.eia.gov/analysis/studies/transportation/marinefuel/pdf/marine_fuel.pdf

Ocean Going Vessel Fuel Use Projection

North American & Caribbean ECA

Source: Department of Energy/EIA, June 2015

Tota

l Fu

el C

on

sum

ed

in

EC

As

(tri

llio

n b

tu)

Distillate fuel

oil is used to

cover the gap

until emission

controls and

fuel switching

systems are

installed

aboard ships.

New Build Ocean Going Vessel Strategies

California Air Resources

Board Compliance

Strategy Assessment*

Key technologies:

LNG-fueled Engines

Selective Catalytic Reduction

Exhaust Heat Recovery

Advanced Hull and Propeller

Design

*For full review of all technologies considered, see:

http://www.arb.ca.gov/msprog/tech/presentation/oceanvessels.pdf

Hybrid Vessel Market

Transparency Market

Research (TMR)

Forecast

Compound Annual Growth

Rate (2014-2022) = 8.02% $2,24

$4,46

0

1

2

3

4

5

2013 2022B

illio

n U

SD

Source: TMR, June 2015

Global Marine Hybrid Propulsion Market

Total Hybrid Vessel Market = Tugboats, Offshore Supply Vessels, Ferries, Defense Vessels, etc.

Global Hybrid Vessel Projections

DNV GL’s CEO Tor

Svensen’s Global

Hybrid Vessel Market

Growth Estimate

33

100

0

20

40

60

80

100

120

2015 2020

Nu

mb

er

of

Ve

sse

ls

Source: DNV GL, June 2015

Global Hybrid Vessels: In Operation or On Order

Note: True hybrid systems configured with battery packs for propulsion – i.e., serial or parallel.

Hybrid Vessel Economics

Hybrid vessels compete on reduced fuel cost not system

cost.

[PERCENTA

GE]

[PERCENTAGE]

10 %

Standard Vessel

Fuel Cost

Power & Propulsion System Cost

Maintenance & Spares Cost

[PERCENTA

GE]

7.5%

7.5%

[PERCENTAGE]

Hybrid Vessel

Fuel Cost

Power & Propulsion System Cost

Maintenance & Spares Cost

Reduced Fuel Cost / Reduced Emission

Source: http://www.xaltenergy.com/images/case-studies/The-Hour-of-Power-RIB-HSC-August2015-A4PAGES.pdf

2015 Port of Los Angeles Assessment

Campbell Foss Retro-fit

Tugboat:

Launched in 2012

Utilized Lithium-polymer

Batteries

2012 battery fire due to

overcharging

Marketing of retro-fits

ceased.

Carolyn Dorothy New-build

Tugboat:

Launched in 2009

Utilizes Conventional

Lead-acid Batteries

Performs quite well

System cost an issue

U.S. Port Emissions by Transportation Mode

EPA, in partnership

with the American

Association of Port

Authorities (AAPA),

has encouraged

ports to measure by

sources of

emission.

Note: Approximately one-third to one-half of the emissions from ocean-going vessels is due to running auxiliary engines for electrical power at berth.

San Pedro Bay Ports Clean Air Action Plan (CAAP)

Real-time Public Access Air Quality Information System*

http://caap.airsis.com/CurrentData.asp

http://caap.airsis.com/MapView.aspx

*Includes Ports of Los Angeles & Long Beach California.

West Coast Ports Early Adopters

Shore Power (‘Cold Ironing’) Initiatives

U.S. Ports Using Shore Power

Port Year of Introduction

Capacity (MW)

Frequency (Hz)

Voltage (kV) Ship Type Utilization

Juneau, Alaska 2001 7-9 60 6.6-11 Cruise

Los Angeles, CA 2004 7.5-60 60 6.6 Container & Cruise

Seattle, WA 2005-2006 12,8 60 6.6-11 Cruise

San Diego, CA 2010 16 60 6.6-11 Cruise

San Francisco, CA 2010 16 60 6.6-11 Cruise

Long Beach, CA 2011 16 60 6.6-11 Container

Source: http://www.ops.wpci.nl/ops-installed/ports-using-ops/

Global Shore Power Market

Navigant Research:

“Shore power is

expected to ultimately

become the most

impactful tool in making

ports more efficient…”

$32

$335

0

100

200

300

400

2015 2024M

illio

n U

SD

Source: Navigant Research, 3Q 2015

Annual Global Shore Power Utility Electricity

Revenue

State of California Actions

2007 California Air

Resources Board

Regulation:

At-berth Vessels Must

Turn-off Auxiliary

Power and either

connect to Shore

Power, or use

Alternative Emission

Control Technology

California Shore Power

Investment Examples:

Port of Long Beach = $200

million.

Port of Los Angeles = $250 (25

Berths)

Port of Oakland = $55 million +

$10 million Tenant Investments

See: http://www.arb.ca.gov/ports/shorepower/shorepower.htm

Shore Power Cost Debate

Is Cold Ironing Redundant Now?

South Carolina Ports:

Ports Authority Chief Executive Jim Newsome said ultra-low sulfur fuel and scrubbers have made the air quality improvements touted by shore power obsolete.

Carnival Cruise Lines plans to install scrubbers on its vessels home-ported in Charleston, South Carolina.

New California At-berth ARB

Certified Scrubber

Technologies:

Maritime Emissions Treatment

System (METS)

See: http://caemaritime.com/when-you-need-us

Advanced Maritime Emission

Control System (AMECS)

See: www.advancedcleanup.com

See: http://maritime-executive.com/features/is-cold-ironing-redundant-now

Alternative Lower Cost Solution

U.S. Department of Energy Fuel Cell Cold Ironing System

Modeling

“…hydrogen fuel cells may be

both technically feasible and

commercially attractive as a

clean, quiet and efficient power

source for ships at berth,

replacing on-board diesel

generators.”

Barge-mounted PEM

Fuel Cell System

See : http://energy.gov/sites/prod/files/2014/03/f12/sand2013-0501_barge_mounted_pemfc.pdf

Matching Finnish Offering: Summary Observations

U.S. ECA Compliance Interests & Leading Finnish Solutions

Entity Technologies Immediate Finnish Offering

MARAD New Generation Drop-in Biofuels

Neste Oil

Fuel Cell (FC) Technology Convion; Cargotech, Konecranes (Terex), The Switch Engineering

DOE LNG-fueled Engines Wȁrtsilȁ

Exhaust Controls Proventia, Wȁrtsilȁ

Engine-based Controls Proventia, Wȁrtsilȁ

California ARB

Exhaust Heat Recovery ABB, Wȁrtsilȁ

Advanced Hull & Propeller Design

Deltamarin, Elomatic, Insinööritoimisto Comatec Oy, NAPA Group, TEVO Oy

Ports Air Quality & Emissions Monitoring

Envitems, Gasmet, Pegasor, Vaisala

Vessel Operators

Hybrid Electric Power ABB, Protacon Oy, Vacon, Trafotek Oy, We Tech Solutions Oy