8 minute read
Air pollution
Capt. Simon Hodgkinson, Global Head of Loss Prevention at West of England Insurance Services, says that planning is the Planning is key key factor as the shipping industry rises to the challenges presented by new air pollution rules
The impact of nitrous and sulphur oxides on the health of crews and coastal communities is becoming an ever-more prominent matter for regulators and air pollution rules are becoming one of the fastest evolving areas in the maritime industry. This drive has been behind the creation of several landmark regulations in recent years, as well as the expansion of NOx (nitrogen oxides) Emissions Control Areas (ECAs). ECAs were created by MARPOL Annex VI to govern emissions in specific high-impact areas, especially in
coastal locations. These areas can cover Sox (sulfur oxides), NOx, and/or particulate matter, depending on the specific rules of the ECA.
The North American and Caribbean Sea NOx ECAs came into effect in 2016, creating a roadmap for many pollution minded policymakers. These regulations impose different and progressively more stringent emissions to power output standards of vessels based on when they were built. They are split into three tiers; Tier I, covering ships built after 1 January 2000, Tier II, covering ships built after 1 January 2011, and, Tier III, covering ships built after 1 January 2016. Since then, China has created two domestic ECAs, including one that regulates NOx emissions. These cover the Pearl River Delta, the Yangtze River Delta and the Bohai-Rim Area including Beijing, Tianjin and Hebei. Two additional NOx ECAs came into effect on 1 January this year, covering the North Sea and the Baltic Sea and enforcing the Tier III standard against ships built after 1 January 2016. It is unlikely that these are the last that will be created.
Shipowners must be aware of these new regional rules, and ensure that they are in full compliance.
TIER III REGULATIONS
Any qualifying vessel built after 2016 that passes through a NOx ECA requires an approved and working control systems such as a Selective Catalytic Reduction (SCR) to trade. These SCR systems reduce the NOx content in the exhaust gasses of a ship’s engines by injecting a reducing agent into the exhaust system at a relatively low temperature. This injection causes a reaction between the NOx particles and the agent, creating harmless nitrogen and water. This means that shipowners and crews need to stay up to date on the boundaries and classifications of ECAs, and that a vessel will need to turn on its SCR system when entering a restricted area. Most SCRs use a solution of urea as the reducing agent, although it is possible to use the ammonia systems used by on-land systems that are used in many power generation operations. At the moment, urea has a distinct advantage because it is more stable and can be stored in normal atmospheric tanks. Any compliant SCR will have received approval from flag states and classification societies for the engine that it is installed within to verify that it meets the regulatory pollution reduction standards for the ship engine in question.
Provided that no critical or listed parts in either the SCR or the engine are then modified, it should be as simple as turning the system on at the right time.
IMPLICATIONS FOR SHIPOWNERS
ECAs have persistently represented geographic peculiarities for shipowners, and this is especially true for NOx ECAs. Ensuring that vessels comply with applicable regulations always requires planning, especially when new machinery was required, and regional differences exist in the rules. On 1 January 2021, the Baltic Sea and North Sea became NOx ECAs in Europe. For some shipowners, SCR systems and Tier III compliance is becoming a new point of negotiation when concluding shipbuilding contracts. This has pushed some shipowners to assign older tonnage to these areas to comply with the regulations, without requiring additional investment. Others have been tasked with either fitting a compliant system or finding new routes or owners for ships that currently arry out trade in the area.
INSURANCE PERSPECTIVE
The fundamentals of NOx emissions regulation are simple. If your vessel is Tier III, it either must use a compliant system or not enter an ECA. SCR systems are generally very reliable, and measuring compliance is relatively simple.
However, logistics represents a real challenge. The reducing agent used within the system must be externally supplied, and the global urea supply chain is not as stable or extensive as many shipowners would like. Indeed, it isn’t regularly available in sufficient quantities in many global ports. It can thus be difficult for shipowners and ship managers to ensure that urea tanks remain full, especially for ships operating tramping services on the spot market. Owners and managers must remain vigilant about regional or port-specific supply issues, and plan ahead to maintain a reliable supply. Poor planning or mis-operation, however, are not exceptional circumstances, are not likely to be covered, and could lead, if not compliant, to the inability of a vessel to enter or trade in an ECA.
PLANNING EMPHASIS
Thorough planning is critical for so much in shipping. This is especially true for NOx emissions regulations. Shipowners must ensure that they have the right systems for the geographic areas of their vessels, in good time. They must also think strategically about where their vessels are deployed. For the foreseeable future, this extends to supply chains. Confidently and reliably securing urea in the right quantities for vessels means understanding the ports that ships are sailing to, and the local market conditions. This is no easy task, especially if an owner has not yet built this administrative capacity.
Americas 1-3 June 2021
All times are in Eastern Standard Time (EST)
Tuesday 1st June
10.00-10.55: Pre-Conference Focus Session: Cargo on Slow Turn to Profit? Panelists: Rodrigo Amengual, Marine and Casualty Head - LatAm, Zurich Insurance, Bill Keogh, Senior Advisor, Concirrus, David Fowler, Divisional Vice President, Great American Group
10.55-11.00: Welcome Address: Daniel Creasey, Managing Director, Cannon Events
11.00-11.40: Keynote Address: The State of the Market and the Latest Trends in the Marine and Specialty Classes of Business Presenter: Jon Hancock, Chief Executive Officer - International General Insurance, American International Group, Inc.
11.45-12.45: Panel Discussion: Current Market Dynamics: Matching the Economics to the Risks Moderator: Michael Pellegrini, Managing Director, North American Practice Leader, Marsh JLT Specialty Panelists: Sean Dalton, Executive Vice President, Head of Marine North America, Munich Re, Michael McKenna, Chief Underwriting Officer Global Specialty, The Hartford, Brian Murphy, Senior Vice President, Berkley Offshore, Xavier Pazmiño, President, ALSUM
12.45-13.15: Networking Break
13.15-14.00: Panel Discussion: Covid-19: Impact Rippling Across Marine Market Panelists: Richard Max Adler, Key Client Broker and Chief Commercial Officer, Atlantic Insurance and Reinsurance Brokers, Michael Venturella, Practice Leader - Marine Group, Envista Forensics
14.00-15.00: Roundtable Sessions and End of Day One
Wednesday 2nd June
10.00-11.00: Pre-Conference Focus Session: What’s in the Box? Panelists: Ian Lennard, President, National Cargo Bureau, Charlie McCammon, Vice President - Risk Consulting, Willis Towers Watson, John Miklus, President, American Institute of Marine Underwriters
11.00-11.05: Welcome Address: Daniel Creasey, Managing Director, Cannon Events
11.05-12.00: Panel Discussion: Making Technology Pay Moderator: Matthew Yeshin, Managing Director Marine, Logistics and Transportation North America, Marsh JLT Specialty Panelists: Juan Carlos Martinez, Chief Executive Officer, Cargo Risk Corporation, Bill Keogh, Senior Advisor, Concirrus, Ronny Reppe, Chief Executive Officer, Noria Digital
12.00-12.45: Panel Discussion: Cyber Criminals Looming Large Panelists: Elisabeth Case, Managing Director, Marsh JLT Specialty, Rob Dory, Chief Executive, Astaara, Lars Benjamin Vold, Managing Director, NORMA Cyber 12.45-13.15: Networking Break
13.15-14.15: Panel Discussion: Sustainability: How Green Can We Go? Panelists: Frank Gonyor, Senior Claims Advisor/Lawyer, Gard (North America) Inc., Mike Unger, Director, Britannia Americas P&I LLC, Peter Malinowski, Executive Director, Billion Oyster Project
14.15-15.00: Roundtable Sessions and End of Day Two
Thursday 3rd June
10.00-11.00: Pre-Conference Focus Session: A Fresh Wind Blowing Through? Panelists: Ian Duthie, Director, North of England P&I Club, Dennis Smith, Vice President Global Marine and Energy Specialty, Guy Carpenter, Bin Wang, Senior Underwriter, Norwegian Hull Club,
11.00-11.05: Welcome Address: Daniel Creasey, Managing Director, Cannon Events
11.05-11.55: Panel Discussion: Catastrophe – A Stormy Outlook Panelists: William Cho, Head of Weather, MatthewsDaniel, Bill Lang, Chief Underwriting Officer, Starr Marine
11.55-12.45: Panel Discussion: Loss Prevention – Reducing the Numbers Panelists: John Dolan, Deputy Loss Prevention Director, The Standard Club Dr. William Moore, Global Loss Prevention Director, The American Club
12.45-13.15: Networking Break
13.15-13.45: One to One Discussion: International Group of P&I Clubs Participants: Martin Cook, Divisional Director - Marine, Ed Broking, Paul Jennings, Chief Executive Officer, North of England P&I Club, Chairman, International Group of P&I Clubs,
13.45-14.30: Panel Discussion: Smuggling and Fines Moderator: Jason Waguespack, Partner, Galloway, Johnson, Tompkins, Burr & Smith Panelists: Claudia Botero-Gotz, Senior Lawyer, Gard, Ruby Hassan, Senior Claims Executive, Skuld, Leanne O’Loughlin, Regional Director Americas, Thomas Miller (Americas) Inc.
14.30-15.30: Panel Discussion: Social Inflation – Feeling the Pain, Fueling the Claim! Moderator: Frederick W (Billy) Swaim III, Director, Partner, Galloway, Johnson, Tompkins, Burr & Smith Panelists: Tony Cowie, Senior Vice President, Head of Ocean Marine, Swiss Re America Corporation
14.30-15.30: Panel Discussion: The Underwriter of the Future Moderator: Maria Fernanda Alonso, Vice president, Swiss Re and President, Alsum Cargo Committee Panelists: Daniel Revilla, Regional Head Latin America and the Caribbean, Lloyd’s of London Axel Trauttenmiller, Aon Re
15.30-16.00: Roundtable Sessions and End of Conference
