Reduction of NOx and SOx in an emission

market -a snapshot of prospects and benefits

for ships in the northern European SECA
area

1.1 ZOI NIKOPOULOU

Department of shipping and marine technology

Division of propulsion and maritime environment
CHALMERS UNIVERSITY OF TECHNOLOGY
ISSN 1652-9189. Report No. 08:107
Göteborg, Sweden, 2008
 Report No 08:117

Reduction of NOX and SOX in an emissions market-

a snapshot of prospects and benefits for ships within the
northern European SECA area

ZOI NIKOPOULOU

Department of shipping and maritime technology

Division of propulsion and maritime environment
CHALMERS UNIVERSITY OF TECHNOLOGY
ISSN 1652-9189
Göteborg, Sweden, 2008
 II

Acknowledgements

Many thanks to professor Arne Jensen at the Department of Logistics and Transport Research Group
at Handels Business School who has taken the time and trouble to alert me of errors. Special thanks
to Hulda Winnes and professor Sven Lyngfelt at the Lighthouse Competence Centre who subjected
my text to rigorous scrutiny and much improved its quality.
Many thanks to Kjell Sandaker who took the time to explain the reality of gas driven ships in Norway;
reading reports would not have compensated for the valuable insight so generously shared.
My thanks to Claus Nikolajsen of Scandlines and Bertil Arvidsson of the Swedish Shipowners
Association for their comments and thoughts.
My thanks also to Unni Einemo from the Bunkerworld who promptly provided with invaluable data. And
to Jan Alsin, Janne Rask, Espen.R.Kristiansen, Lena Blomqvist, Ingrid Carlsen, Lennart Harardson,
Ronald Nilsson, Thomas Stenhede, Carl Johan von Sydow and all the shipowners who helped put
dissimilar pieces together and draw a broad sketch.
The study was financed by the Lighthouse competence centre.

Goteborg, December 2007

 III

Summary

This is a study that examines some of the different alternatives for reducing nitrogen and sulphur
oxides emissions at sea and evaluates them in a future NOx and SOx European emissions market,
where ships can voluntarily participate by providing credits, as it has been proposed by the Swedish
Shipowners’ Association. The aim of the study is to record costs and benefits of such investments for
real ships operating in the EU waters and to be a useful guide, while the idea of emission trading is
under discussion.
NOx and SOx are two chemical components deriving during combustion and which are harmful to the
environment. Transportation is responsible for about half of the NOx and SOx emissions in Europe.
More grams per kWh are emitted from mobile sources than from stationary sources due to available
technologies and space limitations.
It is imperative to reduce NOx and SOx to sustainable levels. This will allow water reserves and soils
to start recovering throughout Europe. Coordination and regulation is needed on a local, national and
European level, as pollution is transboundary. Among the different approaches, are environmentally
differentiated charges (taxes, discounts and dues), consortium benchmarking, environmental
subsidies to support investments on clean technologies and the credit-based approach (emissions
trading).
According to the credit-based approach, the large combustion installations in a geographical area are
capped in terms of their maximum annual emissions. Emissions are quantified in tons and counted in
credits. If an installation emits less than its allocated credits, it can trade the difference in the
emissions market. The result is that the same amount of reductions is achieved in total but through a
market mechanism, which balances costs between sectors. All different approaches have their pros
and cons but the brilliance of the credit-based system is that it initiates a company’s involvement as
profits await those installations, which can achieve over-reductions.
This study examines the costs and benefits for ships participating voluntarily in NOx and SOx cap-and-
trade program in EU.
• The study samples 37 real ships with different operational and technical characteristics in
terms of their annual NOx and SOx emissions
• A worksheet is fed with information such as, the revolutions per minute, the total main engine
output during steaming, the engine type, the fuel type, the annual steaming time and the
average utility of engine power in order to calculate annual fuel consumption and annual NOx
and SOx emissions with and without the various alternatives
• Virtually installs different cleaning technologies or switches fuel and costs each alternative per
ship
• Counts tradable reductions per ship per alternative in tons per year
• Counts revenues from trade per ship according to an average price estimate from the
emissions market
• Evaluates all alternatives in a 5 year time frame
• Examines the environmental performance of every alternative
• Evaluates returns according to the snapshot of the north European marine fuels market for
twelve consecutive months (August 2006 to August 2007)
The expenditure for installing cleaning technologies is relatively small, compared to annual fuel costs,
thus all cleaning technologies are understood as an accessory. Among the sampled technologies, the
Selective Catalyst Reduction system (SCR) is slightly in advance, concerning the rate of returns. By
average, one installation can support a second within five years. Humid Air Motor (HAM) technology
has a slightly slower rate with a pay back at three years, but it comes at an advantage beyond the time
frame of the study, since HAM bears no operational costs (it is a one-time investment). The sea-water
scrubber comes with a higher cost per ton than the estimate from the emissions markets, thus it bears
 IV

no profits in emission trading. Nevertheless, SCR may provide with a compliance solution for reducing
sulphur in sulphur emission control areas (SECAs), since fuel costs overall are much less than those
of fuel switching into distillates.

Table - Emission reductions and costs per cent

SOx NOx PM CO2

Total Total
costs/year costs/year
Bunker without em. with em.
Alternatives SSD MSD costs/year trade trade
IFO max 1,5 % sulphur
residual 100 100 100 100 100 100 100 100
IFO max 1 % sulphur residual 67 100 100* 100* 100 108 108 104
MDO 1% sulphur 67 94* 40* 15* 100 161 161 156
Sea-water scrubber & IFO
max 1,5% sulphur** 25 100 75 75 100 100 117 108
Sea-water scrubber & IFO
max 1% sulphur** 17 100 100 100 100 108 124 114
SCR & IFO max 1,5%
sulphur** 100 10 100 100 100 100 111 90
SCR & IFO max 1% sulphur** 67 10 100 100 100 108 119 94
HAM & IFO max 1,5%
sulphur** 100 30 100 100 100 100 113 96
HAM & IFO max 1% sulphur**
67 30 100 100 100 108 121 100
LNG
0 10 3 1 75 81 92-138(137) 58-105(87)
Estimated average market price: NOx=900€/ton, SOx=960€/ton
(*) not conclusive results (**) capital expenditure spread over 5years
LNG price = 0,042 €/kWh
In bold italics = Cost baseline Scenario In italics = decentralised traffic
number in (parenthesis) includes shipbuilding cost increase spread over 15 years

All emission reductions and costs have been summarised in the Table above. The numbers are
expressed as per cent, with the baseline (100%) to be the low sulphur residual of IFO max 1.5 % (380
centistokes). Low sulphur residuals (maximum 1.5% sulphur content) do not provide any trading
volumes for the emission markets but are treated as the baseline for comparing purposes. Distillates
increase costs disproportionably to emission reductions and to an extent that cannot be overlooked.
Natural gas achieves the largest gains from emission markets and provides lesser annual fuel costs
but a possible increase in shipbuilding costs (for other vessels than gas carriers) shows that shifting to
natural gas may require some kind of encouragement. The author believes that the emissions market
could take the place of a subsidy. Gas infrastructure on land (refilling stations appropriate for shipping)
will determine the sea traffic, which can potentially utilise natural gas but further study is needed on
this.
A credit-based approach gives incentives to sectors with low abatement costs to invest on cleaning
technology and provide inexpensive credits in the emissions market. The largest recipients of cost
savings will be land installations with high abatement costs, such as energy related sectors, which
shall be able to inexpensively comply with European regulation and sustain flexible production levels.
Furthermore, any participation of non-capped sectors is expected to supply the pool with inexpensive
credits. For shipping, it is strategically beneficial not so much for the margin of profit, but because it
motivates shipping companies to invest on cleaning technologies, during a period of pressure for
further environmental regulations.
 V

Glossary

Allowance (or Permit) Permission to emit one ton of a gas in a specified time (usually a year)
Allocation The act of allocating emission allowances
Banking The possibility to carry over reduction units from one period to another. For CO2 it cannot exceed 10% of the
allowances. In California’s RECLAIM NOx banking is nominally prohibited because periods slightly overlap.
Baseline The target against which all is measured. Usually it is historical emissions of a reference year eg, Kyoto
Protocol and California’s RECLAIM refer to the historical emissions of 1990 as their baseline
BAT Best available technology, of the most effective and advanced stage, under economically and technically
viable conditions
BAU Business as usual, no measures taken for reducing emissions
Cap The upper limit of emissions in tons within a period of time
Capex Capital expenditure. The money spend to buy and install a cleaning system
Command The traditional way of dictating emission limits facility-by-facility
and control
FOB Free on board
HAM Humid air motor is a technology which reduces nitrogen oxides emissions
Hot spot Localised high emissions due to trading and/or a geographical shift to where emissions are physically reduced
Hot air Over-allocation of CO2 allowances in eg, former Soviet Union states, which received allowances according to
the 1990 baseline but saw their industries break down during the 1990s and thus, can sell these emission
credits without any reduction efforts.
IFO Intermediate fuel oil. The viscosity of which is measured in centistokes, thus, IFO380 cst and IFO180 cst, now
available in regular and low sulphur content (LS)
MAC Marginal abatement costs. The change in cost when producing one more unit. In the case of emission trade,
they draw ‘the shadow price’ of the traded gas taking into account environmental constraints
MDO Marine diesel oil, a refined oil product of max 2% sulphur content (ISO 8217). In Europe it is sold in max
1,5%s but as of 2010 it will be sold in 0.1%s
MGO Marine gas oil, a refined oil product of max 0,2% sulphur content, soon enough (2008) to be sold in max
0.1%s in EU
MSD Medium Speed Diesel Engine
NEC National Emission Ceilings. Permission to emit x tons by gas for a whole country, allocated by the European
Commission, the NECs are currently under review and are expected to lower in time
NOx Oxygen compounds of nitrogen. The family of nitrogen oxides emissions is produced during combustion
OTC Over the counter
PM Particulate Matter (particles)
Reduction Yet another name for emission reduction unit. One credit= 1 ton of a gas reduced
credit
ROI Return on Investment is a simple tool comprehensive by people from different scientific backgrounds and is
used to evaluate the rate of returns of an investment compared to its costs. ROI=100*net benefits/costs,
where net benefits equal to revenues minus costs.
SECA In Sulphur Emission Control Areas sulphur content in marine fuel is regulated to be maximum 1.5 % by mass
as seen in Annex VI of the MARPOL convention
SCR Selective catalyst reductions system is a technology which decreases nitrogen oxides emissions
SMA Swedish Maritime Administration (Sjöfartsverket)
SOx Oxygen compounds of sulphur. The family of sulphur oxides emissions, mainly consisting of SO2, is produced
during combustion
SSD Slow Speed Diesel Engine
Contents

1 DEFINING THE PROBLEM ................................................................................................................. 1

2 AN OVERVIEW OF THE CREDIT-BASED APPROACH .................................................................. 3
2.1 DETERMING MARKET VALUE FOR NOX AND SOX ................................................................................ 5
3 THE STUDY – OVERVIEW, SAMPLING AND ASSUMPTIONS ...................................................... 7
4 CLEANING ALTERNATIVES – ENVIRONMENTAL PERFORMANCE, PRESENTATION AND
EVALUATION............................................................................................................................................... 9
4.1 LOW SULPHUR RESIDUALS AND DISTILLATES ..................................................................................... 10
4.2 SCR AND 1.5% SULPHUR RESIDUAL FUEL .......................................................................................... 11
4.3 HAM AND 1,5% SULPHUR RESIDUAL FUEL ........................................................................................ 13
4.4 SEA-WATER SCRUBBER AND 1.5% SULPHUR RESIDUAL FUEL .............................................................. 15
4.5 NATURAL GAS ................................................................................................................................. 15
4.6 1% SULPHUR RESIDUAL FUEL AND CLEANING TECHNOLOGIES ............................................................ 18
4.7 REDUCTION EMISSIONS AND RELEVANT COSTS – CONCLUSION OF FINDINGS ........................................ 20
5 DISCUSSION AND CONCLUSIVE REMARKS ................................................................................ 21
 1

2 Defining the problem

To explore and discuss the possibility of a credit-based trading system for NOx and SOx, people from
different disciplines or various political, economic, scientific and industrial interests come together,
each representing another standpoint. However, the sole purpose of state intervention should be to
enforce solutions against the problem: Pollution. Any argumentation fuelled from power and economic
gains and neglecting to provide a successful solution to pollution cannot have a viable future. The
explanation is that - unlike any other political and business issues- it is apparent by reason that
pollution only withdraws through effective actions. It is therefore necessary to clarify the problem.
Human activity is responsible for altering air quality, depositing chemical substances in the
environment, interrupting the ecosystem’s chemical balance and often damaging it permanently. The
emissions of particulate matter, sulphur and nitrogen oxides cause environmental maladies such as
acidification, eutrophication, ground level ozone and human health problems. Such environmental
problems may also impact on the value and income for mari-cultures as well as coastal tourism.
Acidification is the build-up of excess acids into soils, waters, and air. Sulphur dioxides, ammonia and
nitrogen oxides convert into acid substances, damaging ground water and forests. Acid rain is
notorious in Europe for the damages it does to forests, which serve as ‘sinks’ that diminish the
greenhouse effect. In order to protect and increase European ‘sinks’, it is key to treat acidification. The
acidification also causes leakage of metal compounds from ground to lakes and groundwater systems.
Eutrophication is caused by surplus nitrogen and phosphorus depositions and is responsible for a line
of problems, such as excessive growth of plankton algae and changes in species composition which
eventually causes oxygen depletion on the sea floor and a lowered biodiversity.
Ground level ozone, which is the primary constituent of smog, is primarily formed when nitrogen
oxides and volatile organic compounds react in the presence of hot weather and sunlight. ‘’Many
urban areas tend to have high levels of ozone, but even rural areas are also subject to increased
ozone levels because wind carries ozone and pollutants that form it hundreds of miles away from their
original sources’’1. In addition, the ozone is responsible for health problems and damage to agricultural
crops and materials. High concentration can harm lung function and irritate the respiratory system,
especially for those with asthma. In agriculture, leaves can be visibly injured, crop yield and seed
production are also affected. The effects on vegetation are permanent for long-term exposures.
Another environmental effect coupled to increased ozone concentration is global warming. It is ranked
the third most powerful greenhouse gas.
Both SO2 and NOx are also part in aerosol formation. Aerosols are small particles that damage the
respiratory organs as well as cause other health problems. Studies have been conducted aiming to
separate effects of different kinds of aerosols. However, the emissions are interrelated and the effects
of a certain type of aerosol are difficult to distinguish. Still, there is no uncertainty of the fact that the
health effects are severe.
The European Community has already circled NOx and SOx as harmful pollutants, has recorded the
contributors and has decided that they shall be treated. The NEC Directive has made specific
quantified reductions per country and is currently under revision in order to tighten the limits. Policy
making is now in process of deciding on the best instrument to implement regulation. It should be
noted that the contribution of transport to SOx and NOx depositions surpasses those of industrial
installations (see Figure 1).

1
US EPA
 2

___________________________________________________________________________

Figure 1 Anthropogenic emissions of NOx in 1990 from the 5th Envrionmental Action programme (5EAP) target
sectors. Source: Corinair, EEA-ETC/AE

For sea transport, news is unpleasant as projections for 2010-20 show that NOx and SOx emissions
from sea regions will surpass those from land (see Appendix, Figure A). SOx deposition from
international shipping is 10-20% in coastal areas but for some areas ships will be responsible for 50%
of the depositions by 20202. This will not be unnoticed and international shipping will eventually bear
the consequences in policymaking. It would be of strategic importance to lower shipping NOx and SOx
emissions in time and with a minimum cost on an economic and political level.

2
Naturskyddsföreningen, [Online Available] http://www.ccb.se/documents/airpollredshipsSO.pdf, Nov 2007
 3

3 An overview of the credit-based approach

Within the European frame of policy and business, four other proposals for taming shipping emissions
have been discussed: consortium benchmarking, environmentally differentiated charges,
environmental subsidy approach and the credit-based trading approach3. Of all, a credit-based trading
approach is favoured for NOx trade and consortium benchmarking for SOx trade. It has been noted
that environmental dues stumble in the increased privatised nature of ports, consortia may not blend
well with international shipping and subsidies are only considered supplementary measures. Each
approach comes with advantages and disadvantages but this study will examine the credit-based
approach, which has recently received special attention.
Credit-based system, or ‘’cap-and-trade’’, is a policy approach for controlling large amounts of
emissions in a large area from a group of sources4. It is an economic instrument to limit pollution,
which provides industries with flexibility on compliance with environmental regulation. Emission
reductions become a tradable commodity, which can be bought and sold like any other product in the
market. The idea behind emission trading is to give an incentive to companies so as to invest on clean
technologies and innovation, and increase the production efficiency, as reduction efforts will have a
tangible payback.
Authority sets emission limits to industrial installations within a ‘capped’ geographical area. For
emission trading schemes in use today, the limits are arranged to fulfil environmental targets. Often
the emission of a historic year are assigned as a baseline (1990 seems to be a popular reference
year), thus, emissions must be reduced considerably to match the baseline. Not all installations are
capped, every programme sets its own minimum, eg the European CO2 Trading Scheme targets all
installations with rated thermal input exceeding 20 MW, while a local NOx and SOx program in
California targets those installations emitting more than 4 tons annually. Every targeted installation
within the capped area receives emissions allowances (permission to emit in tons per year) not to be
exceeded. Installations have the option to reduce emissions in-house (by installing cleaning systems)
and supplementary purchase reductions from other installations in order to comply at the end of the
calendar year. Trade occurs when an installation with a surplus of reductions/allowances sells them to
an installation with growth in emissions or an inability to make cost-effective reductions.
As different industrial sectors bear different costs for reducing emissions, industrial sectors with low
marginal abatement costs are encouraged to reduce more than they are required by regulation and
provide the market with the surplus. For this service, they are awarded with a margin of profit.
Installations with high marginal abatement costs enjoy savings as they out-source what would be
considerably costlier to do in-house. At the end of the year installations have to certify their reductions
and a hefty fine (per excess ton emitted) awaits the incompliant. Thus, environmental targets are
reached overall but physically achieved were it is least expensive (Figure 2).

3
NERA Economic Consulting
4
US EPA, Cap and trade essentials
 4

Figure 2 The cap-and-trade program. Source: US EPA

Trading can be made anonymously through an emissions market5 (i.e. stock exchange for emissions)
or over the counter (OTC), as a private sale; either directly from one company to another, or through a
dealer. The mechanism of supply-and-demand influences the selling price of the emission commodity
and the pattern of price fluctuation. Naturally, the price of traded emissions will not exceed the
compliance fine per ton. An installation can also bank emission credits for the next trading period, but
banking can not be excessive, usually no more than 10% of the annual allowances.
The cap and trade tool is best suited when environmental concern occurs over a relatively large area
caused by a large number of polluting sources sharing different abatement costs and with the ability to
effectively monitor reductions. For a credit based system to succeed, it is important to fairly allocate
emission allowances and to set the cap low enough so that companies have incentive to invest in
clean technologies.
NOx and SOx trading programs pioneer in USA and operate under the supervision of the US EPA.
RECLAIM, a local program in Los Angeles, California, is the only program including ships, which can
trade with installations of the coastal area (namely ‘Zone 1’) but not with inland installations (referred
to as ‘Zone 2’). For the participating ships a time contract is conducted to ensure that the supply of
credits in the pool is constant. Results from the American programs6 are reported to be remarkable,
with SO2 reducing faster and at lower costs than anticipated. Water reserves with acid depositions are
recovering in the Northeast and sulphate deposition is 25-50% lower than the 1990 levels in the
Northeast and the Midwest. Results are also encouraging concerning localised high emissions (hot
spots). There hasn’t been a geographic shifting of emissions due to the trade, on the contrary, it is the
largest emitters that reduce the largest amounts (Figure 3).

5
Examples of emissions Exchanges are the Chicago Climate Exchange (CCX), Chicago Climate Futures Exchange (CCFE),
the European Climate Exchange (ECX), Nord Pool, Powernext, the Austrian Energy Exchange (EXAA) and the New York Stock
Exchange. More information [Online] Available, page 37, http://www.ieta.org/ieta/www/pages/getfile.php?docID=2214
6
US EPA, Cap and trade: Acid rain program results
 5

Figure 3 Decrease in sulphate depositions over time and ’hot spots’. Source: NADP

Critique on emission trading schemes (as opposed to the traditional command and control option for
installations individually), do not refer to their theoretical effectiveness but question the situations,
where they can effectively apply. The focus is on high localised emissions, due to trading credits
instead of reducing emissions within the installation, the harmful effect of which is said to be little in the
case of NOx and SOx7. Cap-and trade programs are also criticised as regressive, meaning that
allocation of emissions permits grandfathers older and highly polluting installations8.

3.1 Determing market value for NOx and SOx

Concerning the emission commodity, authority does not interfere with the emissions market but the
driving determinant of the trading price is the allowable limit (cap). The lower the cap, the more
expensive abating becomes for an installation per ton, the higher the price of the gas commodity
traded. In order to understand costs involved for different industrial sectors in Europe, one can consult
their average marginal abatement costs9 (see Appendix, Table A). Marginal abatement costs vary per
sector and a simple average for EU industrial sectors is 3 387 Euros per NOx ton reduced and 3 330
Euros per SOx ton reduced. The price of a traded ton derives from the cost of tons for sale and their
availability in the market. In order not to overestimate expected revenues, the low bar of the marginal
abatement costs (MAC) was considered and the average traded ton is estimated to be 900 Euros for
NOx and 960 Euros for SO2 considering:

• IIASA’s abatement costs per sector were calculated with technical measures and thus, have
been said to slightly emphasize on costlier solutions10
• NEC Directive will not be met by all member states for both gases
• Political fermentation and market mechanisms tend to smoothen environmental costs
• Fluctuations towards both up and down are expected and the estimates are only considered
for a cost-benefit evaluation of the cleaning alternatives, following a conservative route

7
Zimmermann
8
Parry
9
Indicative average abatement costs in Euros per ton for sectors with ‘beyond Business As Usual’ NOx and SOx measures are
supplied by IIASA for 2010 and 2020 and can also be found in reports by Entec to EC DG Environment General
10 The Swedish Environmental Research Institute Gothenburg, IVL
 6

The Swedish Shipowners Association has made a proposal for voluntary participation of ships in a
NOx and SOx emission trading scheme within the EU. The proposal refers to national environmental
targets set by the NEC Directive for those installations targeted by the IPPC Directive. The proposal
acknowledges the potential of the maritime sector to further reduce emissions, the ability to verify
reductions at sea, the gaining potential for land-based installations and defines the general parameters
of trade (Figure 4). A Swedish governmental inquiry produced an investigation by SIKA, Sjöfartsverket,
Naturvårdsverket and Energimyndighetens, which reports on the theoretic potential of a credit-based
approach but is neutrally positioned otherwise.

Figure 4 NOx and SOx trade proposal by Swedish Shipowners Association

 7

4 The study – Overview, Sampling and Assumptions

The main objective of the study is to make an overview of NOx and SOx abating options at sea and to
investigate any costs and benefits these may have for shipping companies participating voluntarily in a
credit based program in Europe as proposed by the Swedish Shipowners Association. For this reason,
a pool of real ships representing the current EU traffic was used as a sample.
The pool consists of:

• 37 ships (25 ships plus 12 sister ships) steaming in EU waters, which for reasons of
anonymity have been coded as Car carrier 1, Car carrier 2 etc.
• Different types, such as car carriers (4), container ships (3), cruise (2), general cargo (1),
passenger (7), Ro-Ro cargo (9), tankers (8), supply/icebreakers (3) and utility (1).
• Different sizes, with total main engine kilowatt output ranging between 2 200kW to 72 000kW
with a product tanker and a cruise ship at the low and high end of the sample. The average
output is 20 000 kW but the median is 14 480kW, which is considered as medium size.
Technical specifications were retrieved mainly by Lloyd’s Fairplay Database.
• Most samples were medium speed diesel (MSD) with 4 high speed diesels (HSD) and 3 slow
speed diesels (SSD).
• 7 of the 37 ships confirmed using distillates in their main engines at the time of inquiry
• Annual main engine time utility ranges from 1 500 hours (17%) to 7 780 hours (89%) of the
calendar year, while by average ships steamed 5 077 hours (58%). Low steaming times had a
visitor cruise ship from overseas, a passenger ship (surprisingly) and short-sea tankers ships
with relatively long loading and unloading times.
• The average utility of engine power is 82%, ranging from 68-95%.
• The annual fuel consumption in tons varies also (1 500 – 3 8000 tons), with the average to be
in the middle (15 800 tons).
• All ships have been assumed to steam only within the SECAs and operate under the SECA
emission requirements. In reality 10 ships operate elsewhere in the EU waters or are
chartered in the European north. The reason for this assumption, is to explore the emission
markets for shipping companies under stricter baselines.
• The car carriers have also been assumed to operate fully within the SECA, although in reality
they voyage overseas.
• Cleaning technologies are assumed to have scrap value equal to zero

For every ship, annual nitrogen and sulphur oxide emissions were computed in tons assuming that
there is no cleaning technology on-board. Their emissions were calculated for main engine steaming,
according to the ship’s revolutions per minute (RPM), IMO’s NOx curve, an indicator of specific fuel
consumption from the NTM methodology11 and the ship’s operational characteristics (main engine time
utilization, engine power utility, (see Appendix Table B), while SOx emissions were calculated
according to the sulphur content in fuel by mass. Any emissions at berth and/or during manoeuvring
have been excluded for reasons of simplicity. Then the annual NOx and SOx emissions were
calculated per ship for different cleaning technologies or switching to distillate fuels:

• Switching to low sulphur residuals

11
Nätverket för Transporter och Miljön, NTM, http://www.ntm.a.se/index.asp
 8

• Installing SCR, Selective Catalytic Reduction System for NOx control,

• Installing HAM, Humid Air Motor system for NOx control
• Installing Sea-water Scrubber for SOx control
• Switching to marine diesel oil (MDO)
• Switching to marine gas oil (MGO)
• Switching to natural gas (LNG)

Reductions achieved below the IMO baselines are considered tradable and used thereafter in the
study for calculating revenues from the emissions market. Ships are assumed to sell all their tradable
credits.
Ships were ‘virtually’ placed to operate under SECA conditions12 and to participate in the NOx and
SOx emission markets. Tradable emissions were calculated in tons per ship per annum for all above
alternatives. After consulting installation companies and having deployed the relevant literature, total
expenditure13 was calculated and spread per traded ton. Costs and payback are tested in the
emissions markets under a five year time frame, in order to have the same denominator for all
cleaning technologies. Capital expenditure for all technologies is spread equally into five years and all
numerical results thereafter consider a five year write off (see Appendix, Table C.).
Last but not least, the estimates for revenues were decided upon only after consulting marginal
abatement costs of the land based industry14, which are expected to be the targets of a cap-and-trade
program, possibly those installations defined in the IPPC Directive. There after, revenues are
calculated using the lowest marginal abatement costs of the land-based industry, which correspond to
900 Euros per traded NOx ton and 960 Euros per traded SOx ton. Due to lack of a real market in
operation, the estimates mirror the expected average selling price per unit. And thus, all alternatives
were evaluated to see the rate on investment and the pay back period. In any case, a discrepancy
between the estimates and real prices as they develop in a future market is expected, but the aim of
the study -examining the scenario of a credit-based trading system including ships- will hopefully be
satisfied.

12
In SECA the maximum sulphur content is 1.5%
13
Total costs include capital expenditure, maintenance, operation, monitoring and verification costs for a five year time horizon.
14
As given by IIASA, found in reports by Entec Consulting Ltd, Task 2b and 2c
 9

5 Cleaning alternatives – environmental performance,

presentation and evaluation
Different technologies or fuel switching, reduce nitrogen and sulphur oxides to a different degree as
seen in Table 1. It is important to include CO2 in the scope, as the number one global issue is
greenhouse phenomenon and climate change. Any alternative reducing nitrogen and sulphur oxides
but increasing greenhouse gases would not be considered as a viable environmental option.
In the current report, cleaning technology operates with residual oil of maximum 1.5% sulphur content,
satisfying the SECA standards. The maximum sulphur content of fuels sold as defined by ISO is
different from the actual average content in the European market. For Marine Diesel Oil, different
sources, such as Mariterm, refineries and the Swedish Environmental Research Institute (IVL), report
of different average sulphur content, ranging between 0.2-0.5 and 1.5%. For calculations concerning
MDO, 1 % sulphur content is considered. Concerning the relevant regulation, maximum sulphur
content of distillates sold within the EU is dictated:
• Marine Diesel Oil is currently sold with maximum 1.5% sulphur content by mass but as from
2010 it shall be sold with maximum 0.1% sulphur content.
• As from next year, all Marine Gas Oil sold in European markets will be of 0.1% sulphur
content (current 0.2%). Therefore, tradable emissions have been calculated with the new
standard of 0.1%.
As seen in Table 1, low sulphur intermediate fuel oil (IFO LS), which satisfies the SECA standards, is
the baseline (100%). Distillates and sea-water scrubber reduce sulphur emissions and relevant
particulate matter (PM). Selective Catalyst Reduction system (SCR) and HAM mainly decrease
nitrogen emissions and little of the sulphur emissions, while natural gas decreases all nitrogen,
sulphur, particulate matter and some of the carbon dioxide.
Table 1 Emissions per cent for the different alternatives

PM

Alternatives SOx NOx SSD MSD CO2

IFO max 1.5 % sulphur residual 100 100 100 100 100

MDO 1% sulphur 67 94* 40* 15* 100

MGO 0.1 % sulphur 7 94* 40* 15* 100

Sea-water scrubber & IFO max 1.5% sulphur 25 100 75 75 100

SCR & IFO max 1.5% sulphur 100 10 100 100 100

HAM & IFO max 1.5% sulphur 100 30 100 100 100

LNG 0 10 3 1 75

(*) not conclusive results

IFO=intermediate fuel oil
 10

5.1 Low sulphur residuals and distillates

As of 2006, residuals with maximum 1,5 % sulphur are sold in the European markets in 380 and 180
centistokes viscosity to provide for those ships steaming in sulphur emissions control areas (SECAs),
which at the moment are the Baltic Sea, the North Sea and the English Channel.
Low sulphur residuals come from low sulphur crudes; blending high and low sulphur crudes, or
blending residuals and distillates. IFO 380 and IFO 180 types can be sold in low or regular sulphur
content. The low sulphur residuals are, of course, in demand and the average price difference
between the low and regular products has been 20 US dollars per ton (8% of the regular sulphur
selling price). In this study low sulphur residuals constitute of the baseline for comparing emissions
and costs, in particular the IFO380 LS product. Any results hereafter and per cent expressions occur
by comparing with low sulphur IFO 380.
For SECA ships willing to participate in the emissions markets, low sulphur residuals will not give any
notable reduction credits, neither for NOx, nor for SOx, as the attribute of the product is to satisfy
SECA regulations and any reduction credits derive at random from blending and are no more than a
safety net.
One way for a ship to reduce nitrogen and sulphur oxide emissions is to switch to distillate fuels;
marine diesel oil (MDO) and marine gas oil (MGO). As sulphur emissions are proportional to the
sulphur content in the fuel, the use of MDO and MGO will help lower sulphur emissions as well as the
particulate matter (PM) at sea. Nitrogen oxide emissions are slightly decreased and CO2 is
unchanged.
For this study, fuel costs were examined in terms of their cost-efficiency. Fuel prices per ton were
acquired by Bunkerworld and refer to the simple average of the previous 12 months, that is, from
August 2006 to August 2007 (Table 2). This does not exactly mirror current fuel prices and trends but
gives ‘conservative’ results. Nevertheless, a historical average was within the scope of this academic
study. Cost calculations are conducted in Euro and conversions from US dollar to Euro were done with
the annual 2006 exchange rate of 0.758.

Table 2 Marine fuels average selling price FOB Rotterdam (August 2006-August 2007) and in percentage Source:
Bunkerworld

NAME $/ton €/ton % %

IFO 380 regular sulphur 291.50 220.95 93 100

IFO 380 LS max1.5%sulphur 314.70 238.54 100 108

IFO 180 regular sulphur 311.00 235.73 99 107
IFO 180 LS max1.5% sulphur 335.55 254.34 107 115
MDO max 2% sulphur 508.20 385.21 161 174

MGO max 0.2% sulphur 562.70 426.52 179 193

Under the modest scenario of MDO and MGO stabilizing at last year’s prices, switching to MDO will
increase fuel costs to 161%, while switching to MGO will increase fuel costs to 179% compared to the
low sulphur residual baseline (IFO 380). In practice, for all sampled ships this meant an annual cost
increase between 270 000Euro and 7.3mEuro for annual fuel consumptions ranging between 1 500 to
38 000 tons. This increase is remarkable; spreading the cost increase per ton (NOx + SOx) reduced is
4 600 Euro for switching to MDO and 6 000 Euros for switching to MGO. The cost of the emission
reduction per ton is too high to have any selling potential in the emissions market.
If ships switch to distillates and simultaneously participate in the emissions market, annual fuel costs
increase to 155% by average for MDO and 166% for MGO for all sampled ships. It is apparent that
 11

gains from trading NOx and SOx reductions are negligable compared to annual increase in fuel costs.
Switching to distillates does not appear to be a cost-efficient solution so other alternatives need to be
scrutinised.

5.2 SCR and 1.5% sulphur residual fuel

The SCR system is a commercial product that reduces NOx. At the moment, 300 engines (about 80
ships) have SCR system worldwide15. It is a catalytic exhaust treatment with an oxidation additional
option to lower volatile organic compounds (VOC) and carbon monoxide (CO)16. Urea is injected into
the hot exhaust gas and reacts with nitrogen oxides producing harmless nitrogen (N2) and water. The
system has some space requirements in the engine room. The reduction rate is controlled with a
maximum of 90-95%.
The cost structure for the SCR includes capital expenditure, operational costs (200 Euros per NOx ton
reduced for urea), maintenance (8 000 Euros per year17) and monitoring costs (20 Euros per ton
traded). As seen in Figure 5, the main components of the cost structure for SCR is capital expenditure
and operational costs (urea), which – and according to the time utility of the engines- share a smaller
or larger portion of the total.
In the absence of an engineering study per ship, an SCR installation company was consulted and an
estimate per ship was calculated with an expected discrepancy. The average capital cost is 51500
Euros per MW, which also falls within Entec Consulting estimates for newbuilds and retrofits. The
average cost per NOx ton traded is 486 Euros, ranging between 322 and 1124 Euros (see Appendix,
B). These results come in accordance to other literature and show that NOx abatement costs are
lower for ships than for land installations. The primary factor that determines the costs per NOx ton is
steaming time per year, as the more the time utility of the engine, the more capital expenditure is
diffused over the traded tons. Ships with a combination of small engines and little annual steaming, will
find it difficult to exploit the NOx market with the SCR, at least with the current market estimates.
1000000

900000
Annual costs in Euro

800000

700000

600000

500000

400000

300000

200000

100000

0
s se l
ax 2

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Capital cost Maintenance cost Operational cost Monitoring & Verification cost

15
Lövbald and Fridell
16
Munters Sweden
17
For every 1000 hours 6 cleaning events are required for 150 Euros per event (Entec). In this report 8 000Euros per annum
were considered for all ships, irrespective of main engine time utility.
 12

100%
Cost categories - Share of total cost

80%

60%

40%

20%

0%

ssel

r. )
er 2

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Gene
S upp

ple --
E xam
Capital cost Maintenance cost Operational cost Monitoring & Verification cost

Figure 5 SCR cost in relevance to total cost

The average rate of return is 100% with a payback period of 2.7 years. Which means that, within the
five year time horizon of this study, one SCR installation can support another one in the same fleet.
Assuming that the ship regularly receives the Swedish Maritime Administration fairway dues discounts,
repay can be shorter to a couple of months (average of 2.5 years). For a ship with little steaming time
but large gross tonnage, discounts can be a relief cutting down repay time considerably. This was the
example of tankers and sister ships with only 30% of steaming time but over 11 000 of gross tonnage,
which received noticeable discounts under the SMA rebate system and thus, cut the payback period
by 1 year – from 6.3 to 5 years. The SMA discounts cut, by average, the dues almost to half. They
also consist of the 14% of the total annual SCR costs- ranging from 2% to 63% depending on the
ship’s gross tonnage. For this reason, they may not always act as a strong incentive to install the SCR
system for all types of ships.
After the five year time horizon, and according to some literature18, the catalyst reactor may have to be
rebuilt. The main component, the catalyst, requires rebuilding depending on the type of fuel during
operation. There is noticeable uncertainty19 concerning the time estimate; this study assumes a grim
window of 5 years (Table 3):
Table 3 Capital costs and fuel content. Source: Entec

Sulphur content by weight

in fuel Rebuild reactor catalyst Relevant cost to rebuild reactor

<0.2 In 15-20 years 90% of total capital expenditure for NEWBUILD or

≤1.5 In 5 years 60% of total capital expenditure for RETROFIT

2.7 In 3 years

18
Entec Task 2b, page 8-9
19
Holmstrom vs. US EPA (Entec)
 13

Concerning the sensitivity to IMO NOx curve baseline, at 6 grams of nitrogen oxides per kilowatt hour
ships commence to show loss, which gradually peaks at 2 gram NOx/kWh, with steaming time to be a
contributing factor (see Appendix Table D).

5.3 HAM and 1,5% sulphur residual fuel

Humid Air Motor (HAM) uses evaporated seawater to reduce the temperature in the cylinder, which is
responsible for the formation of nitrogen oxides. ‘’Roughly three times as much water vapour as fuel is
introduced into the engine to achieve 70-80% of NOx reduction’’. For this study a 70% is assumed.
Costing for the HAM technology was done based on information from the engineers of MS Mariella20.
Compared to the SCR, HAM does not use an additive (urea), which means no operational costs. On
the other hand, the capital expenditure per MW is triple as high, between 95 000 (for a large and new
ship) to 131 000Euros per MW (as retrofit for a small ship). The costs structure can be seen in Figure
6.
The average cost per NOx ton with HAM technology is 689 and 760Euros per traded ton,
corresponding to newbuilds and retrofits respectively (see Appendix,B). Capital expenditure has been
spread over five years, although the time life of this technology is by far longer. The main cost involved
with the HAM is the humidifier, which has a life span between 12.5 to 25 years depending on the
material used.
For the emissions markets and within the five year time frame, return on investment is 51% for
newbuilds and 37% for retrofits, with an average of repay period to be 3.8 and 4.2 years respectively.
Again, the determinant factor for ship with the highest costs per ton traded, was main engine time
utility and ‘idle’ ships seem to be getting the worse results.
Assuming that all ships are eligible to the Swedish Maritime Administration discounts, repay period is
cut by a couple of months. Again, the rebate system favours ships with large tonnage and the short-
sea tankers make the most of it, reducing payback period by one year (from 8.1 to 6.6 years including
SMA discounts).

20
page 45, Task 2b, Entec Consulting
 Cost categories - Share of total cost Annual costs in Euro

C C

0%
20%
40%
60%
80%
100%
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200000
400000
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Capital cost
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Figure 6 HAM costs in relevance to total cost

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 15

5.4 Sea-water scrubber and 1.5% sulphur residual fuel

The scrubbing process runs on a straightforward idea. Exhausts from the engine go through a sea-
water tank, where they are filtered from sulphur oxides. In exit, the scrubbing water is diluted with
more water, in order to dissolve the high acidity, and then discharged with a 6.5 pH into the sea. The
concern lies on the effect of discharging acid water in closed areas, like ports and bays in SECAs,
especially in brackish waters. The volumes of water required to filter the exhausts is an issue. The
consumption of water is non-linear, which means that scrubbing 3% sulphur fuel down to 0.5% or
1.5% will require similar quantities of water. A further reduction though, to 0.2% or 0.1% sulphur
content, brings substantial increase in water usage. For sea-going ships, this may not pose a problem
but for ships in closed waters it could become an issue. Aeration of the water or adding a base can cut
down the quantities required for scrubbing. Further studies are necessary for enclosed and semi-
enclosed areas. Nevertheless, the sea-water scrubber is a promising technology21.
Capital expenditure comprises the investment by about 98%. On average, costs per ton traded are
1470 Euros for newbuilds and 2046 Euros for retrofits, which quickly denote that for the selected
market estimates (900 and 960 Euro per traded ton) the investment does not repay within the given
time frame. Sea-water scrubber requires eight to eleven years for newbuilds and retrofits to rebound
the investment in the emissions market. This is not so much due to capital expenditure per se, but
rather to the SOx volumes themselves, as the volume ratio between NOx and SOx emissions is 5:1.
The Swedish Maritime Administration fairway discounts cut down payback by a year respectively.
The sea-water scrubber is not a cleaning technology to be fairly evaluated in the short term and
independently of fuel costs for the SECA zones. It is a cleaning technology that allows a ship to
operate in a SECA with regular sulphur fuel and without the necessity to jump onto another and
exclusive fuel category. As seen in the Table 4, sea-water scrubber is a positive way for ships
operating in a SECA to adapt to restrictions without compromising on, neither cost, nor the
environment:
Table 4 - Sea-water scrubber and residuals - cost increase per cent from max 1.5% sulphur residual

Sea-water Scrubber & IFO380 LS max 1.5% Sea-water Scrubber & IFO380 max 2.7%
Sulphur Sulphur

NO TRADE TRADE NO TRADE TRADE

NEW RETROFIT NEW RETROFI T NEW RETROFIT NEW RETROFIT

Average 114 119 105 110 106 112 97 103

Median 112 117 103 108 105 110 96 101

Conditions % total cost compared to IFO380 max 1.5% sulphur

TRADE= including revenues from the emissions market

5.5 Natural Gas

Natural gas as a marine fuel is quite a new idea; the technology had already developed but as long as
bunker fuels costs were economic, it received limited attention. The break point was when natural gas
became cheaper than residual oil early 2006. It may be regarded as an unusual choice for ships other

21
AGS, The Alliance for Global Sustainability.
 16

than gas carriers but for road transport, natural gas buses have been running successfully in urban
areas. Due to persistent high oil prices and under tougher environmental pressure, the option of
burning natural gas receives attention in this study.
Liquefied natural gas (LNG) comes undoubtedly first in terms of environmental performance,
minimising NOx, SOx, PM and of all alternatives, it is the only one that reduces CO2. Emissions from
burning natural gas are just 1.42 grams of NOx per kilowatt hour and almost zero sulphur (0.00154
grams per kilowatt hour) giving a lot of reduction credits to ships participating in the emissions markets
(Figure 7). In comparison, the current IMO NOx curve is 10 to 17 gram per kilowatt hour depending on
the engine’s revolutions per minute.

2500

2000
Tradable amount (tons)

1500

NOX
SOX
1000

500

t
1

4
r

el
1

r4

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Ta
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pp
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e
pl
m
xa
E

Figure 7 Annual tradable emissions when utilising natural gas

Prices for LNG can vary per geographical location and after consulting local suppliers in Göteborg a
selling price of 0.045 Euros per kilowatt hour (0.42 SEK/kWh) was generously set for the volumes and
attributes of international shipping22. With this price scenario, the annual costs for burning LNG are by
average 92% of the low sulphur IFO380 costs. In the case of ships participating in the emissions
markets, the revenues are notable and the cost balance after trade is down to 58% of the IFO380LS
annual costs (Figure 8). Concerning sensitivity over the fuel price, for a fixed netto price of
0.0353Euros per kilowatt hour (see Appendix,Table F), natural gas annual costs comprise, by average,
only the 71% of low sulphur residual bunker costs.
The brake even point, where annual fuel costs of natural gas and low sulphur residual oil (IFO380 LS)
are equal is, by average 0.04996 €/kWh (0.46SEK/kWh). If revenues from the emissions markets are
included, the brake even point between these two fuels is 0.0668 €/kWh (0.61 SEK/kWh). In addition
to lower fuel costs, LNG has normally been less volatile than oil, with prices locked under long time
contracts; an assisting factor for cost planning.

22
As seen in table Table E of the Appendix, the highest LNG netto price was 0,035Euros per kilowatt hour (0,32SEK/kWh) but
after communicating with secondary sources an exaggeration of 30% was decided upon for all of the cost calculations
 17

10000000
9000000
8000000
Annual costs (Euro)

7000000
6000000
5000000
4000000
3000000
2000000
1000000
0

en v y

Ca l
Pa ru i 2
Ro sse e 1

ca r 2

Pa en g 2
Ro se r 4
Ro o c r 1

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6
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fis
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pl
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Ex
IFO380 LS LNG Annual LNG costs with emission trading

Figure 8 Annual fuel costs - IFO380 and LNG

The results are very encouraging concerning fuel costs so the scope is widened to comprehend if
other difficulties are involved:
• Natural gas storage facilities require more space and are heavier compared to those of
conventional diesel
• Storing is done in special cryogen tanks in vacuum and perlite insulated tanks (supplier in
Göteborg exists)
• Storing and supply systems are exclusive installations compared to conventional fuel tanks
• Even if the ‘lean burn gas motor’ cost 20-30% dearer than the conventional diesel engine, this
difference appears to have recently dropped to nil.
• Shipbuilding cost may increase by 20-25% (DNV)23.

Of the 37 sampled ships, shipbuilding costs were available for 12. Cost increase was calculated as if
the ships were built in 2006 in order to be gas driven:
Newbuild cost increase [Euro] = 0.25 * total inflated shipbuilding expenditure [USD] * 0,758
The cost increase was divided by the fuel annual cost difference between IFO380 and LNG, plus the
revenues from the emissions markets:
Newbuild cost increase [Euro] / (Δfuel + annual revenues from the emissions market) [Euro/year] =
time required to brake even [years]
As seen at Table 5, emission trading can support increased shipbuilding costs for environmentally
friendlier ships. The cruise ships are luxurious and expensive to build so results are exaggerated;
Passenger 3 has unusually low steaming times and any investment on-board has low return rate.
Among other factors, the burden of an exclusive installation, as this of the LNG, could discourage the

23
Det Norske Veritas 2005
 18

investing on gas driven ships. A credit-based trading system can play the role of a subsidy and may
increase the interest of the market for the economic and environmental possibilities entangled.
Table 5 Time required to compensate for the increased ship building costs in natural gas driven ships in and out of the
emission market

LNG netto=0.035€/kWh LNG netto=0.045€/kWh

Years to Years to Years to Years to
compensate compensate compensate compensate
Engine output (with em. (without em. (with em. (without em.
Ship kW trading) * trading) * trading) * trading) *

Car Carrier 1 14710 5 14 8 232

Cruise 1 36180 9 21 14 139

Cruise 2 72000 21 46 32 235
Passenger 1 25 920 5 10 7 32
Passenger 2 50 400 2 4 3 13
Passenger 3 36 000 10 22 16 112
Passenger 4 36 000 3 6 5 19
RoPax 1 44 480 4 8 6 25
Ro cargo 9 9320 3 6 4 19
Supply and sister ships 13440 5 11 8 58
Average - 7 15 10 88

*Assumes annual cost difference between LNG and IFO380 LS (Δfuel) to be constant

Last but not least, currently supply locations for ships are still scarce within the current SECAs.
Nevertheless, a brief search shows that supplier and distributors multiply their facilities, some of which
are appropriate for supply ships. Infrastructure for ships and investing on gas driven ships is a
dynamic and simultaneous process. The author is positive that in the next years it is possible to create
supply points for ships and to provide the SECAs with a viable option for the general traffic.

5.6 1% sulphur residual fuel and cleaning technologies

Along with 1.5% sulphur residual on sale in Rotterdam and the northwest, shipping companies have
privately locked quantities of 1% sulphur residuals. Since there is lack of data, an overhead of 25 US
dollars per ton was added to IFO380 and IFO180 1.5% bunker costs to compensate for, after
contacting a shipping company.
 19

Table 6 – Market price for 1% sulphur residuals Source: Bunkerworld and Broström

Cost per ton FOB in

Cost per ton FOB in Euros Cost relevance
US Dollars (average (annual 2006 to IFO380LS in
Aug 2006-Aug 2007) exchange rate 0,758) percentage %
IFO 380 max1.5 % sulphur FOB
Rotterdam 314.70 238.54 100
IFO 180 max1.5 % sulphur FOB
Rotterdam 335.55 254.34 107
IFO380 1% sulphur FOB
(assumption) 339.70 257.49 108
IFO180 1% sulphur FOB
(assumption) 360.55 273.29 114

As seen in Table 6, by purchasing 1% sulphur content residuals, annual fuel costs increase by 8%. In
practice this means a cost increase between 27 000 Euros to 733 130 Euros per year according to the
ship’s annual fuel consumption. For the SCR and HAM technologies, the annual revenue in the
emissions markets is half the cost (51%), that is, for 960 Euros per ton expected to flow in, 1895 Euros
are spent. The cost-benefit ratio is 2:1, so the cost of reducing one ton of sulphur oxides is double the
revenue estimate of the SOx commodity in the emission market. For the sea-water scrubber
technology, the reduction in SOx emissions is disproportional as the switching to 1% sulphur fuel
contributes to just few more SOx tons reduced:
For the HAM/SCR
ΔFuel Cost : Δ Revenues = 2 : 1
ΔFuel Cost : Δ Reduction Credits = 1895 Euro,
Where ΔFuelCost is the difference between IFO 380 1.5% sulphur residual and IFO 380 1% sulphur
residual per year,
ΔRevenues is the extra revenues acquired by switching from 1.5 to 1 % sulphur residual
and
ΔReduction Credits are the additional tradable credits gained by switching from 1.5 to 1 % sulphur
residual
Likewise, for the Sea-water Scrubber
ΔFuel Cost : ΔRevenues = 8 : 1
ΔFuel Cost : ΔReduction Credits = 7580 Euro
The discount from the Swedish Maritime Administration is negligible; 470Euros per year by average
(median is 266Euros). Passenger ships, which have usually larger tonnage, have the same dues in
both fuel categories (Table F, Appendix). Although, the economic effort to reduce sulphur oxides is
noticeable, the relief is petite. Switching to 1%sulphur residuals may still be perceived as an attractive
idea in order to comply with regulation (compared to other options) but it does not create cost-efficient
credits in the emission markets.
 20

5.7 Reduction emissions and relevant costs –

conclusion of findings
In Table 7 we can see emission reductions and costs:
Table 7 – Emission reductions and costs

SOx NOx PM CO2 Total Total

costs/year costs/year
Bunker without em. with em.
Alternatives SSD MSD costs/year trade trade

IFO max 1,5 % sulphur

residual 100 100 100 100 100 100 100 100

IFO max 1 % sulphur residual 67 100 100* 100* 100 108 108 104

MDO 1% sulphur 67 94* 40* 15* 100 161 161 156

Sea-water scrubber & IFO

max 1,5% sulphur** 25 100 75 75 100 100 117 108

Sea-water scrubber & IFO

max 1% sulphur** 17 100 100 100 100 108 124 114

SCR & IFO max 1,5%

sulphur** 100 10 100 100 100 100 111 90

SCR & IFO max 1% sulphur** 67 10 100 100 100 108 119 94

HAM & IFO max 1,5%

sulphur** 100 30 100 100 100 100 113 96

HAM & IFO max 1% sulphur** 67 30 100 100 100 108 121 100

LNG 0 10 3 1 75 81 92-138(137) 58-105(87)

Estimated average market price: NOx=900€/ton, SOx=960€/ton

(*) not conclusive results
(**) capital expenditure spread over 5years
LNG price = 0.042 €/kWh
In bold italics = Cost Baseline Scenario
In italics = decentralised traffic
number in (parenthesis) includes shipbuilding cost increase spread over 15 years
 21

6 Discussion and conclusive remarks

Publications by US EPA are encouraging about nitrogen and sulphur oxide credit-based programs, in
terms of achieving the environmental targets and minimizing the overall costs.
Voluntary participation of shipping companies in a credit-based trading system is expected to provide
shipping companies with emolument and incentive to invest in clean technologies. During current
conditions, abatement costs at sea are notably lower than those on land, especially for NOx.
As suppliers of credits, shipping companies will be rewarded with a margin of profit, but in credit-based
trading systems the main beneficiaries are the large, buyers who save substantially by inexpensively
purchasing what would be costlier to maintain within the installation. Among the beneficiaries are
installations with large thermal output and high abatement costs, such as energy related industries,
which tend to pass their costs down the line24.
It has been discussed that within a credit based system, land installations can increase their
production capacity and compensate by purchasing emission reductions from the pool. For some
installations this could be the only way, especially in sensitive areas. Involving exempted emitters in
the efforts, such as mobile sources, can ‘lift’ the ceilings of stationary emitters, for some of which
increasing capacity is of vital importance.
Concerning the revenues from the emissions market, natural gas has by far the best environmental
performance and rewards the shipping company. SCR comes second with HAM right behind (Figure
9). For the shipping company, revenues from trading are enough to pay back the costs of cleaning
technology. It seems that in a credit-based system, investing on clean technology can be a self-
supporting project. The SCR repay covers the funding of another cleaning installation, within five
years, and accelerates the ‘greening’ of the fleet in an inexpensive manner and beyond international
regulation.
Comparing the two technologies for nitrogen control, and for the five year time frame, SCR cost per
ton is smaller than this of HAM. The rate of returns is slower for HAM also due to the traded volumes.
Nevertheless, after the five year time frame, SCR has a disadvantage, since it has operational costs
and due to the possibility of having to rebuild the reactor.
The revenues from reductions at sea are relevant to the baselines (in this study they are established to
be the SECA), as well as any trading ratio agreed between land and sea installations. In California’s
RECLAIM scheme, it was agreed that 1.3 tons reduced at sea are exchanged to 1 ton reduced on
land. Environmental and other arguments exist from both sides and the above has been a numerical
agreement. Current baselines are key to the results; if NOx baseline falls below 6 grams per kilowatt,
the average ship on HAM does not collect gains from the emission markets and if baseline falls below
4 grams per kilowatt, the average ship on SCR does not collect gains either.
Concerning sulphur technology, the sea-water scrubber should not be judged under the scope of
emissions trading. Rather, it is a technology that 1) allows the ship to steam in a SECA using regular
oils 2) With low sulphur residual, it downgrades the sulphur but without the excess costs of the
distillates.
Switching to distillates in order to retrieve tradable NOx and SOx credits for the emissions markets is
not cost-efficient. It takes the ship into an exclusive fuel category but still, it does not eliminate both
nitrogen and sulphur problems. The increase is outstanding and may influence the cost of sea
transportation service, possibly also influencing the shift of traffic from sea to road transport (especially
for routes and products where the two modes are competing). This rise cancels the idea of the
inexpensive nature of sea transportation for the cargo sector. For transportation that runs on the
margin – that is, for price and time sensitive products- medium hauls in some EU destinations can be

24
‘Power Intensive Industries object to windfall profits from Emissions’, CEMBUREAU, Bruxelles
http://www.cembureau.be/Cem_warehouse/
 22

replaced by road transport. This weakens shipping competitiveness and ironically undermines the EU
strategic planning for less road emissions, congestions and noise.
Natural gas results are very encouraging in dealing effectively with the problem and providing a flow of
revenues in the emissions markets for the shipping company. At the same time, the fuel selling price is
economical, resulting in further cost cuts. A generous increase in shipbuilding costs -for the non gas
carrier ships- denotes that some kind of support or encouragement may be considered to initiate
shipbuilding. The revenues from the emissions markets can conditionally take the place of a subsidy.
Further study on infrastructure will clarify for which ships and/or ship routes LNG use is applicable in
the north and the northwest.
In whatever way the scheme is actually implemented, it initiates the interest of an industry otherwise
exempted. Concerning timing, shipping is very close to becoming the centre of attention in European
policy since soon enough, shipping will emit more nitrogen and sulphur oxides than all land sectors
combined. Hopefully, a credit-based trading system for NOx and SOx in EU will make use of the long
experience from other programs, will stay transparent and unbiased, resulting in lower emissions
overall, lesser costs and prove to be the starting point for the recovery of our environment.
 23

3500000

3000000
Annual revenues from emission market (Euro)

2500000

2000000

1500000

1000000

500000

er

er

t
l
2

r4

go

4
ity

uc
ss
er

er

er

er

er

er

er

er

er

er

er
e

o
x

in
ak

ti l

ar
ie
Pa

od
oR

rg

rg

rg

rg

rg

rg

rg

rg

rg
is

is

ta

U
rri

rri

rri
ng

ng

ng

ng
nk

nk

nk

nk
ve
rr

re

C
ru

ru

ca

ca

ca

ca

ca

ca

ca

ca

ca

pr
on
ca

ca

ca

ca
R

Ta

Ta

Ta

Ta
o

eb

al
C

g
oR

ss

ss

ss

ss

er
o

in

er
ar

ar

ar

ar
/ic
R

oR

oR

R
Pa

Pa

Pa

Pa

nk
en
R

C
o-

o-

o-

o-

o-

o-

o-
ly

is
R

Ta
pp

- -f

G
R

R
Su

e
pl
m
xa
LNG total annual revenues from the emission markets SCR total annual revenues from the emission markets (1,5%sulphur fuel)

E
HAM total annual revenues from the emission markets (1,5%sulphur fuel) SOx MGO 0,1%s fuel annual revenues

SWS total annual revenues from the emission markets (1,5%sulphur fuel) MDO total annual revenues from the emission markets

Figure 9 Annual revenues from the emissions markets per alternative per ship
 Euro Euro

Ro Ro
Ro Ro

0,00
2 000 000,00
4 000 000,00
6 000 000,00
8 000 000,00
10 000 000,00
12 000 000,00
14 000 000,00
16 000 000,00
0,00
2 000 000,00
4 000 000,00
6 000 000,00
8 000 000,00
10 000 000,00
12 000 000,00
14 000 000,00
16 000 000,00
Pa Pa
C x2 C x2
Pa r ui Pa r ui
ss se ss se
en 1 en 1
ge ge
r r
Ro 2 Ro 2
Ro Ro
C 1 C 1
Pa r ui Pa r ui
ss se ss se
2 2
Pa eng Pa eng
ss er ss er
4 4

LS IFO380
LS IFO380
Ro en Ro en
-R g e -R g e
o r o r
Ro c a 1 Ro c a 1
Ro rg o Ro rg o
c 3 c 3
Ca a rg Ca a rg
rc o8 rc o8
Ca ar ri Ca ar ri
e e
Ro r ca r 1 Ro r ca r 1
-R r rie -R r rie
o o
Ro c a r 4 Ro c a r 4
-R rg -R rg
o o o o
24

c 6 c 6
c a arg c a arg
rc o rc o

Scrubber NEW and LS IFO380

Scrubber NEW and LS IFO380

Ro ar 7 Ro ar 7
R rier R rier
Ro o ca 2 Ro o ca 2
Su -R rg Su -R rg
pp o c o 9 pp o c o 9
ly a ly a
/ic rg o /ic rg o
eb
r 2 eb
r 2
Ca ea Ca ea
r k r k
Ro ca er Ro ca er
-R r rie -R r rie
Ro o c r 3 Ro o c r 3
Annual fuel costs inside the emission markets

Figure 10 Sulphur alternatives - Annual fuel costs in and out of the emissions markets
-R arg -R arg
Annual fuel costs outside the emission markets

o o o o
ca 4 ca 4
rg rg
Ta o 5 Ta o 5
nk nk
e e
Ta r 1 Ta r 1

Scrubber RETROFIT and LS IFO380

Pa nk Pa nk
Scrubber RETROFIR and LS IFO380

s e s e
Ro s en r 2 Ro s en r 2
-R g e -R g e
o r o r
MDO
MDO

ca 3 ca 3
rg rg
Co o Co o
nt 1 nt 1
Ex ai Ex ai
MGO
MGO

am Ta ner am Ta ner
pl n pl n
e ke
r e ke
r
- -f - -f
is h U 3 is h U 3
in t ilit in t ilit
G gv y G gv y
en e en e
er ss er ss
Natural gas

e e
natural gas

al al
Ca l Ca l
Ta rgo Ta rgo
nk nk
er er
4 4
 25

References
Alliance for Global Sustainability, AGS, ’Sea-water scrubbing- reduction of SOx emissions from ship
exausts’, Göteborg 2007
Det Norske Veritas, Teknisk Rapport No 2005-1095, Revisjon nr 03, Miljøverndepartementet
Reduksjoner av NOx i fartøyer – Tiltaksanalyse
Directive 1996/61/EC (IPPC Directive), Concerning integrated pollution prevention and control,
[Online] Available http://ec.europa.eu/environment/ippc/pdf/ippc_report_en.pdf, Sep 2007
Directive 2001/81/EC on National Emission Ceilings and Annex I (NEC Directive), [Online] Available
http://eur-lex.europa.eu/LexUriServ/site/en/oj/2001/l_309/l_30920011127en00220030.pdf , Sep 2007
European Environment Agency (EEA), Tropospheric Ozone in EU - The consolidated report, Topic
report No 8/1998, ISBN: 92-828-5672-0, [Online] Available http://reports.eea.europa.eu/TOP08-
98/en/page005.html
Energimyndigheten, Naturvårdsverket, SIKA and Sjöfartsverket, Handels med utsläppsrätter för svavel
och kväveoxider inkluderande sjöfart, 2007, Dnr 0602-06-02200
Entec UK Ltd, Service Contract on Ship Emissions: Assignment, Abatement and Market-based
Instruments, Task 2b – NOX Abatement and Task 2c – SO2 Abatement [Online] Available
http://ec.europa.eu/environment/air/pdf/task2_nox.pdf
and http://ec.europa.eu/environment/air/pdf/task2_so2.pdf, Sep 2007
International Institute for Applied Systems Analysis, IIASA, ‘Baseline Scenarios for the Clean Air for
Europe (CAFE) Programme’, [Online] Available http://www.iiasa.ac.at/rains/CAFE_files/Cafe-
Lot1_FINAL(Oct).pdf
Lövblad, G and Fridell, E., ‘Experiences from use of some techniques to reduce emissions from ships’,
Göteborg, 2006,
[Online] Available
http://www.vgregion.se/upload/Milj%C3%B6/Transporter/Engelsk%20rapport%20060428.pdf
Nätverket för Transporter och Miljön (NTM), Methods and data for environmental assessment of
international cargo transport, January 2005
NERA Economic Consulting, ‘Economic Instruments for Reducing Ship Emissions in the European
Union – European Commission 2005, Directorate General Environment’, [Online] Available
http://ec.europa.eu/environment/air/pdf/task2_so2.pdf,
http://ec.europa.eu/environment/air/pdf/task2_nox.pdf
and http://ec.europa.eu/environment/air/pdf/task3_final.pdf, Sep 2007
Ozone Position Paper, [Online]
Available http://ec.europa.eu/environment/air/documents/pos_paper.pdf, Sep 2007
Parry, Ian W.H., Are Emissions Permits Regressive? Resources for the Future Discussion Paper 03-
21, June 2003, [Online] Available http://www.rff.org/documents/RFF-DP-03-21.pdf
(European Associations of) Power intensive industries object to windfall profits from Emissions
Trading, [Online]
Available http://www.cembureau.be/Cem_warehouse/2-
INDIRECT%20IMPACT%20OF%20EMISSIONS%20TRADING%20ON%20ELECTRICITY%20PRICE
S.PDF
Swedish Methodology for Environmental Data (SMED), Methodology for calculating emissions from
ships:1. Update of emission factors, 2004
Swedish Environmental Research Institute Gothenburg, Service contract for Review of the RAINS
Integrated Assessment Model - Reference ENV.C1/SER/2003/0079, [Online] Available
http://ec.europa.eu/environment/air/cafe/activities/pdf/rain_model.pdf
Swedish Shipowners Association and Pricewaterhousecoopers, Emissions Trading Schemes in
Europe for SO2 & NOX including shipping, 2006, [Online] Available
 26

http://www.sweship.se/Files/PDFDokument/060515_Final_SSAProposal.pdf
US EPA, Cap and trade: Acid rain program results, [Online] Available
http://www.epa.gov/airmarkets/cap-trade/docs/ctresults.pdf
US EPA, Cap and trade essentials [Online] Available, http://www.epa.gov/airmarkets/cap-
trade/docs/ctessentials.pdf, Sep 2007
US EPA, Ground level Ozone, [Online] Available, http://epa.gov/air/ozonepollution/index.html, Sep
2007
Zimmermann, Michelle, The Clean Air Mercury Rule: Understanding the Controversy, MIT
Undergraduate Research Journal, [Online] Available, http://web.mit.edu/murj/www/v13/v13-
Features/v13-f3.pdf

Contacts
(Alphabetically)
Carl Johan von Sydow, Sales/Purchases, Top Oil, E-mail: carljohan@topoil.se
Espen.R.Kristiansen, Purchasing Manager, Scandlines, E-mail: espen.r.kristiansen@scandlines.dk
Jan Alsin, Laboratory Manager – Manager, Saybolt, E-mail: jan.alsin@corelab.com
Janne Rask, Anderstorp Gas, EON, E-mail: janne.rask@eon.se
Hulda Winnes, Doctorate student, Lighthouse, hulda.winnes@chalmers.se
Ingrid Carlsen, Bunker Purchaser, Broström Tankers AB, E-mail: Ingrid.Carlsen@brostrom.se
Kjell Sandaker, Project Development, Eidesvik*, E-mail: kjell.sandaker@eidensvik.no
Lena Blomqvist, VP Environment Global Environment, Corporate Affairs, Wallenius Wilhelmsen
Logistics, Email: lena.blomqvist@2wglobal.com
Lennart Harardson, Wärtsilä, Email: Lennart.Haraldson@wartsila.com
Per Holmström, DEC - Diesel Emission Control, Munters Sweden, Email: per.holmstrom@munters.se
Ronald Nilsson, Fuel Business Development, EON, Email: roland.nilsson@eon.se
Sven Lyngfelt (publishing), Associate professor, Lighthouse, svenl@chalmers.se
Thomas Stenhede, CHP/DE Applications, Manager, Wärtsilä Power Plants
Tori Linbol, Natural Gas Vice president Statoil, Email: torlin@statoil.com
Unni Einemo, Senior Editor, Bunkerworld London, Unni.Einemo@bunkerworld.com

*ships not in sampled pool

 27

APPENDIX

Figure A - Range of NOx and SO2 projections Range of SO2 projections for the “with climate measures”
projection (thick solid line), the “no further climate measures projection (thin solid line) and the national
energy projections (dashed line), in kt. Note: (in blue - descending) EU 15, (in green - ascending) Sea
regions, (in red) New Members States. Source: IIASA

Table A

Indicative average abatement costs in € for sectors with ‘beyond Indicative average marginal abatement costs for sectors with
BAU’ NOx measures ‘beyond BAU’ SO2 measures

2020 Cost
AcActivity 2010 2020 2010 Cost Curve -
Fuel production and conversion: Curve - marginal
Combustion 3 306 3 362 Sector marginal cost cost
Combustion in residential commercial
sector 8 085 8 034 Fuel production & conversion: Combustion 2 704
Combustion in residential-commercial
Industry: Combustion in boilers 5 588 5 731 sector 2 004 2 004
Industry: other combustion 2 792 3 052 Industry: Combustion in boilers 5 609 6 445
Power and district Heat Plants: Exist 4 343 5 270 Industry: Other combustion 2 139 2 627
Power and district Heat Plants: New 3 378 3 275 Power & district heat plants: Exist. Other 3 838 4 365
Industrial process: Cement Production 839 848 Power & district heat plants: New 8 946 8 659
Industrial process: Coke ovens 1 900 1 900 Industrial. Process: Cement production 8 691 8 691
Industrial process: Lime production 872 881 Industrial. Process: Coke oven 1 144 1 144
Industrial process: Nitric Acid 3 711 3 825 Industrial. Process: Lime production 5 839 5 839
Industrial. Process: Other non-ferrous
Industrial process: other non-ferrous 2 651 2 651 metals prod. - primary and secondary 2 786 2 786
Industrial process: pig iron, blast 3 844 3 844 Industrial. Process: Pig iron, blast furnace 1 083 1 083
Industrial process: petroleum 8 374 8 690 Industrial. Process: Paper pulp mills 1 099 1 099
Industrial process: agglomeration 3 049 3 210 Industrial. Process: Petroleum refineries 1 070 1 070
Industrial. Process: Agglomeration plant -
Other transport: other off-road 44 398 44 398 sinter 941 941

Other transport: rail (exhaust) 17 226 18 033 Industrial. Process: Sulfuric acid 972 990

Light duty vehicles 51 322 56 435 Waste: Agricultural waste burning 686 686

Motorcycle: 4 stroke (exhsust) 142 694 134 335 Waste: Flaring in gas and oil Industry 6 286 6 747
Waste: Agricultural waste burning 444 444 Waste: Open burning of residential waste 1 586 1 586
Other transport: rail (solid fuels), heating
Waste: Flaring in gas and oil industry 3 520 3 520 (stationary combustion) 5 245 5 245
Waste: open burning of residential 879 879 Average for Stationary sources only 3 330 3 443
Average for Stationary sources only 3 387 3 495 Average 3 298 3 406
Average 14 915 14 887 Source: IIASA
Source: IIASA BAU = Business as Usual
 28

Table B
SCR -- cost
SCR -- cost per NOx ton HAM -- cost HAM -- cost
per NOx ton SCR -- cost per reduced per tons per tons
Total hours of Annual fuel reduced NOx ton (capex in a 5 reduced reduced
main engine utility consumption (capex in a 5 reduced (capex year spread) (capex in a 5 (capex in a 5
engine per year in in tons – main year spread) in a 5 year € from year spread) year spread) €
power Engine cruising engine € from SCR spread) € from ENTEC € from from ENTEC
vessel type (kW) type speed steaming COMPANY ENTEC NEW RETROFIT ENTEC NEW RETROFIT
car carrier 1 14 710 SSD 7 000 17 067 322 327 378 355 378
car carrier 2 14 480 MSD 5 737 15 040 378 385 462 531 566
car carrier 3 14 480 MSD 5 164 10 830 439 449 556 721 770
car carrier 4 14 480 MSD 6 910 17 050 359 365 434 473 504
Container and
sister ships 7 200 MSD 5 034 7 334 548 406 488 564 601
Cruise 1 36 180 MDS 6 570 35 655 393 370 444 467 548
Cruise 2 72 000 MSD 2 710 31 687 502 558 725 1 011 1 194
General Cargo 3 264 MSD 5 500 3 250 491 510 631 681 681
Passenger 1 25 920 MSD 3 902 19 389 487 436 541 648 763
Passenger 2 50 400 MSD 4 000 34 353 447 449 561 694 818
Passenger 3 36 000 HSD 1 500 9 318 928 876 1 200 1 927 2 284
Passenger 4 36 000 HSD 4 690 30 568 449 433 536 647 761
Product tanker 2 200 HSD 4 250 1 424 753 777 994 727 727
Ro-Ro cargo 1 9 000 MSD 4 970 8 289 556 427 521 638 681
Ro-Ro cargo 2 14 480 MSD 6 415 13 850 385 392 474 553 590
Ro-Ro cargo 3 15 600 MSD 6 753 19 073 353 348 408 391 457
Ro-Ro cargo 4 12 000 MSD 4 830 10 494 402 424 519 641 684
Ro-Ro cargo 5 12 000 MSD 4 830 10 494 402 424 519 641 684
Ro-Ro cargo 6 18 900 MSD 4 440 15 193 445 436 540 642 756
Ro-Ro cargo 7 18 900 MSD 4 440 15 193 445 436 540 642 756
RoRo pax 44 480 MSD 4 200 31 833 446 432 536 644 758
RoRo cargo 8 23 040 MSD 5 400 18 550 433 419 514 596 702
RoRo cargo 9 9 320 MSD 7 784 13 907 432 343 399 396 421
RoRo Pax 2 and
sister ship 48 000 MSD 4 730 38 688 412 414 509 594 698
supply/icebreaker
and sister ships 13 440 MSD 6 132 11 711 427 423 518 643 685

Tanker 1 11 700 MSD 4 800 10 168 416 427 524 651 694
Tanker 2 9 480 SSD 6 500 9 493 427 348 406 406 432
Tanker 3 7 562 SSD 6 500 7 093 414 361 424 434 463
Tanker 4 and
sister ships 4 760 MSD 2 628 2 265 1 124 1 096 1 499 1 461 1 461
Utility 6 960 HSD 4 000 4 863 563 531 669 915 977
Average 20 231 SSD 5 077 17 067 479 467 582 678 750
 29

Table C Main functions used for calculations

Fuel consumption [ton]= engine output [kW] * specific fuel consumption indicator [ton g/kWh] *
engine time utilization [hours] * average engine utility / 1 000 000
Tradable NOx Emissions with SCR [ton]= IMO NOx baseline [g/kWh] * engine output [kW] * engine
utilization[hours] * engine utility * 0.9 * 0.000001
Tradable SOx emissions [ton]= Annual fuel consumption [ton]* SECA decimal sulphur content
*2*reducing factor
Annual Total Cost of Technology [Euro]= (capital cost/5) + annual operating costs + annual
maintenance costs + monitoring and verification costs [Euro]

Revenue from NOx or Sox [Euro] = 900 or 960 [Euro]* traded volume [ton]
Payback period [years] = Total expenditure in five years [Euro] / Annual revenue [Euro]
Cost per ton [Euro]= Total annual costs [Euro] / traded volume [ton],

Where Total annual costs [Euro]= 1/5 * Capital expenditure [Euro] + annual maintenance [Euro] +
annual operational costs [Euro]+ monitoring and verification costs for the traded volumes [Euro]

And traded volume [ton] = reductions below the SECA baseline [ton]
ROI=100*((NOx net benefits * NOx ratio)+(SOx net benefits * SOx ratio)) [Euro] /cost per ton reduced
[Euro],
Where ratio is the ratio of the traded volumes between NOx and SOx for every technology
Annual fuel costs [Euro] = average price of fuel [Euro per ton or kWh]* annual fuel consumption [per
ton or kWh]
SMA port discounts for regular service [Euro] =factor * gross tonnage *2*12/ Exchange rate

Table D – Revenue sensitivity to IMO NOx curve

Number of ships Average annual Comments
IMO baseline NOx without revenue in the steaming time
g/kWh emissions market
6 9 3485 Includes 5 sister ships
5 11 3723 -
4 15 4235 -
3 31 - -
2 34 - -
 30

Table E - Natural gas selling price - netto

Type and quarter SEK/kWh €/kWh

CNG 2007 Q1 19,84 öre/kWh netto 0,1984 0,0214

CNG 2007 Q2 19,06 öre/kwh netto 0,1906 0,0206

CNG 2007 Q3 22,68 öre kWh netto 0,2268 0,0245

LNG 2007 Q1 19,84 öre/kWh netto LOW 0,2484 0,0268

LNG 2007 Q2 19,06 öre/kwh netto LOW 0,2406 0,0260

LNG 2007 Q3 22,68 öre kWh netto LOW 0,2768 0,0299

LNG 2007 Q1 19,84 öre/kWh netto HIGH 0,2984 0,0322

LNG 2007 Q2 19,06 öre/kwh netto HIGH 0,2906 0,0314

LNG 2007 Q3 22,68 öre kWh netto HIGH 0,3268 0,0353

Average 0,2553 0,0275

Plus 30% from LNG Q3 high 0,4248* 0,0458*

Source: EON * NOTE: a 30% exaggeration after conducting secondary sources

Table F - Sjöfartsverket SOx rates

SOx rates per GT in

SEK Pax Other

0-0,2 0 0

0,21-0,5 0,3 0,2

0,51-1 0,6 0,4

1,01- 0,6 0,6