Air Pollution from Ships in Danish Harbours: Feasibility Study

THESIS FOR DEGREE OF DOCTOR OF PHILOSOPHY

of Cold-ironing Technology in Copenhagen

FABIO BALLINI

Department of Naval, Electrical, Electronic and Telecommunication Engineering UNIVERSITY OF GENOA, Italy 2013

BALLINI FABIO Department of Naval, Electrical, Electronic and Telecommunication Engineering (DITEN), University of Genoa, Italy

ABSTRACT

Annex VI of the MARPOL Convention (IMO) and a number of EU directives, principally Council Directive 1999/32/EC, set the regulatory framework for the shipping industry and signature member states, while at the same time limiting unilateral regulatory measures. This thesis has studied best-practice examples of unilateral emission control in the North Sea and Baltic Sea region. The main study case has been the Port of Copenhagen. To accommodate the growing cruise traffic, a new cruise pier has been constructed that is prepared for cold-ironing, a technology that allows vessels at berth to use shore power rather than electricity generated by auxiliary engine. To assess the socio-economic impact of this technology, I applied an advanced external air pollution evaluation model, studying emissions from international shipping in the North Sea and Baltic Sea within the specific timeframe of May-August 2012. My calculations demonstrated that the total external health cost of emissions from cruise ships at berth in Copenhagen within the 5-month timeframe was €5,384,086. My calculations also showed that a scenario of 60% of visiting cruise ships using shore power (i.e. approx. the total capacity of the proposed cold ironing utility) would result in an

external health cost saving of NOx SO2 and PM emissions respectively of €2,675,384, €28,535 and €175,590. My cost-benefit analysis demonstrated that the external health costs would balance the capital cost in harbour-side cold-ironing infrastructure in 10-15 years. The thesis also identified two prerequisites for the economic feasibility of shore power in Copenhagen. Firstly, Denmark needs to obtain an exemption from Community Directive (2003/96/EC), Article 14(1)(c) to exempt vessels from paying local Danish environmental tax on shore power. Secondly, a pool of major Baltic destinations needs to be created to ensure that cold-ironing becomes a benchmark incentive-based technology in the region with which to reduce emissions in harbour environments.

Keywords: air pollution, cost-benefit analysis, ship exhaust emissions, socio-economic impact, cost-effectiveness, cold-ironing technologies, shore power, impact assessment, feasibility study, external heath costs, investment cost, international maritime law, incentive-based emissions reduction, abatement technology, market penetration, pooling, business case.

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INDEX

INTRODUCTION…………………………………………………..…………………………………………………………..1

1.1.STUDY BACKGROUND……………………………………………………………………………………………………1

1.2 AIM AND RESEARCH QUESTIONS…………………………………………………………………………………..3

1.3METHODOLOGICAL APPROACHES AND SCIENTIFIC FOUNDATION……………..…………………..5

2. THE REGULATORY FRAMEWORK………………………………………………………………………………….7

2.1INTERNATIONAL REGULATIONS…………………………………..………………………………………………….7

2.2 EU REGULATIONS…………………………….……………………………….………………………………………….14

2.3 REGULATIONS APPLYING TO DANISH PORTS…………..……………………………………………………18

2.3.1 POLICY TO REDUCE NOx EMISSION IN DENMARK………………...... 19

2.4 COST BENEFIT OF TREADABLE EMISSION CREDIT SYSTEM……………………………………………20

2.5 NORWEGIAN NOx TAXATION AND SUBSIDIES………………………………………………………………23

2.6 NOx TAXATION AND STATE SUBSIDIES IN AN EU PERSPECTIVE……………………………………25

2.7 PM TAX ON PORT EMISSIONS………………………………………………………………………………………29

2.8 DIFFERENTIATED PORT DUES……………………………………………………………………….………………30

2.9 VOLUNTARY AGREEMENTS AND CONSORTIUM BENCHMARKING……………………………….33

3. ABATEMENT TECHNOLOGIES AND ALTERNATIVE FUELS………………………….………………….36

3.1 COST OF NOX ABATEMENT TECHNOLOGY…………………………………………………..……………….36

3.2 USING WATER TO LOWER THE COMBUSTION TEMPERATURE……………………………………..37

3.2.1 WIFE ON DEMAND……………………………………………………………….………………………38

3.2.2 HUMID AIR MOTOR……………………………………………….…………..…………………………39

3.3 TREATMENT OF THE EXHAUST GAS……………………………………………….…………………………….39

3.3.1 SCRUBBER…………………………………………………………….……………..……………………….39

3.3.2 SELECTIVE CATALYTIC REDUCTION (SCR)…………………….………………….….………...40

3.3.3 EXHAUST GAS RECIRCULATION (EGR)……………………………………………………………41

3.3.4 LIQUEFIED NATURAL GAS (LNG)………………………………………….…………..…………..43

4. COLD-IRONING TECHNOLOGIES ………………………….………………………….….……………………..47

4.1 COLD-IRONING TECHNOLOGY IN CRUISE SHIPS……………………..…………………………………….47

4.2.ISO STANDARD: HIGH VOLTAGE SHORE CONNECTION (HVSC) SYSTEMS.…….……….……...51

4.3 SYSTEM DESCRIPTION…………………………………………………………………….……….………….……….52

4.4 WORK BARGES AND LNG POWER BARGES…………………………………………………………..………53

4.5 COLD-IRONING AS RETROFIT………………………………………………..……………………………………..56

4.6 CURRENT COLD-IRONING MARKET SHARE…………………………….….…………………………………58

4.7 COLD-IRONING PENETRATION IN THE BALTIC SEA.………….……………….………………………….60

5. DANISH ELECTRICITY SUPPLY – THE NORDIC ENERGY MIX AND THE COPENHAGEN

CLIMATE PLAN 2015…………………………………..……………………………………………………………….62

5.1 NORDIC ENERGY MIX…………………………………………………………………………….……………………62

5.2 DANISH ELECTRICITY SUPPLY…………………………………………………………………………….………..64

5.3. COPENHAGEN CLIMATE PLAN……………………………………………………………..…………………….65

6. HEALTH COST- EXTERNALITY OF AIR POLLUTION IN DENMARK………………………….……..68

6.1 INTRODUCTION…………………………………………………………………………………………………………..68

6.2. THE EXTERNAL VALUATION OF AIR POLLUTION MODEL ……………..…………..………………..70

6.3 DEFINITION OF THE SCENARIOS……………………………………………………………………………….….71

6.4 PRESENT AND FUTURE HEALTH IMPACT IN EUROPE AND DENMARK

OF INTERNATIONAL SHIPPING ……………………………………………………………..………………………76

6.5 EXTERNALITY COSTS PER KG EMISSION………………………………………………………………………..79

7. PRESENTATION OF STUDY CASE: COPENHAGEN CRUISE PORT.……………………………………82

7.1 CRUISE INDUSTR………………….……………………………………………………………………………………...82

7.2TOTAL TRAFFIC ………………………………..……………………………………………………………………….….82

7.3 SIZE OF VESSELS…………………………………………………………………..……….……………………….…….84

7.4 COMPETITIVE POSITION ………………………………………………..…………………………………………...88

7.5 LOGISTICS…………………………………..……………………………………….…………………………………….…92

7.6 ENVIRONMENTAL IMPACT………………………………………………………………………………….……….93

8.COLD IRONING FEASIBILITY AND COST BENEFIT……………………………………………………….100

8.1 COST OF ON-BOARD GENERATION OF ELECTRICITY USING

AUXILIARY ENGINES…………………………………………………………………………………..……………….100

8.2 ELECTRICITY COST: MARKET RATE AND REDUCED RATE……..………………………………….....102

8.3 COLD-IRONING BUSINESS CASE …………………………..…………………………………………………….103

8.4 CALCULATION OF EMISSION FACTORS OF AUXILIARY ENGINES………………..………………..108

8.5 TOTAL EMISSIONS REDUCTION…………………………….….………………………………………………..108

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8.6 EXTERNAL HEALTH COST ……………………………………………..…………………………………………..110

8.7. COST-BENEFIT ANALYSIS (CBA)…………………………………………………..…………………………….116

9. ANALYSIS AND CONCLUSIONS…………………………………………………………..………..……………120

10 FUTURE WORK…………………………………………………………………………………………….…………126

REFERENCES………………………………………………………………………………………………………….…….127

APPENDIX……………………………………………………………………………………………………………….…..140

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ACKNOWLEDGMENT

I would like to thank my supervisor Associate Professor Riccardo Boz- zo, the Department of Naval, Electrical, Electronic and Telecommunica- tion Engineering, University of Genova, for his scientific support and guidance during the work on this thesis. And I would also like to thank Jørgen Brandt, Head of Section, and Helge R. Olesen, Senior Advisor, at the Department of Environmental Science & DCE, Aarhus University, for their scientific guidance and valuable advice.

I would like to thank Kirsten Ledgaard, Director of Planning, By & Havn, for her help and assistance and Bengt Olof Jansson from Copen- hagen Malmö Port for his valuable guidance.

I would also particularly like to thank Kristian Anders Hvass and Profes- sor Niels Mygind, Department of International Economics and Manage- ment, Copenhagen Business School, for their scientific guidance. And I would also like to thank the Copenhagen Business School for hosting me in Copenhagen during my fieldwork.

Finally, I would like to thank friends and colleagues at the department who helped me by answering my many questions and for our inspiring talks.

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LIST OF ABBREVIATIONS

AE Auxiliary Engine ATRS Air Transport Research Society BaS-NoS Baltic Sea + North Sea (pertaining to EVA) BIMCO Baltic and International Maritime Council CAFÉ Clean Air for Europe CEEH Centre for Energy, Environment and Health

CH4 Methane CO Carbon monoxide

CO2 Carbon dioxide

CO(NH2)2 Urea CMP Copenhagen Malmö Port CTM Chemical Transport Model DEHM Danish Eulerian Hemispheric Model DKK Danish currency unit (kroner) ECA Emission Control Areas EEB European Environmental Bureau EEDI Energy Efficiency Design Index EGR Exhaust Gas Recirculation ENSO European Network of Transmission System Operators for Electricity EPA Danish Environmental Protection Agency EU The European Union EVA External Valuation of Air Pollution Model GAINS Greenhouse Gas and Air Pollution Interactions and Synergies HAM Humid Air Motor HVSC High-Voltage Shore Connections

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IMDG Code International Maritime Dangerous Goods Code IMO The International Maritime Organization IPPC Integrated Pollution Prevention and Control ISO International Organization for Standardization KBH2025 Copenhagen Climate Plan LNG Liquefied Natural Gas MARPOL International Convention for the Prevention of Pollution from MCR Maximum Continuous Rotation MGO Marine Gas Oil

N2 Nitrogen NaOH Caustic soda NEC National Emission Ceilings NECA Nitrogen Oxide Emissions Control Area

NH3 Ammonia

NOx Nitrogen Oxide

NO2 Nitrogen Dioxide OECD/EEA Organisation for Economic Co-operation and Development/ European Economic Area PM Particle Matter R&D Research and Development RAINS Regional Air Pollution INformation and Simulation SECA Sulphur Emissions Control Area SEEMP Energy Efficiency Management Plan SCR Selective Catalytic Reduction SOMO35 Sum of Ozone Means Over 35ppb UNCLOS United Nations Convention on the Law of the Sea VOC Volatile Organic Compounds WHO Word Heath Organization

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WiFE Water in Fuel Emulsion YOLL Years of Lost Live

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1 INTRODUCTION

1.1 STUDY BACKGROUND

Projections indicate that without further regulatory action the continued growth in emissions of SO2 and NOx from the maritime sector would surpass that of all land-based sources in the EU by 2020. A wide range of initiatives and regulatory measures have in recent years been adopted to air pollution from land-based sources, including the CO2 emissions trading scheme regulated by the European Emissions Trading Scheme. Within shipping, Annex VI of the MARPOL Convention (IMO) and a number of EU directives, principally Council Directive 1999/32/EC, represent the regulatory framework for tackling the issue of reducing exhaust gas emissions from ships. These regulatory measures set minimum values and standards, requiring industry players and authorities to take action, although at the same time limiting the options of individual states to set out their own regulatory measures and unilateral initiatives to reduce emissions from ships. In 2015, the North Sea and Baltic Sea will become a Sulphur Emissions Control Area (SECA) under the IMO, which will result in the reduction of SO2 emissions from shipping. In 2016, the region is also expected to become a Nitrogen Oxide Emissions Control Area (NECA) under the

IMO, which will target NOx emissions in the region, although the effect will be incremental since the regulatory measures deal with engine design and a near total renewal of the fleet would be required to achieve the full potential benefit. With the introduction of the SECA, shipping companies have been given the option of reducing exhaust emissions,

either by using marine fuels with a maximum content of 0.1% sulphur, or by using abatement technologies. The overall reduction in NOx emissions in the Baltic Sea and North Sea in the coming years will therefore depend on the choice of technologies and investment strategies that shipping companies make within the framework of SECA and NECA requirements. In the light of these international regulatory initiatives within shipping, the main political focus in the North Sea and Baltic Sea region in relation to emissions control will in the coming years no doubt shift to adopting measures that can further reduce NOx and PM emissions. This thesis will study some of the best-practice examples of unilateral initiatives adopted within the region in relation to curbing NOx emissions, including the mandatory Norwegian NOx tax introduced in 2003, which also applies to shipping, and the differentiated harbour dues introduced in Sweden in 2002. The core study case of this thesis represents a current example of the range of challenges, legally and economically, that individual states in the region experience when seeking to adopt unilateral initiatives to curb exhaust emissions from shipping that have a direct impact on the health and wellbeing of their citizens. The study case is the Port of Copenhagen, Denmark, where over the past decade the considerable rise in cruise ship holidaymaking in the North Sea and Baltic Sea has made the Danish capital the region’s leading cruise ship hub. To accommodate the rise in cruise ship traffic and reduce the local impact of ship exhaust emissions in urban areas close to the harbour, the Copenhagen harbour development company and port authority, By & Havn, has constructed a new cruise pier, which is set to open in 2013, at some distance from residential areas. In accordance with the city’s climate policy, the new

pier is prepared for the introduction of cold ironing, a technology that allows vessels at berth to use shore power rather than rely on electricity generated by their auxiliary engines. This thesis will seek to assess the socio-economic benefit of introducing cold ironing in Copenhagen based on a project for shore power infrastructure proposed by the port operator, Copenhagen Malmö Port. I will assess the socio-economic benefit of applying this technology in Copenhagen by developing a cost-benefit analysis based on an advanced model for local-scale air pollution valuation in addition to site-specific data pertaining to the geographical parameter and timeframe of the study. Furthermore, this thesis will seek to identify the legal framework under international law that would allow Denmark and other nations in the region to potentially adopt cold-ironing as a benchmark incentive- based mechanism to reduce NOx and PM emissions from cruise ships in harbour environments.

1.2 AIM AND RESEARCH QUESTIONS

The aim of this thesis is to quantify the positive socio-economic benefit of reducing airborne exhaust emissions from cruise ships hoteling in Copenhagen by offering a cost-benefit analysis of the introduction of cold-ironing technology at the city’s new cruise ship pier. The aim is furthermore to identify the legal framework under international law that would allow Denmark and other nations bordering the North Sea and Baltic Sea to adopt cold-ironing as a benchmark incentive-based mechanism to reduce NOx and PM emissions from cruise ships in harbour environments.

To achieve these objectives I have pursued the following research questions:  To which extent does current international and EU law give

leverage to unilateral initiatives to reduce NOx and PM emissions from shipping?  Which best-practice, incentive-based mechanisms have been applied in the North Sea and Baltic Sea region within a unilateral framework to reduce NOx and PM emissions?  To which extent does best-practice abatement technology offer a cost-effective solution to emission reduction?

 What is the external health cost of NOx and PM emissions (€/kg) in the context of the given geographical parameter and timeframe of the study case using a benchmark model for air pollution valuation?  What is the socio-economic impact of exhaust emissions from cruise ships hoteling in Copenhagen, based on 2012 data?  What is the cost-benefit to society of the implementation in the Port of Copenhagen of the planned cold-ironing utility?  How could cold-ironing technology in the Port of Copenhagen be developed as a benchmark incentive-based mechanism to reduce emissions in harbour environments in the North Sea an Baltic Sea region?

1.3 METHODOLOGICAL APPROACHES AND SCIENTIFIC FOUNDATION

This thesis adopts an interdisciplinary approach to research, drawing on the scientific disciplines of chemistry, environmental science, engineering, economy and law. The methodological approach is based on quantitative research with a bottom-up approach to local-scale inventory. To assess the external health cost of each individual compound of ship exhaust emission in the Port of Copenhagen, I modified individual standards in the applied External Valuation of Air Pollution Model (EVA), an advanced model developed by the University of Aarhus. The key advantage to this model, which tracks the impact pathway of regional-scale air pollutant and chemical transportation, is that it can account for the non-linear chemical transformations and feedback mechanisms influencing air pollutants from a particular regional source (in this case international shipping) within a given geographical region (in this case the Baltic Sea and the North Sea) and within a given timeframe (in this case May-August 2012). The model is based on local- scale information from the Centre for Energy, Environment and Health, CEEH. I furthermore modified the standard scenario of the EVA model to focus on the specific harbour environment rather than the sea environment (i.e. SNAP category BaS-NoS/15). In addition, I obtained location-specific shipping data from 2012 from the Copenhagen Malmö Port (CMP) and port authority on the basis of which I calculated the average energy consumption of each vessel, etc. The data used for these calculations was supplied by the port operator, Copenhagen Malmö Port (CMP), and the city’s port authority.

I have assumed that auxiliary engines in port use fuel with a sulphur level of 0.1% in compliance with current EU regulation. To calculate the external cost of CO2 emissions I have assumed the rate of €0.02/kg applied to rural areas in Denmark as cited by the Danish Ministry of Transport. The PM emission factor is based on EU25 emissions data from the RAINS model and EU25 electricity production data from the EU report on Energy and Transport Trends to 2030.

2 THE REGULATORY FRAMEWORK

2.1 INTERNATIONAL REGULATIONS

IMO MARPOL ANNEX VI

The International Convention for the Prevention of Pollution from Ships(1) (MARPOL) represents the main IMO Convention currently in

(1)The International Convention for the Prevention of Pollution from Ships (MARPOL) is the main international convention covering prevention of pollution of the marine environment by ships from operational or accidental causes. The MARPOL Convention was adopted on 2 November 1973 at IMO. The Protocol of 1978 was adopted in response to a spate of tanker accidents in 1976-1977. As the 1973 MARPOL Convention had not yet entered into force, the 1978 MARPOL Protocol absorbed the parent Convention. The combined instrument entered into force on 2 October 1983. In 1997, a Protocol was adopted to amend the Convention and a new Annex VI was added which entered into force on 19 May 2005. MARPOL has been updated by amendments through the years. The Convention includes regulations aimed at preventing and minimizing pollution from ships - both accidental pollution and that from routine operations - and currently includes six technical Annexes. Special Areas with strict controls on operational discharges are included in most Annexes. The MARPOL Convention is divided into VI annex: Annex I Regulations for the Prevention of Pollution by Oil (entered into force 2 October 1983) covers prevention of pollution by oil from operational measures as well as from accidental discharges; the 1992 amendments to Annex I made it mandatory for new oil tankers to have double hulls and brought in a phase-in schedule for existing tankers to fit double hulls, which was subsequently revised in 2001 and 2003. Annex II Regulations for the Control of Pollution by Noxious Liquid Substances in Bulk (entered into force 2 October 1983): details the discharge criteria and measures for the control of pollution by noxious liquid substances carried in bulk; some 250 substances were evaluated and included in the list appended to the Convention; the discharge of their residues is allowed only to reception facilities until certain concentrations and conditions (which vary with the category of substances) are complied with. In any case, no discharge of residues containing noxious substances is permitted within 12 miles of the nearest land. Annex III Prevention of Pollution by Harmful Substances Carried by Sea in Packaged Form (entered into force 1 July 1992), contains general requirements for the issuing of detailed standards on packing, marking, labelling, documentation, stowage, quantity limitations, exceptions and notifications. For the purpose of this Annex, “harmful substances” are those substances which are identified as marine pollutants in the International Maritime Dangerous Goods Code (IMDG Code) or which meet the criteria in the Appendix of Annex III.

force regarding the protection of the marine environment, representing 50% of the gross tonnage of the world’s merchant fleets. The MARPOL convention’s principle articles mainly deal with jurisdiction and powers of enforcement and inspection. Six annexes cover the various sources of pollution from ships and provide an overarching framework for international objectives. MARPOL Annex VI, also known as the ‘International Convention for Prevention of Air Pollution by Ships’, has been adopted to control exhaust emissions in international shipping. This Convention limits sulphur dioxide (SO2) and nitrogen oxide (NOx) emissions from vessels whereas volatile organic compounds (VOCs), particulate matter (PM) and carbon dioxide (CO2) emissions are not presently subject to IMO regulation.

Annex IV Prevention of Pollution by Sewage from Ships (entered into force 27 September 2003) contains requirements to control pollution of the sea by sewage; the discharge of sewage into the sea is prohibited, except when the ship has in operation an approved sewage treatment plant or when the ship is discharging comminuted and disinfected sewage using an approved system at a distance of more than three nautical miles from the nearest land; sewage which is not comminuted or disinfected has to be discharged at a distance of more than 12 nautical miles from the nearest land. In July 2011, IMO adopted the most recent amendments to MARPOL Annex IV, which entered into force on 1 January 2013. The amendments introduce the Baltic Sea as a special area under Annex IV and add new discharge requirements for passenger ships while in a special area. Annex V Prevention of Pollution by Garbage from Ships (entered into force 31 December 1988): Deals with different types of garbage and specifies the distances from land and the manner in which they may be disposed of; the most important feature of the Annex is the complete ban imposed on the disposal into the sea of all forms of plastics. In July 2011, IMO adopted extensive amendments to Annex V that entered into force on 1 January 2013. The revised Annex V prohibits the discharge of all garbage into the sea, except as provided otherwise, under specific circumstances. Annex VI Prevention of Air Pollution from Ships (entered into force 19 May 2005): Sets limits on sulphur oxide and nitrogen oxide emissions from ship exhausts and prohibits deliberate emissions of ozone depleting substances; designated emission control areas set more stringent standards for SOx, NOx and particulate matter. In 2011, after extensive work and debate, IMO adopted ground-breaking mandatory technical and operational energy efficiency measures which will significantly reduce the amount of greenhouse gas emissions from ships; these measures were included in Annex VI entered into force on 1 January 2013.

The MARPOL Annex VI 2008 revision offers an estimated €15 to €34 billion reduction in external costs to the EU in improved public health and reduced mortality. The cost estimates of implementing the revision range from €2.6 to €11 billion. As such the revision offers benefits that are 3 to 13 times greater than the cost(2).

SULPHUR DIOXIDE (SO2)

MARPOL Annex VI regulates the emission of SO2 by prescribing limits on fuel sulphur content, which significantly reduces particle emissions.

The sulphur content of a liquid fuel essentially determines the SO2 emissions released in the combustion of that fuel, i.e. the combustion of low sulphur fuels leads to low levels of SO2 emissions. Equally, a reduction of SO2 emissions can be achieved by using higher sulphur fuels in combination with emission abatement methods. The most significant changes to MARPOL Annex VI in the 2008 revision addressed SO2 pollution: (1) A reduction from 1.5% by weight of the sulphur content of all marine fuels used in SECAs: – To 1% by 1 July 2010 – To 0.1% by 1 January 2015

(2) A reduction from 4.5% by weight of the sulphur content of all marine fuels used globally outside of Sulphur Emission Control Areas (SECAs), i.e. the “global standard”. – To 3.5% by 1 January 2012

(2)DIRECTIVE OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL, amending Directive 1999/32/EC as regards the sulphur content of marine fuels. Brussels, 15.7.2011; EC (2011) 919.

– To 0.5% by 1 January 2020, subject to review in 2018, with a possible delay to 2025

(3) Allowing access to a broad range of emission abatement methods (“equivalents”), such as equipment, methods, procedures or alternative fuels.

Figure 1–Regulation timeline: sulphur marine fuels.

Source: Lloyd's Register EMEA

NITROGEN OXIDE (NOX)

Annex VI of the MARPOL convention regulates NOx emissions from large marine diesel engines as defined in the Tier I, Tier II and Tier III standards. The Tier I standards were defined in the 1997 version of Annex VI, while the Tier II/III standards were introduced by the Annex VI

amendments adopted in 2008. Furthermore, the amendment defines two sets of emission and fuel quality requirements: 1) global requirements, and 2) more stringent requirements applicable to ships in Emission Control Areas (ECAs). The current Tier II standard is approx. 20% lower than Tier I, while the Tier III standard is approx. 80% lower than Tier I.

The MARPOL Annex VI regulation for NOx applies to all diesel engines of 130 kW or larger, implying that the limits are also binding for most Auxiliary Engines (AE). Under the 2008 Annex VI amendments, Tier I standards became applicable to existing engines installed on ships built between 1 January 1990 and 31 December 1999, with a displacement of ≥ 90 litres per cylinder and rated output ≥ 5000 kW, subject to availability of approved engine upgrade kit(3). The following table shows the emission limits in the MARPOL Convention.

Table1 The MARPOL NOx emission limits (g NOx / kWh)

Engine revolvements per minute <130 130≤rpm2000 rpm≥2000 TIER From year g Nox / kWh Tier I 2000 17 45*rpm -0,2 9,8 Tier II 2011 14,4 44*rpm -0,23 7,7 Tier III 2016 3,4 9*rpm -0,2 1,96

EMISSION CONTROL AREAS (ECAs)

Annex VI of the MARPOL Convention provides an opportunity for coastal states to designate part of the sea as an Emission Control Area (ECA) in order to prevent or reduce the adverse impacts on human

(3)Source: DIESEL – www.dieselnet.com.

health and the environment through measures that control exhaust emissions. An ECA can cover NOx, SO2 or PM or all three types of emissions. A Sulphur Emissions Control Area is called a SECA and a Nitrogen Oxide Emissions Control Area is subsequently called a NECA. The North Sea (including the English Channel) and the Baltic Sea have been designated as SECAs.

Figure 2. Sulphur Emissions Control Area (SECAs) - Baltic and North Sea SECAs

Source: http://www.atobviaconline.com/helpFiles/WebService/bp_shipping_marine_distance_ta.htm

A designated SECA area requires the use of fuel with low sulphur(4) content. At present, fuel of a sulphur content not greater than 1% must be used in the ECAs. In 2015, this limit will be lowered to 0.1% sulphur. Low sulphur fuel must be used in main engines, Auxiliary Engines (AE)

(4) See Figure 1.

as well as auxiliary boilers. Furthermore, IMO has adopted a proposal from the United States and Canada to jointly designate an Emission Control Area (ECA) for specific US and Canadian coastal waters. The proposed ECA area in North America would extend up to 200 nautical miles from the coast(5).

Figure 3 shows the existing and potential Emission Control Areas worldwide

Source: Baltic Ports Organization Secretariat

Furthermore, the nations surrounding the Baltic Sea and the North Sea are expected to introduce a NECA that will come into force in 2016. However, if implemented, a hypothetical negative side effect of creating the NECA could be that ship owners (including cruise ship owners) respond by predominantly using ships built before 2016 in the NECAs. This could delay the renewal of the fleets operating in the NECAs, to the disadvantage of public health and the environment. On the other hand, a significant reduction of NOx emissions can be expected within

( 5 )http://www.atobviaconline.com/helpFiles/WebService/index.html?seca_and_eca_a reas.htm

designated NECAs within a few years after the average lifetime of a ship engine, which is 25 years(6) (C. Trozzi).

Table 2. Special areas under MARPOL (Annex VI)

SPECIAL AREAS ADOPTED# DATE OF ENTRY INTO FORCE IN EFFECT FROM

Baltic Sea (SOX) 26 September 1997 19 May 2005 19 May 2006

North Sea (SOX) 22 July 2005 22 November 2006 22 November 2007 North American (SOX, NOX and PM) 26 March 2010 1 August 2011 1 August 2012 United States Caribbean Sea ECA (SOX, NOX and PM) 26 July 2011 1 January 2013 1 January 2014 Source: IMO (International Maritime Organization)

# Status of multilateral conventions and instruments in respect of which the International Maritime Organization or its Secretary-General perform depositary or other functions as of 31 December 2002.

2.2 EU REGULATIONS

EXHAUST GAS EMISSIONS FROM SHIPS

Projections indicate that without further regulatory action the continued growth in emissions of SO2 and NOx from the maritime sector would surpass total emissions of such pollutants from all land-based sources in the EU by 2020(7).

The Council Directive 97/68/EC(8) was adopted with the aim of reducing health and environmental effects from NOx, HC and PM emissions from

(6)Emission estimate methodology for maritime navigation, Carlo Trozzi, ( 7 )SEC (2005) 1133: Commissions Staff Working Paper accompanying the Communication on Thematic Strategy on Air Pollution (COM(2005)446 final) and the Directive on Ambient Air Quality and Cleaner Air for Europe(COM(2005)447 final). (8)Directive 97/68/EC of the European Parliament and of the Council of 16 December 1997 on the approximation of the laws of the Member States relating to measures

ships. In order to balance SO2 emissions from non-road mobile machinery and road transport emissions, the directive offers an option for member states to set stricter emission limits in special areas of inland waterways. Such emission limits would be valid for all ships passing through these inland waterways. The European emission standards for new non-road diesel engines have been structured as gradually more stringent tiers known as Stage I...IV standards.

Stage I/II: The first European legislation to regulate emissions from non- road (off-road) mobile equipment was promulgated on 16 December 1997(9). The regulations for non-road diesels were introduced in two stages: Stage I implemented in 1999 and Stage II implemented from 2001 to 2004, depending on the engine power output. Engines used in ships, railway locomotives, aircraft, and electricity generating sets were not covered by the Stage I/II standards.

Stage III/IV. Stage III/IV emission standards for non-road engines (including engines used in ships) were adopted by the European Parliament on 21 April 2004( 10 ), and for agricultural and forestry tractors on 21 February 2005(11).

against the emission of gaseous and particulate pollutants from internal combustion engines to be installed in non-road mobile machinery. (9) Directive 97/68/EC of the European Parliament. (10) DIRECTIVE 2004/26/EC OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL of 21 April 2004 amending Directive 97/68/EC on the approximation of the laws of the Member States relating to measures against the emission of gaseous and particulate pollutants from internal combustion engines to be installed in non-road mobile machinery (11)COMMISSION DIRECTIVE 2005/13/EC of 21 February 2005 amending Directive 2000/25/EC of the European Parliament and of the Council concerning the emission of gaseous and particulate pollutants by engines intended to power agricultural or

Stage III standards, which are further divided into Stages IIIA and IIIB were phased in from 2006 to 2013, Stage IV enters into force in 2014. The Stage III/IV standards, in addition to the engine categories regulated at Stage I/II, also cover railroad locomotive engines and marine engines used for inland waterway vessels. Stage III/IV legislation applies only to new vehicles and equipment; replacement engines to be used in machinery already in use (except for railcar, locomotive and inland waterway vessel propulsion engines) should comply with the limit values that the engine to be replaced had to meet when originally placed on the market.

COUNCIL DIRECTIVE 1999/32/EC

Council Directive 1999/32/EC(12) establishes limits on the maximum sulphur content of gas oils, heavy fuel oil in land-based applications as well as maximum sulphur content of marine fuels and serves as the EU legal instrument to incorporate the sulphur provisions of the MARPOL Annex VI.

COUNCIL DIRECTIVE 2005/33/EC

Council Directive 2005/33/EC( 13 ) amends Council Directive 1999/32/EC. The new directive prescribed that a ship at berth must not

forestry tractors, and amending Annex I to Directive 2003/37/EC of the European Parliament and of the Council concerning the type-approval of agricultural or forestry tractors. (12)COUNCIL DIRECTIVE 1999/32/EC of 26 April 1999 relating to a reduction in the sulphur content of certain liquid fuels and amending Directive 93/12/EEC. (13)DIRECTIVE 2005/33/EC OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL of 6 July 2005 amending Directive 1999/32/EC.

use marine fuel with a sulphur content exceeding 0.1%, a provision that came into force on 1 January 2010. There were a few exemptions to the 0.1% sulphur cap, which included ships moored at berth for less than two hours. This EU requirement nonetheless came into force 5 years earlier than the IMO-standard 0.1% sulphur cap. The directive also offered a strong operator compliance mechanism, while the MARPOL Annex VI had no such enforcement mechanism. And furthermore, the directive allows for a more limited range of equivalent emission abatement methods compared to the revised MARPOL Annex VI. However, on one issue the EU directive was less stringent than MARPOL Annex VI However: Where the MARPOL Annex VI allowed a maximum sulphur content of 1% in SECAs, the EU directive allowed ships to use fuels with a sulphur content of up to 1.5%.

COUNCIL DIRECTIVE 1999/32/EC

On 15 July 2011, the EU adopted a proposal for an amendment of Council Directive 1999/32/EC(14)to align the directive with the latest IMO provisions on the sulphur content of marine fuels and adapt the directive to the MARPOL Annex VI provisions on alternative compliance methods. The adopted proposal furthermore maintains the links between the stricter fuel standards in SECAs and the fuel requirements for passenger ships on regular service and improves the implementation of the directive by harmonising and strengthening provisions for monitoring of compliance and reporting.

(14)See footnote 12.

2.3 REGULATIONS APPLYING TO DANISH PORTS

Council Directive 1999/32/EC (amended by Council Directive 2005/33/EC) was implemented in Denmark by Statutory Order No. 1663 of 14 December 2006, which was later amended by Statutory Order No. 372 of 15 April 2011(15).

International conventions and EU legislation limit Denmark’s options in adopting tougher regulation on emissions from ships around Denmark. Article 24 of the United Nations Convention on the Law of the Sea (UNCLOS)(16) rules out emission charging of “innocent passage”, while Article 26(17) rules out distance-based emission charges for international sea transport, even for those vessels calling at national ports. And although international conventions provide an option for national regulation of “innocent passage” for special environmental concerns(18),

(15)https://www.retsinformation.dk/Forms/R0710.aspx?id=136787 (16) Article 24 “Duties of the coastal State” - Section 3, innocent passage in the territorial sea subsection a. rules applicable to all ships - 1. The coastal State shall not hamper the innocent passage of foreign ships through the territorial sea except in accordance with this Convention. In particular, in the application of this Convention or of any laws or regulations adopted in conformity with this Convention, the coastal State shall not: (a) impose requirements on foreign ships which have the practical effect of denying or impairing the right of innocent passage; or (b) discriminate in form or in fact against the ships of any State or against ships carrying cargoes to, from or on behalf of any State. 2. The coastal State shall give appropriate publicity to any danger to navigation, of which it has knowledge, within its territorial sea. (17)Article 26 “Charges which may be levied upon foreign ships” Section 3. innocent passage in the territorial sea subsection a. rules applicable to all ships - 1. No charge may be levied upon foreign ships by reason only of their passage through the territorial sea. 2. Charges may be levied upon a foreign ship passing through the territorial sea as payment only for specific services rendered to the ship. These charges shall be levied without discrimination. (18)UNCOLS Convention; Article 21 “Laws and regulations of the coastal State relating to innocent passage”, The coastal State may adopt laws and regulations, in conformity with the provisions of this Convention and other rules of international law, relating to innocent passage through the territorial sea, in respect of all or any of the following:[…]paragraph

it is not common practice for a country to do so, especially for ships not calling at ports in the nation. In practice, this means that the Danish authorities can only regulate exhaust gas emissions from ships calling at Danish ports in accordance with EU directive 2005/33/EC( 19 ) and MARPOL Convention Annex VI.

The SECA that takes effect in 2015 throughout the Baltic Sea and North

Sea does not include NOx emissions. Although 70% of NOx emissions in the waters around Denmark are emitted by foreign-flagged ships that never call at a Danish port, the only options for Danish legislators has been to join other nations in the region and the EU to seek the introduction of a NECA, which is expected to come into force in 2016.

2.3.1 POLICY TO REDUCE NOx EMISSION IN DENMARK

Denmark levies a tax on emission of NO2-equivalents from 20 combustion( ). The obligation to pay the tax covers emissions of NO2- equivalents on Danish territory, including the territorial sea and the Danish continental shelf area. Large industrial units, for instance industrial processes with heavy energy consumption, waste incineration plants and industry processes emitting more than 200 tons NOx annually must measure NOx emissions.

In 2010, the tax rate was €680 per metric ton NOx emitted. The tax rate will increase gradually reaching €730 per ton in 2015(21).

(f): the preservation of the environment of the coastal State and the prevention, reduction and control of pollution thereof. (19) See footnote 13. (20) Act no. 472 af 17/06/2008, “Lov om afgift af kvælstofoxider”. (21) Danish Environmental Protection Agency; Environmental Project no. 1421, 2012.

In the absence of measurements of emissions to air of NO2-equivalents during combustion, the estimated quantity of NO2-equivalents is estimated relative to the quantity of goods delivered and consumed. The Danish Ministry of Taxation may lay down rules for the metering and rules for the measurement of NO2 emissions into the air.

The NOx tax is also applied to fuel used in the transport sector. However, in the transport sector the tax is very small, approximately €1.56 per ton fuel or approximately €0.026 per kg NOx. Sea transport is, in general, exempt from the NOx tax, also large vessels with emissions above 200 22 metric tons of NOx annually( ).

2.4 COST BENEFIT OF TRADABLE EMISSION CREDIT SYSTEM

The nations around the Baltic Sea and North Sea are expected to introduce a NECA in 2016, but since such a zone is basically about engine efficiency standards it would take time before the benefits of emissions reduction would materialise since the Tier III requirements would only apply to new vessels. So studying the case of the cost-benefit of a tradable emissions credit system is nonetheless relevant. Despite the current woes of the international carbon emissions trading system, which has resulted in low prices for CO2 quotas, market-based instruments, such as the Kyoto Flexible Mechanisms( 23 ), including credits for greenhouse gas reductions tradable permits, are often considered an efficient measure with which to reduce emissions. Market-

(22)See previous footnote. (23)Haoran Pan, 2001. "The economics of Kyoto flexible mechanisms: a survey,"Energy, Transport and Environment Working Papers Series ete 0111, Katholieke Universiteit Leuven, Centrum voor Economische Studiën, Energy, Transport and Environment.

based instruments such as emission charges or cap-and-trade systems offer shipping companies a high level of freedom in responding to a given regulation. Such a system would cover all NOx emissions from ships registered in nations that are signatories to the treaty. A baseline would need to be defined (i.e. geographical demarcation of the NOx tax zone). A critical issue of the credit-based programme concerns the setting up of a method for measurement of emission savings and determining the initial level of emissions to avoid giving credits to emission savings that would have occurred anyway. An emission credit programme would furthermore require the development of a reliable monitoring, reporting, and verification method. In order to get a reasonably detailed system, parameters such as ship location, ship engine characteristics, emissions factor, activity level and energy consumption could be included. There would be a trade-off between the cost and precision of the monitoring system and administrative costs will increase with the complexity of systems. The efficiency of the credit- based programme would also depend on the number of agents participating in the market for credits. A limited number of actors in the programme also limit the potential for emission reductions.

Nonetheless, an international NOx tradable emissions credit system would encourage shipping companies to invest in NOx abatement technology and speed up compliance with Tier III engine standards. Estimates based on the current scenario (i.e. before the introduction of a NECA in the Baltic Sea and North Sea in 2016) could, depending on the applied technology, reduce NOx emissions in Denmark by up to 60-80%. The potential reduction is estimated to be in the range of 60% to 80% of total annual NOx emissions from national Danish sea transport, corresponding to between 5,718 and 7,624 tons of NOx. The 5,718 tons

figure corresponds to 60% of the NOx emissions from national navigation transport in Denmark and 4% of total NOx emissions in Denmark. The benefit to society of will be approx. €7.11 per kg NOx, in total €40,661,211 for all 5,718 tons of NOx annually. Technologies applied under this scheme would focus on exhaust gas recirculation (EGR), water injection in turbo-charge-air (HAM) and selective catalytic reduction (SCR). The average capital and operational cost of these three technologies is €0.5179 per kg of NOx. Applying these technologies would amount to a total cost of €2,916,180. An additional cost of this measure would include monitoring and inspection plus additional costs of setting up an organisation that can facilitate emission trading. Furthermore, additional administrative resources would initially be required to design the system and to find the right level of credits to issue in the market. It is estimated that these costs would amount to €2.5 million annually. The total value to the Danish society would therefore be approx. €35,245,031 annually. However, tradable credits may not be the best measure to reduce PM, since there are only a few technologies available in addition to those already applied in SECAs.

Table 3. Cost benefit from reducing NOX emissions by a tradable emission credits EU/Year a) Benefit 40661211 b) Cost 2916180 c) Administration 2500000

Cost per kg NOx (B+C)/kg NOx 0,95

Cost benefit, a- b - c (Eur/Year) 35245031 Source: Danish Environmental Protection Agency; Environmental Project no. 1421, 2012.

2.5 NORWEGIAN NOx TAXATION AND SUBSIDIES

Norway, which is not an EU member, levies a higher tax on NOx emissions than Denmark, and unlike the Danish NOx tax, the Norwegian NOx tax also applies to sea transport. The Norwegian NOx tax is accrued to a NOx Fund that offers subsidies for NOx emissions reducing measures in the shipping industry. All enterprises obligated to pay NOx tax in Norway are eligible to join the Environmental Agreement regardless of nationality. These enterprises may apply for support from the NOx Fund to cover investments and operating costs. The NOx fund subsidises investments with up to 80% of the actual cost(24)

The Norwegian NOx tax is €2.21 per kg of NOx emissions (1 Jan 2011 tax rate, 2013 exchange rate)(25)The Norwegian tax is based on measured emissions or source-specific emission factors and energy consumption. Calculation of emissions must represent ordinary and representative operating conditions. If actual emission figures are not available, and if source-specific emission factors based on fuel consumption have not been determined, emissions are calculated according to the following:

Engines:  rpm less than 200: 100 kg NOx per metric ton of fuel  200 rpm to 1,000 rpm: 70 kg NOx per metric ton of fuel  1,000 rpm to 1,500 rpm: 60 kg NOx per metric ton of fuel  1,500 rpm upwards: 55 kg NOx per metric ton of fuel

(24)See APPENDIX I for a more detailed list of subsidy limits in the Norwegian NOX fund. (25)Danish Environmental Protection Agency; Environmental Project no. 1421, 2012.

Turbines:  Turbines: 16g NOx per m3 LNG  Turbines: 25kg NOx per ton liquid energy fuel  Low NOx turbines: 1.8g NOx per m3 gas.

These NOX emission factors are on level with standard emission factors of approx. 12g NOx/kWh for medium-speed engines and 17g NOx/kWh for low-speed engines.

The tax covers:  Emissions from traffic in Norwegian territorial waters, i.e. sea areas around the Norwegian mainland as defined by Act No. 57 of 26 June 2003(26) concerning Norway’s territorial waters and ad- joining areas.  Emissions from domestic traffic even if, in part, operating outside Norwegian territorial waters. Domestic traffic is defined as traffic between two Norwegian ports.  Norwegian registered vessels are liable to pay Norwegian NOx tax when operating in waters where the distance to the Norwegian coast (baseline) is less than 250 nautical miles.  Foreign owners based outside of Norway are liable to pay Norwe- gian NOx tax through a representative registered for taxable traffic. Upon arrival in Norway, the captain should notify the customs authority of the representative that will pay the tax.

(26)Act No. 57 relating to Norway’s territorial waters and contiguous zone, 27 June 2003.

Exemptions:

 Direct foreign traffic, fishing and hunting in remote waters are exempt from the Norwegian NOx tax.  Vessels in direct traffic between Norwegian and foreign ports are exempt from tax for the entire voyage.  Emissions from sources that are encompassed by an environmental agreement with the Norwegian State on the implementation of NOx-reducing measures in accordance with a predetermined environmental target are exempt from the tax.

2.6 NOx TAXATION AND STATE SUBSIDIES IN AN EU PERSPECTIVE

The overall purpose of fuel tax is to reduce fuel consumption. Denmark, which is an EU member state, levies fuel taxes although sea transport is exempted. All revenues from fuel tax in Denmark, including NOx and

CO2 taxes, accrue to the state. Unlike the Norwegian NOx taxation programme, the Danish NOx taxation scheme does not include a state subsidy programme and does not cover sea transport.

The question is whether the introduction of programme inspired by the Norwegian example would be beneficial and feasible in the EU. One EU-based example of a combined taxation and subsidy program is the

French NOx tax, which finances subsidies for land-based emissions- reducing technologies. Stationary sources in France pay an NOx tax of

27 €53.60 per ton( ). Of the total French NOx tax revenues, 75% are earmarked for subsidies for emissions-reducing technologies and R&D.

All companies subject to the NOx tax are eligible to apply for the subsidy. The subsidy rates are 15% for standard abatement technologies and 30% for particularly innovative technologies with an additional 10% subsidy for small and medium-sized companies.

In general, subsidies and state aid programmes are prohibited by EU law(28), although certain categories of aid are exempt. As a rule, the EU should be notified of all public subsidies and the EU Commission then assesses whether they can be exempt from prohibition. Common to EU regulation is that public aid should be accessible to all companies. The EU Commission distinguishes between three types of state aid:

 Horizontal schemes: Horizontal schemes allow multiple companies across sectors to receive state subsidy designed to improve the conditions for business by allowing support for e.g. R&D.  Sector schemes: Sector schemes exclusively address companies in certain sectors. The transport sector is one of the major beneficiar- ies of such schemes, including the ship building industries and au- tomakers.  Regional aid schemes are designed to support regions with particular economic or employment problems.

(27)Source: OECD/EEA database on instruments used for environmental policy and natural resources management (28)Article 87 of the EC Treaty (ex Article 92), “Save as otherwise provided in this Treaty, any aid granted by a Member State or through State resources in any form whatsoever which distorts or threatens to distort competition by favouring certain undertakings or the production of certain goods shall, insofar as it affects trade between Member States, be incompatible with the common market”.

Most Danish public aid (85%) supports horizontal schemes, while 14% applies to specific sectors(29). Regional aid only plays a very small part in Denmark.

The Norwegian NOx Fund would probably comply with EU rules in the following two aspects:

 The combination of tax and funding in the Norwegian system is balanced, meaning that the sector as a whole is not distorted.

 The subsidy of NOx reducing equipment is open to all applicants

that pay the NOx tax. The scheme therefore does not favour specific sectors of the shipping industry.

There are in addition obvious benefits to a NOx taxation scheme combined with state subsidies for abatement technologies:

 The general increase in cost of NOx emissions is an incentive to

introduce NOx emissions reducing measures supported by the NOx Fund

 The program speeds up investment in NOx emissions reducing measures in the shipping sector.  The NOx tax applies to all transport sectors and therefore does not disadvantage shipping over road transport.

(29)Source: Danish Competition and Consumer Authority.

However, there may also be serious legal challenges and possible financial drawbacks to seeking to introduce such a combined NOx tax and state subsidy programme in the EU to cover sea transport:

 Unless the national NOx tax and subsidy programme were to be introduced on a purely voluntary basis the programme may be challenged legally as a breech of Article 14(1)(c) of the Energy Taxation Directive (2003/96/EC)30 that obliges EU member states to exempt power produced on board a craft (including while at berth in a port) from taxation.

 If the NOx tax and subsidy programme were to be introduced on a voluntary basis the incentive to stay outside the scheme may be higher than the incentive to join the scheme.

 The NOx tax could result in inefficient subsidy funding if subsidised investment is made in areas that would have found sufficient investment even without the scheme.  The system will require administrative funding and evaluation that would incur an added cost to overall investment.

( 30 )COUNCIL DIRECTIVE 2003/96/EC of 27 October 2003 restructuring the Community framework for the taxation of energy products and electricity; Article 1 “In addition to the general provisions set out in Directive 92/12/EEC on exempt uses of taxable products, and without prejudice to other Community provisions, Member States shall exempt the following from taxation under conditions which they shall lay down for the purpose of ensuring the correct and straightforward application of such exemptions and of preventing any evasion, avoidance or abuse:[…] (c) energy products supplied for use as fuel for the purposes of navigation within Community waters (including fishing), other than private pleasure craft, and electricity produced on board a craft.

2.7 PM TAX ON PORT EMISSIONS

According to EPA(31), PM emissions in Danish ports amount to approx. 57 tons annually. Approx. half of the ships calling at Danish ports are national transport, while the rest is international transport. Introducing a PM tax in Denmark would involve many of the same issues as those regarding a NOx tax when it comes to quantifying emissions. The tax would either be based on emission factors or actual, measured emissions. However, when it comes to shipping, a PM tax may not provide an incentive for companies to introduce measures to reduce PM emissions. There are only three technologies that can be adopted to reduce PM emissions:

 To use gas rather than oil fuel. However, since one of the major barriers to switching to gas is limited bunkering facilities a PM emission tax would not necessarily constitute an incentive for the shipping industry. Boosting bunkering facilities would require a concerted international programme.  To install scrubbers. However, since the technologies related to low-sulphur fuels are already an option for the shipping industry when complying with the North Sea and the Baltic Sea SECAs to be introduced in 2015, a PM tax would not represent an added incentive for the shipping industry to introduce scrubbers.

(31) Calculation made on “Danish Environmental Protection Agency; Environmental Project no. 1421, 2012” based on energy consumption from Work report No. 11, 2003, Emissions from ships at berth combined with new emission factors from national emission inventory.

 To use shore power when docked. However, at present Article 14(1)(c) of the Energy Taxation Directive (2003/96/EC)( 32 ) obliges EU member states to exempt electricity produced on board a craft (including while at berth in a port) from taxation.

Notably, the health damage of PM emissions are higher in densely populated areas(33). Therefore, the hoteling of ships in ports signifies a particular challenge. The emissions from AE-generated electricity in Danish harbours amount to 20 tones of PM annually(34). Manoeuvring cannot be based on electricity from land. Estimates( 35 ) show that a PM tax of €100 per kg of PM could nonetheless potentially shift 60% of the energy consumption by ships from AEs to shore-based electricity, which would result in a considerable reduction in PM emissions since PM emission from land- based power stations is 85% lower per kWh than AE-generated power.

2.8 DIFFERENTIATED PORT DUES

Another tool to promote the investment in technologies with low NOx emission in the shipping industry in Denmark could be to introduce a fee-bate system, which implies that differentiated port dues are paid by vessels based on an environmental index, including emissions intensity

(32)See footnote 30, page 43. (33)Damage costs calculated by the Ministry of Transport, National Environmental Research Institute (2010). (34)Based on EPA, 2003, it is estimated that auxiliary engines use 109,000 MWh for light, air consumption etc. in Danish ports every year. This amount combined with average emission factors of NOX and PM of 12 g/kWh and 0.18 g/kWh respectively give the total emissions per annum. (35)Emissions from electricity production based on average electricity production according to the TEMA2000 model from Danish Ministry of Transport. Danish Environmental Protection Agency; Environmental Project no. 1421, 2012.

(e.g. g/kWh) and level (e.g. engine size). Port dues already generally vary with regard to vessel class and size, the type of port, the frequency of calls to port and the type of service offered. A fee-bate system requires a certification scheme to be established to ensure valid calculations of the environmental index to be used by port authorities to levy differentiate port dues. Such certifications need to build on the classifications of the EEDI Energy Efficiency Design 36 Index( ), which as of 2013 defines an upper limit for CO2 emissions per transport unit (i.e. CO2 grams per metric ton of dead weight per nautical mile).

The Swedish Maritime Administration introduced differentiated port dues in 2002 to support the development and introduction of low NOx emitting technologies, such as SCR and HAM. The Swedish organisation is funded by “fairway dues” consisting of two parts: one related to the size of the ship and one related to the tonnage of the cargo.

Only the share related to the size of the ship is calculated relative to NOx

(36)The amendments to MARPOL Annex VI Regulations for the prevention of air pollution from ships, add a new chapter 4 to Annex VI on Regulations on energy efficiency for ships to make mandatory the Energy Efficiency Design Index (EEDI), for new ships, and the Ship Energy Efficiency Management Plan (SEEMP) for all ships. Other amendments to Annex VI add new definitions and the requirements for survey and certification, including the format for the International Energy Efficiency Certificate. The regulations apply to all ships of 400 gross tonnage and above and are expected to enter into force on 1 January 2013. However, under regulation 19, the Administration may waive the requirement for new ships of 400 gross tonnage and above from complying with the EEDI requirements. This waiver may not be applied to ships above 400 gross tonnage for which the building contract is placed four years after the entry into force date of chapter 4; the keel of which is laid or which is at a similar stage of construction four years and six months after the entry into force; the delivery of which is after six years and six months after the entry into force; or in cases of the major conversion of a new or existing ship, four years after the entry into force date. The EEDI is a non-prescriptive, performance-based mechanism that leaves the choice of technologies to use in a specific ship design to the industry. As long as the required energy-efficiency level is attained, ship designers and builders would be free to use the most cost-efficient solutions for the ship to comply with the regulations. The SEEMP establishes a mechanism for operators to improve the energy efficiency of ships.

emissions to offer ships a rebate system starting progressively at 10 g/NOx per kWh. When the fee-bate system was introduced in Sweden in 2002, the general level of port fees was raised to keep revenues constant.

A fee-bate system offers a relatively cost-neutral tool with which to encourage investment in environmentally friendly sea transport. However, there are serious challenges and drawbacks to the system:

 The potential effects of differentiated port dues will depend on the number of ports participate in the program. If only a limited number of ports participate then there is a risk that ships with a low environmental index will seek ports without differentiated port dues rather than investing in abatement technology. A pool of harbours is therefore needed before the adopted measures can have a beneficial impact.  There needs to be a substantial differentiation in port dues to encourage shipping companies to invest in abatement technology. Existing port dues may be too low to enable sufficient differentia-

tion. In Sweden, 37 ships were registered in 2009 as low NOx emission vessels. Almost all of these had been fitted with SCR units that had been subsidised following a subsidy program in 2002(37).  Ships with high emissions may choose to take a detour rather than seek the shortest travel route in order to save on port fees. This may increase emission levels rather than curb them.

(37)Environmental Project no. 1421;page 98; Danish Environmental Protection Agency , 2012; Denmark.

 The negotiating element of port dues means that vessels subject to high fairway due may seek to negotiate a lower overall tariff and port authorities may have a commercial interest in settling for lower dues.

2.9 VOLUNTARY AGREEMENTS AND CONSORTIUM BENCHMARKING

Large corporations that market themselves as environmentally friendly also require that their suppliers also comply with their Corporate Social Responsibility policies. It could therefore be argued that environmental improvements could be effectively achieved through corporate and consumer demand.

In consortium benchmarking, shipping companies commit voluntarily to achieving an average emission rate, known as the benchmark. Companies that are part of the consortium can then trade among themselves to achieve the average rate (much like a credit-based system).

Setting the benchmark emission rate is a key element of the consortium benchmark programme design. Benchmark rates based on inputs (e.g. emissions per unit fuel) are the easiest to define, while benchmarks based on outputs (e.g. emissions per kWh, transport service, etc.) may be more difficult to quantify but would offer stronger incentives to reduce emissions through a wide range of initiatives.

There are several obvious advantages to voluntary schemes:

 Unlike a credit-based approach there is no need to establish and certify a baseline emission rate in the case of benchmarking since the benchmark rate effectively serves as the baseline.  Part of the administration and monitoring of the programme could be handled by the consortium itself.  If appropriate penalties are applied, all consortium members will have a vested interest in ensuring that they comply with requirements.

Voluntary schemes however also have their drawbacks and pitfalls:

 Ships with low environmental indexes will have no incentive to stay in the programme other than the threat of a perceived loss of brand value, which may have only limited impact on their competitive standing in the shipping industry.  The shipping industry could effectively fall into two categories, both with inefficient investment strategies in relation to environmental gain and competitive standing: On the one hand consortium member companies that invest to improve already efficient vessels with relatively little environmental gain in relation to investment. And on the other hand, non-consortium companies sail- ing vessels with low environmental indexes in which they fail to invest sufficiently although relatively large environmental gains could be made with small investments.

 Emissions reduction is incremental because the benchmark is set too low and is only very gradually improved  Member companies pursue “green-washing”, i.e. give emphasis to public relations and easy, highly visible environmental initiatives with limited substance.

3 ABATEMENT TECHNOLOGIES AND ALTERNATIVE FUELS

3.1 COST OF NOX ABATEMENT TECHNOLOGY

With the introduction of the SECA in the North Sea and Baltic Sea, shipping companies will basically have three choices

 To use low-sulphur (1.0%) fuel oil/MGO  To use heavy fuel oil (HFO) with abatement technology (either

technologies that prevent NOx from forming during combustion or post-combustion technologies)  To use liquefied natural gas (LNG) or other fuel alternatives.

However, the SECA does not target emissions of NOx, which along with other harmful compounds, such as VOC and PM, will continue to impact the environment. However, abatement technologies also offer benefits in the reduction of such emissions. See table 4 and 5.

Table 4. NOx reduction and cost effectiveness of abatement technology

Operation and Annual Cost per NO Technologi Investiment Fuel Cost X Reduction NO Ship type Lifetime Maintenance cost tonne X es (k€) ( k€) (%) ( k€) (k€) (€/tonne) EGR+WIFE NEW 743 25 15 103 166 340 75 - 80; 50 (0,1% S) SCR NEW 949 25 169 0 297 600 85 - 90

Source: Bosh et. All (2009) NOX control methods Table 4 shows the reduction in NOx emissions offered by two abatement technologies described below. EGR + WiFE = a combination of Exhaust Gas Recirculation and WiFE on Demand (75-80%). SCR = Selective Catalyst Reduction (85-90%).

Table 5. Cost effectiveness of NOX reduction measured per €/ton

Small Vessels Medium Vessels Large Vessels Technologies Ship type (€/tonne) (€/tonne) (€/tonne) Humid air NEW 255 222 188 motors Humid air Retrofit 291 274 250 motors SCR inside NEW 517 419 379 SO2 ECA SCR inside Retrofit 583 469 422 SO2 ECA Source: data are in accordance with those reported in ENTEC (2005b), Rahai and Hefazi (2006), Lovblad and Fridell (2006) and IIASA (2007).

Table 5 shows the reduction of NOx in €/tons of abatement technologies described below. SCR inside SO2 ECA = Selective Catalyst Reduction inside Sulphur Dioxide Emissions Control Area.

3.2 USING WATER TO LOWER THE COMBUSTION TEMPERATURE

The formation of NOx can be prevented by lowering the temperature in the combustion chamber either by emulsifying water in fuel prior to injection (WiFE) or by charging the cylinder with humidified air

(HAM). NOx emissions reductions from these technologies vary from 50%-90%.

3.2.1 WIFE ON DEMAND

WiFE on Demand (“Water in Fuel Emulsion on Demand”) is a fuel emulsion technology that reduces NOx emissions by providing Water in Fuel Emulsion (WiFE) “on demand”. When the water evaporates in the combustion chamber the temperature is lowered and NOx emissions are reduced.

38 Studies( ) show that 1% NOx reduction is obtained per 1% of added water. A water-to-fuel-ratio of 30% can reduce NOx emissions by 30% and PM by 60-90%. The maximum amount of water that can be added to fuel depends on the engine load, but the maximum water-to-fuel-ratio is 50%, (= NOx reduction of 50%). A water content of 50% increases the fuel consumption by approx. 2%.

Table 6. Total annual investment(39) cost of WiFE retrofit in two-stroke engines(40).

SMALL MEDIUM LARGE

Engine size (MCR, Kw) 3580 11420 28750 Investment (€/year) 14944 29791 60438 Operation and maintenance (€/year) 33190 108560 271000 Source: Danish Ministry of the Environmental – Project n. 1421, 2012

(38)MAN Diesel and Turbo (2010): two-stroke engine emission reduction technology: state-of-the-art, cimac paper: 85. Apollonia Miola, Biagio Ciuffo, Emiliano Giovine, Marleen Marra; Regulating air emissions from ships: the state of the art on methodologies, technologies and policy options; page 57; European Commission Joint Research Centre, Institute for Environment and Sustainability. November 2010. (39)Entec (2005): Service Contract on Ship Emissions: Assignment, Abatement and Market-based Instruments Task 2b – NOX Abatement (40)Note: Small, Medium and Large refer to the engine size.

3.2.2 HUMID AIR MOTOR

Humid Air Motor (HAM) is an abatement technology that uses evaporated seawater, which is injected into the combustion air to lower the temperature peaks during the combustion process and thus reduce

NOx emissions. The NOx reduction potential is estimated to be up to approx. 70-80%.(41) (Eyring et al., 2005b)42.

3.3 TREATMENT OF THE EXHAUST GAS

Some technologies rely on post-combustion treatment of the engine exhaust gas to reduce NOx, in some cases reducing emissions up to 85- 99%.

3.3.1 SCRUBBER

A scrubber is a technology that effectively abates emissions by the use of alkaline compounds to neutralise SO2 and remove acid gases from engine exhaust emissions. The method uses seawater (or freshwater mixed with caustic soda (NaOH)) as a “scrubbing” agent. The sludge is then led to a tank where the water is filtered and circulated back into the

(41)On the precautionary principle, Annex VI of the MARPOL Convention forbids discharging waste into estuaries and enclosed ports. Air pollution from ships. A briefing document by: The European Environmental Bureau (EEB), The European Federation for Transport and Environment (T&E), Seas At Risk (SAR), The Swedish NGO Secretariat on Acid Rain. (EEB, 2004). (42)Eyring, V., Kohler, H., Lauer, A., Lemper, B. (2005b). Emissions from international shipping: 2. Impact of future technologies on scenarios until 2050. Journal of Geophysical Research, 110.

43 sea (EEB, 2004). Scrubbers can reduce SOx by 99% and NOx ( ) and

PM by 85% without increasing CO2 emissions.

Figure 4 Capital cost and operational cost of scrubber

Source: Danish Ministry of Environmental (Project No. 1421, 2012)

3.3.2 SELECTIVE CATALYTIC REDUCTION (SCR)

Selective Catalytic Reduction (SCR) is an abatement technology that uses a catalyst to convert NOx into nitrogen and water by injecting ammonia (NH3) or urea (CO(NH2)2) into the hot exhaust gas to react with nitrogen oxides, resulting in the production of harmless nitrogen

(N2) and water. Reduction of NOx emissions may reach 90-95%.

However, to reach a 90% NOx reduction, approx. 15g of urea is needed per kWh energy from the engine. Most common SCR applications reduce NOx emissions slightly below the maximum capacity (i.e. 85-90%) in order to limit ammonia emissions.

(43)A. Miola et al, 2010.

The technology requires significant space for the catalysts and the storage of ammonia/ urea. The following chart shows the costs( 44 ) of retrofitting SCR technology.

Figure 5: Annual cost of SCR NOX reduction system

Source: Danish Ministry of Environmental (Project No. 1421, 2012)

3.3.3 EXHAUST GAS RECIRCULATION (EGR)

Exhaust Gas Recirculation (EGR) works by recirculating filtered and cooled exhaust gas into the charge air to decrease the peak cylinder temperature during combustion. The EGR technology reduces NOx by 35% (Entec, 2005b). EGR can also be combined with water injection

(WiFE), resulting in an approx. 70-80% reduction in NOx emissions. However, PM emissions increase because of the reduced amount of oxygen and longer burning time. And since exhaust gases contain

(44) MAN Diesel & Turbo (MAN, 2011) and (Entec, 2005).

gaseous sulphur species, a corrosion problem from sulphuric acid formation is generated (EPA, 1999), which is why the technology is not suited for marine diesel engines using heavy fuel oils.

Installing EGR technology in a Tier II engine results in an increased fuel consumption of approx. 2%(45). EGR can be used on new vessels to comply with the IMO Tier III regulation from 2016 (at least for two- stroke engines).

Figure 6: Cost of retrofitting EGR technology (MAN Diesel & Turbo (2009)).

Source: Danish Ministry of Environmental (Project No. 1421, 2012)

(45)Fitting EGR technology to a fuel-optimised Tier I engine gives an estimated fuel consumption that is 1% lower than a Tier II engine without EGR

Figure 7: Total annual cost of EGR NOx reduction

Source: Danish Ministry of Environmental (Project No. 1421, 2012)

Figure 7: Shows the difference in annual cost of EGR in relation to Tier level of engine, mainly due to higher fuel consumption.

3.3.4 LIQUEFIED NATURAL GAS (LNG)

Liquefied Natural Gas (LNG) is natural gas that has been converted (temporarily) to liquid form for easy storage and transport. From an emissions perspective, LNG is a very good alternative to heavy fuels. Maintenance costs are low but investment costs are high.

Advantages:

46  Emissions of NOx are low: 1.42 grams( ) per kWh.

(46)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 Reduction of NOx and SOx in an emission market - a

47  Emissions of SOx are low: 0.00154( ) grams per kWh sulphur, which means LNG complies with the SECA restrictions. 48  Emissions of CO2 are relatively low: 75% reduction( ).  The world supply of LNG is expected to increase between 2015- 2020(49).  LNG is approx. 8% cheaper per GJ compared to gas oil (Danish Energy Agency (50)).  Price structures for LNG are generally locked under long-time contracts(51) yet tied to the oil price.  Maintenance costs are significantly lower compared with a diesel engine.

Disadvantages:

 Establishing LNG bunkering facilities, including LNG terminals and a network of LNG supply ships, is costly. Currently, only a few nations (e.g. Norway) offer a LNG network  Retrofitting is costly. The additional ship investment cost is DKK 40-100 million for retrofitting of a 2-20 MW LNG marine engine snapshot of prospects and benefits for ships in the northern European SECA area; page 23; (47)See previous footnote. (48)See Table 4. (49)Reporting By Edward McAllister in New York and Oleg Vukmanovic in London. http://www.reuters.com/article/2013/01/18/us-lng-market-price-hike- idUSBRE90H07T20130118. (50) Danish Energy Agency, 2011: Prerequisites for socio-economic analyses in the field of energy, April 2011 shows that natural gas is 40% cheaper compared to gas oil. When including a cost of €4.78/GJ for production and distribution of LNG the price difference is reduced to 8%. (51)The spot market has proven volatile in 2012/2013 due to high demand following natural disasters and power shortages. http://www.reuters.com/article/2013/01/18/us-lng-market-price-hike- idUSBRE90H07T20130118

(Environmental Protection Agency in Denmark(52). Volume for fuel storage is around 3-4 times higher than for storage of oil. The relationship between engine size (MCR) and investment expendi- ture is shown in Figure 7  The price of new ships with LNG propulsion typically has an added investment cost of 10-20% due53 to the LNG storage tanks, the fuel piping system and additional safety measures. The additional investment cost for a small 3,300kW LNG fuelled general cargo ship is approx. US$ 3.6 million (DNV, 2011)

Figure 8. LNG retrofitting, total investment cost

Source: Danish Ministry of Environmental (Project No. 1421, 2012)

(52) With some technologies a methane slip is caused due to exhaust valves being open when the gas enters into the combustion chamber. (53)Shipbuilding cost may increase by 20-25% (DNV)23.

Table 7. Comparison of emissions from heavy fuel oil and LNG

Source: Danish Ministry of Environmental (Project No. 1421, 2012)

Table 7: Comparison of emissions from heavy fuel oil and LNG with a HFO and a gas 50-bore MAN Diesel & Turbo ME-GI engine adapted to LPG and LNG.

4. COLD-IRONING TECHNOLOGIES

4.1 COLD-IRONING TECHNOLOGY IN CRUISE SHIPS

Emissions from ships can cause damage to the environment and health at great distance from the source of pollution. However, emissions are especially harmful within the immediate environment, such as SOx NOx,

VOC, PM, CO, and N2O. Although SOx emissions are set to be significantly reduced in the North Sea and Baltic Sea when the SECA is implemented, emissions from ships will still pose a challenge to ports located close to urban environments, such as in Copenhagen, not least in the case of the hoteling of power consuming cruise vessels during turnaround.

One option in reducing ship emissions would be for ports to supply vessels at berth with shore power from the national grid as an alternative to generating electricity using on-board Auxiliary Engines (AE). Although AEs can be combined with abatement technology to reduce harmful emissions, there is no requirement to do so. Some shipping companies and cruise operators may choose to use abatement technology, such as scrubbers, to reduce SOx emissions when the SECA comes into force, a technology that will also reduce other emissions including NOx. Howev- er, harmful emissions from ships in port environments will still pose an environmental problem.

Shore power (or cold-ironing) is a fully developed technology mainly used by the US navy and when dry-docking vessels. In Europe, the technology is used for ferry services in cities such as Gothenburg,

Rotterdam and Zeebrugge. The technology has only been implemented for commercial use for cruise ships very few places in the world, including California and Alaska. Shore power is known by a variety of names, e.g. ‘cold ironing’ ‘shore-side power’, ‘high-voltage shore connections (HVSC)’, ‘onshore power supply’ ‘shore-to-ship power’ and ‘alternative maritime power’. The term ‘cold-ironing’ derives from the act of dry-docking a vessel, which involves shutting down all on-board combustion, resulting in the vessel going ‘cold’.

Advantages:

 Shore-side electricity supply can effectively reduce hazardous

emissions (e.g. SOx NOx, VOC, PM, CO, N2O, CH4) in the local environment significantly.

 Since power supplied from the national grid (i.e. from power stations) is subject to stricter emissions control(54)(55) (including

(54)On 21 December 2007 the Commission adopted a Proposal for a Directive on industrial emissions. The Proposal recasts seven existing Directives related to industrial emissions into a single clear and coherent legislative instrument. The recast includes in particular the IPPC Directive. The IPPC Directive has been in place for over 10 years and the Commission has undertaken a 2 year review with all stakeholders to examine how it, and the related legislation on industrial emissions, can be improved to offer the highest level of protection for the environment and human health while simplifying the existing legislation and cutting unnecessary administrative costs. The results of this review have provided clear evidence of the need for action to be taken at a Community level. The IPPC Directive has recently been codified (Directive 2008/1/EC of the European Parliament and of the Council of 15 January 2008 concerning integrated pollution prevention and control). The codified act includes all the previous amendments to the Directive 96/61/EC and introduces some linguistic changes and adaptations (e.g. updating the number of legislation referred to in the text). The substance of Directive 96/61/EC has not been changed and the adopted new legal act is without prejudice to the new Proposal for a Directive on Industrial Emissions. (55)The overall aim of the LCP Directive is to reduce emissions of acidifying pollutants, particles, and ozone precursors. Control of emissions from large combustion plants - those whose rated thermal input is equal to or greater than 50 MW - plays an important

CO2) than power supplied from AEs, the overall level of exhaust emissions form ships using shore power is reduced considerably.

 Noise levels and vibration from AEs are eliminated. In close prox- imity to the AEs, noise levels of 90-120 dB can be reached(56)(Cooper 2004).

 There are benefits to the health of cruise ship personnel and dockworkers.

 Although vessels will always need AEs for emergency power supply, also at sea, the operative running costs and capital investment for these engines will be lower if the use of AEs is limited.

 Cruise ship labour costs tied to producing electricity using AEs while at berth will be reduced.

role in the Union's efforts to combat acidification, eutrophication and ground-level ozone as part of the overall strategy to reduce air pollution. The LCP Directive entered into force on 27 November 2001. It replaced the old Directive on large combustion plants (Directive 88/609/EEC as amended by Directive 94/66/EC). The LCP Directive contains the following provisions: Plants licensed after 26 November 2002 have to comply with the (stricter) emission limit values for SO2, NOx and dust fixed in part B of the Annexes III to VII.; Plants licensed on or after 1 July 1987 and before 27 November 2002 have to comply with the (less strict) emission limit values fixed in part A of the Annexes III to VII. ; Significant emission reductions from "existing plants" (licensed before 1 July 1987) are required to be achieved by 1 January 2008: a) by individual compliance with the same emission limit values as established for the plants referred to in point 2 above or b) through a national emission reduction plan (NERP) that achieves overall reductions calculated on the basis of those emission limit values. The Commission considers that it is possible to adopt a "combined approach" (combination of points a) and b)) for these "existing plants". A NERP must address all three pollutants covered by the Directive for all the plants covered by the plan. (56)ENTEC (2005a).

Disadvantages/limitations

 Electricity powered by AEs is generally cheaper than land-based electricity supply.

 Electricity powered by AEs is exempt(57)from national energy and electricity tax within the EU. However, in 2011 the EU granted exceptions to Germany(58) and Sweden(59) to allow these countries to supply shore power at a reduced rate (i.e. without paying local environmental energy taxes) as an incentive to shipping companies to use shore power.

 Considerable capital investment must be made in land-based power supply utilities.

 The international ISO standard for High Voltage Shore Connections (HVSC) was adopted in 2012 (see chapter 5.2). Existing technology on cruise ships with cold-ironing capability often do not comply with the new standards.

 Few cruise vessels are equipped with cold-ironing technology and 90% of those that are equipped with such technology use 60Hz

(57)Article 14(1)(c) of the Council Directive (2003/96/EC) ( 58 )COM/2011/0302 final - NLE 2011/0133 / COUNCIL DECISION authorising Germany to apply a reduced rate of electricity tax to electricity directly provided to vessels at berth in a port in accordance with Article 19 of Directive 2003/96/EC (59)COUNCIL IMPLEMENTING DECISION of 20 June 2011 authorising Sweden to apply a reduced rate of electricity tax to electricity directly provided to vessels at berth in a port (‘shore-side electricity’) in accordance with Article 19 of Directive 2003/96/EC (2011/384/EU).

frequency (as opposed to the 50Hz European standard). Converting 50Hz to 60Hz is costly(60).

 Shore power can only be supplied while vessels are at berth and not while manoeuvring or during navigation. Port environments would therefore still be subject to a certain level of emission.

4.2 ISO STANDARD: HIGH VOLTAGE SHORE CONNECTION (HVSC) SYSTEMS

The international standard (IEC/ISO/IEEE 80005-1:2012(E)(61) for High Voltage Shore Connection (HVSC) systems applies to cold-ironing technology on board vessels and the power utilities supplying the shore power. This ISO standard has been adopted as Danish standard(62)DS/ISO/IEC/IEEE 80005-1.

The standard applies to the design, installation and testing of HVSC systems and addresses:  High-voltage shore distribution systems  Shore-to-ship connection and interface equipment  Transformers/reactors

(60) Report on Shore Power for Cruise Ships, By & Havn and CMP 2012 . (61)IEC/ISO/IEEE 80005-1:2012(E) describes high voltage shore connection (HVSC) systems, on board the ship and on shore, to supply the ship with electrical power from shore. This standard is applicable to the design, installation and testing of HVSC systems and addresses: HV shore distribution systems; shore-to-ship connection and interface equipment; transformers/reactors; semiconductor/rotating convertors; ship distribution systems; and control, monitoring, interlocking and power management systems. It does not apply to the electrical power supply during docking periods, e.g. dry-docking and other out of service maintenance and repair. (62)Utility connections in port – Part 1: High Voltage Shore Connection (HVSC) Systems – General requirements. Danish Standards, Edition 1.0 2012-07.

 Semiconductor/rotating converters  Distribution systems  Control, monitoring, interlocking and power management systems

The standard does not apply to shore power supplied during dry-docking and out-of-service maintenance and repair.

4.3 SYSTEM DESCRIPTION

1. A local sub-station transforms 20-100kV electricity supplied by the national grid to 6-20kV.

2. Cables deliver the 6-20kV power to the port terminal.

3. Most vessels will require 60Hz power supply, which required conversion from the 50Hz grid standard to 60Hz.

4. Electricity is distributed to the terminal via high-voltage cables63.

5. For easy handling, cables are connected to the vessels using an electro-mechanically powered cable reel system mounted on a reel tower. A davit would be used to raise the cables to the vessel.

6. The cables are connected to an on-board socket.

(63)High-voltage cables can transport far more electricity than 400V cables of the same dimension. They are also more flexible and easier to use. The capital and maintenance cost is also lower. (Jiven 2004).

7. The electricity is then transformed from high voltage to 400V to be used for on-board power supply. The preferable location for the transformer is by the main switchboard in the engine room.

Figure 9 Overview of shore-side electricity connection

Source: Reproduced from ENTEC(2005a)

4.4 WORK BARGES AND LNG POWER BARGES

Increasingly, new port facilities are prepared for shore power, such as those recently constructed in Rotterdam and Copenhagen. However, some port environments, such as container ports, require gantry cranes, which limits the options of installing cable reel towers on the pier. See figure 10. LNG barges with power-generating capacity (6.6kV/11kV, 60Hz) are currently being tested in Hamburg (2012-13). The prototype is developed by Carl Robert Eckelmann AG.

Advantages to barges in relation to conventional shore power:

 Barges are flexible. In the case of power barges they can also supply electricity to ships in less accessible parts of ports or where gantry cranes limit options for cable reel towers. In the case of the Copenhagen cruise port, power barges could also supply shore

power to cruise ships calling on the city’s old cruise ship pier in the inner harbour.  Power barges are monitored by remote control and the required manpower would more or less be the same as with traditional shore power.  Power barges supply LNG generated electricity with low emissions (see Figure 10)

Disadvantages to barges in relation to conventional shore power:

 At a unit price of €15 million(64), the capital investment in power barges may be higher than establishing traditional shore power facilities in new harbours.  The maximum capacity of projected LNG power barges is 7- 8MW(65), which is below peak demand for large cruise ships. Commercial operators may be seeking to introduce vessels with a peak demand of 16MWh(66).  Emissions reduction using power barges will in all scenarios be higher than with conventional shore power supply.  Emissions reduction in the local environment will be higher than conventional shore power  LNG powered barges will require LNG bunkering facilities67 in relative close vicinity to the port and few such facilities are currently available in Europe.

(64)Deutsche Shiffahrts-Zeitung, THB Sonderbeilage, 31 August 2012. (65)Waterborne cold ironing for container vessels, DNV Academy 8 May 2012 (66)Copenhagen Malmö Port (CMP) 2012. (67)The seven Baltic ports that have agreed to promote the development of LNG bunkering infrastructure are: Aarhus, Helsingborg, Helsinki, Malmö-Copenhagen, Tallinn, Turku, Stockholm and Riga. The project was initiated by the Baltic Ports Organization (BPO) and half of the €4.8 million scheme will be financed by the

 In the case of Copenhagen, using mobile LNG power plants may not be consistent with the Copenhagen Climate Plan KBH2025, which required existing power utilities using fossil fuel to switch

to CO2 neutral fuel.  Running time for LNG power barges is approx. 96 hours, which means supplying cruise vessels that are hoteling over several days will require a short interruption of power supply while barges are replaced.

Figure10. Docking arrangement with barge

Source: Reproduced from: ENTEC(2005a)

Figure 10 shows how a barge can be used instead of cable reel towers on land. Shore-side electrical cables are connected to the cable reel on the work barge, which is mounted on a turntable allowing it to swivel up to 60 degrees. The turntable can automatically adjust the tension to prevent

European Union TEN-T Transport Infrastructure Programme. BIMCO, Baltic LNG Bunkering to set global benchmark, 4 July 2012 https://www.bimco.org/en/News/2012/07/04_Feature_Week_27.aspx.

sagging during tidal changes. A hydraulic boom to the deck of the ship allows cables to be connected to the ship.

4.5 COLD-IRONING AS RETROFIT

Retrofitting vessels with cold-ironing technology implies modifying them to support high-voltage shore connections. Generally, cruise vessels are designed with maximum space utilisation and with very limited free space, especially close to the switchboard. Newer vessels are often designed with reserve space for cold-ironing retrofitting. The age limit for cold-ironing technology retrofitting for cruise ships is estimated at 12 years(68).

Figure11. Cruise vessel engine rooms

Source: Copenhagen and Malmo Port (CMP).

(68)Copenhagen Malmo Port, 2012.

Figure 11 shows the engine rooms of a medium-size (B=32.2m) diesel electric cruise vessel. A cubicle for plug-in shore cables must be mounted on the ship’s side, which requires 1500mmx1600mmx2700mm (BxDxH) of space. However, the allocated space on board the ship must be larger than the cubicle to support servicing.

This requires a steel-to-steel space the size of three 800-frame lengths (2400mm) and a width towards the centre of about 4000mm. A high- voltage shore connection requires one additional incoming cubicle of an estimated size of 800mmx1600mmx2200mm (BxDxH).

This additional type-tested cubicle must be connected to the main bus bars of the switchboard with a compatible link secured against short cir- cuit both mechanically and electrically.

4.6 CURRENT COLD-IRONING MARKET SHARE

The cruise industry is a global business and the vessels that call on Copenhagen during the summer months operate in the Mediterranean, the US East Coast and Caribbean during winter.

Figure 12. Distribution of cruise passengers worldwide in 2012.

Passengers July 2012

1% 2% Alaska

12% Asia 5% Australia and Pacific 5% 35% Baltic

15% Bermuda and America East Coast Caribbean

5% Mediterranean 20% California

Source: Copenhagen Malmo Port (CMP), 2011

Figure 12 shows the distribution of cruise vessels during summertime (i.e. northern hemisphere). The Mediterranean is the principal area for cruise holidays, followed by the Caribbean, the Baltic Sea and Alaska. The Caribbean is busiest during winter months.

Currently, only harbours in North America (particularly California and Alaska) offer cruise ship shore power. Cruise ships operating along the

US and Canadian west coast, including Alaska, only have limited operation in Europe, yet they have the highest market share for cold- ironing technology since regulation in California requires cruise operators to use shore power or use abatement technology.

Table 8.Cruise ship during the summer season 2012 with the cold iron capability.

Time along side Energy consumption Cruise liner Vessels Gross tonnage quay (h) MW/h* Emerald Princess 113.561,00 143,00 1.430,00 Costa Deliziosa 92.720,00 9,00 90,00 Eurodam 86.273,00 79,00 790,00 Costa Luminosa 97.720,00 143,00 1.430,00 Arcadia 83.521,00 33,50 335,00 Caribbean Princess 112.894,00 19,00 190,00 Source: Copenhagen Malmo Port (CMP), 2012.

Table 9. The share of vessels in different operating areas that have cold-ironing capability.

% on number of Cold iroing istallation Vessels vessels % on GT % on passenger Alaska 11 42,3 52,1 52,3 Asia 0 0 0 0 Australia and Pacific 3 15 28,9 27,1 Baltic 4 9,3 16,1 16,5 North Sea and North Atlantic 2 5,4 17 14,2 Bermuda and Nord America 1 11,1 11 11,8 Caribbean 1 2,8 4,2 4 Mediterranean 5 4,7 9,4 9,4 California (winter) 11 27,3 34 30,8 Other or not active 0 0 0 0 Source: Copenhagen Malmo Port (CMP), 2012.

Table 9 shows that Alaska is the leading area with an about 50% share of cold-ironing vessels. The share of cruise ships operating in California during the winter season that have cold ironing capability is 75%.

4.7 COLD-IRONING PENETRATION IN THE BALTIC SEA

In the Baltic Sea and Mediterranean, no shore power cold-ironing facilities for cruise ships currently exist but about 10-16%(69) of the vessels operating in these areas have cold-ironing capability. These vessels are all rather new and large and in principle “designed to go anywhere”.

In total, 70 different cruise ships called on Copenhagen during the summer peak season (May-August) in 2012. Of these, only 6 had cold- ironing capacity. These 6 ships made 38 calls on Copenhagen, which represents 12% of total cruise ship calls (308) for summer season, and spent a total of 426.5 hours in Copenhagen. Of the cruise ships operating in the Baltic Sea, 60% (in relation to capacity) are new and large vessels that could be retrofitted if shore power utilities were to be established in Baltic ports.

However, if the switch to cold-ironing in harbours only relies on the renewal of the fleet with newer vessels with cold-ironing capacity, it will take up to 20 years for 80% 70of the fleet to be ready for cold-ironing.

(69)Data from Copenhagen Malmo Port, 2011. (70)Copenhagen Malmö Port (CMP) 2012.

Figure 13 The age of distribution of cruise vessels calling on Copenhagen.

Age of Baltic Cruise vessels (Copenhagen harbour)

14 12

8 6 4

2 Numberofvessels 0

Age of vessel (years)

Source: Copenhagen Malmö Port, 2011

Figure14 Statistical probability that a cruise vessel visiting Copenhagen has visited the harbours in mention

Statistical probability that a cruise vessel visiting Copenhagen has visited the harbours in mention

100 90 80 70 60 50 40 30 20 10

0 Probability (%) the vessel visits other harbour other visits vessel the (%) Probability

Source: Copenhagen Malmö Port

5 DANISH ELECTRICITY SUPPLY – THE NORDIC ENERGY MIX AND THE COPENHAGEN CLIMATE PLAN 2015

Cold-ironing technology allows ships to connect to the national grid rather than use AE-generated electricity, which reduces emissions in the port environment. However, the environmental benefit depends on the source of power in the national grid.

5.1 NORDIC ENERGY MIX

In Scandinavia, electricity is traded across boarders. The Danish electricity trade varies greatly and is influenced by price developments on the Nordic wholesale electricity market, Nord Pool Spot(71), which includes Denmark, Norway, Sweden, Finland and Estonia. Trading also takes place with Germany.

Energy supplied on the Nordic wholesale market is influenced by variable factors:  Precipitation levels at hydropower stations in Norway and Sweden  The price of fuel

 The price of CO2 quotas

Table 10. Production split of the Nordic Energy Mix

Class of energy sources TWh Share 1. Fossil energy source and peat (Natural gas, coal, oil, peat, non-renewable 56,1 14,90% waste and recycling fuels) 2. Renewable source of energy (Hydro power, biofuel, wind power, solar 240.3 63.6% power, renewable waste and recycling fuels) 3. Nuclear power 80.3 21.3% 4. Non identifiable 0.7 0.2% Source: Based on data from the ENTSO-E Statistical Yearbook 2011.

(71)Real time trading in Nord Pool Spot: http://www.statnett.no/en/The-power- system/Production-and-consumption/State-of-the-Nordic-Power-System-Map/.

Table 10 shows the production split of the Nordic Energy Mix.

Naturally, NOx and SO2 emissions result not only from thermal power generation but also from some renewables, such as biomass and waste incineration. But the overall mix has a strong component of renewables and nuclear power that cause limited gaseous emissions. The largest component of renewable energy is hydropower, which accounts for 52.9%(72) of all electricity generation in the Nordic Energy Mix.

Figure 15. Danish net export of electricity

Source: Energistatistik 2011, The Danish Energy Agency

Figure 15 shows the net export of electricity from Denmark. In 2011, Denmark imported 4,7 PJ of electricity (4.3 PJ from Norway and 8.8PJ from Sweden). Denmark was a net exporter of electricity to Germany of 8,3 PJ(73). Green: total, Yellow: Germany. Red: Norway, Blue: Sweden.

(72)Nordic Production Split 2004-2011, Nord Pool Spot. (73) Nordic Production Split 2004-2011. Real time exports: http://energinet.dk/Flash/Forside/index.html.

5.2 DANISH ELECTRICITY SUPPLY

Despite the liberalised, open trading market for electricity, the major component of Danish electricity supply comes from the country’s own power stations. Power supply in Denmark has traditionally been thermal but is now increasingly reliant on renewables. In 2012, 30% of electricity( 74 ) generated in Denmark was wind power. The national energy plan for Denmark(75) calls for 50% of Danish electricity supply to be wind power by 2020. In addition, all fossil fuels, also within transport, are to be phased out by 2050. Energy production in Denmark is nonetheless still comparatively more reliant on emissions-producing sources than other contributors to the Nordic Energy Mix.

Figure16: The split of Danish power production in 2011

Source: Energistatistik 2011, The Danish Energy Agency

(74)Danish wind industry association. http://www.windpower.org/en/news/news.html#727 (75)Danish Energy Agreement, 22 March 2012. http://www.ens.dk/EN- US/POLICY/DANISH-CLIMATE-AND-ENERGY-POLICY/Sider/danish-climate-and-energy- policy.aspx.

Figure 16 shows the split of Danish power production in 2011 according to source of fuel. Grey: coal, Violet: oil, Yellow: natural gas, Blue: wind power, Green: other renewables.

5.3. COPENHAGEN CLIMATE PLAN

The peak season for power production in Copenhagen is during the winter when large amounts of heat are needed for urban district heating. Excess electricity from heat generation is then generally exported. The main cruise ship season (April-October with peak season in June) is during a time of year with low Danish electricity production from conventional power stations in general. Power production from offshore wind power in Copenhagen peaks in October-December76. In June, wind energy totals 265MWh, in January it peaks at 560MWh.

Power production in Copenhagen is generally becoming greener. The City of Copenhagen (i.e. the municipality) adopted an ambitious climate plan in 200977, (revised in 2012 and entitled KBH2025), which aims to make the city the world’s first “CO2 neutral city by 2025”. With pubic investments of €360 million and private investments of €2.68-3.35 billion, the plan calls for the replacement of thermal power with sustainable energy, including biomass, wind power, geothermal heating, waste incineration and (to a limited extent) biogas from wastewater treatment. To offset CO2 emissions generated by household gas consumption (mainly for cooking) and traffic, etc., the city plans to

(76)Lynettens Vindkraft I/S . http://www.lynettenvind.dk/produktion/prod2012.htm. (77)In 2009, when the Copenhagen Climate Plan was adopted, 42% of the power and heating generated in the city was based on coal, while only 13% was based on wind power. CO2 emissions from power production alone accounted for 51% of total CO2 emissions in the city, while heating represented 26%. Transport represented 21%. Source: KBH2015

produce more CO2-neutral energy than it consumes. Traffic, nonetheless, is also targeted with investments in public transport. In relation to cruise ships, the plan includes requirements that all future cruise port developments should be “prepared for cold-ironing”. In 2012, the Copenhagen Climate Plan was ahead of schedule(78) and within the next 5-7 years, the overall scenario of air emission in Copenhagen is expected to change significantly. Not only will CO2 levels be diminished, other gaseous pollutants will also be reduced as a consequence.

Table 11 current emission levels of NOx and SO2 from Copenhagen power stations in relation to the Nordic Energy Mix

Total output Primary energy Secondary Name g NOx/kWh g SO2/kWh Operational changes (GWh) source energy source

Svanemøllen 145 Gas Light fuel 0.85 0.0003 Closes in 2014* Closes: Block 1: 2015*, H.C. Ørstedsværket 883 Gas Heavy/Light fuel 0.23 0.02 Block 2: 2023* To convert to 100% Avedøreværket 2199 Gas Biomass 0.19 0.06 biomass. Date pending To convert to biomass. Amagerværket 3754 Biomass Coal 0.17 0.038 Date pending Will be replaced with a Amagerforbrændingen 3754 Household waste - 0.32 0.69 state-of-and-art utility in 2016 Average emissions 0.352 0.352 Nordic Energy Mix 0.32 0.07 Sources: 2011 annual environmental reports from Dong Energy, Vattenfall and Amagerforbrændingen/Amager Ressourcecenter.

*The power stations are to remain in service as reserve stations

Table 11 shows the coefficient between power stations in Copenhagen and the Nordic Power Mix in relation to SO2 /kWh and NOx/kWh. Based on this data I have assumed that the emissions factor for the Nordic Energy Mix is a valid measure for emissions from power generation for

(78)Copenhagen Climate Plan 2025, Københavns commune teknik- og miljøforv altningen www.kk.dk/klima.

the following reasons: 1) The largest contributor of SO2 emissions is the waste incineration centre that does not produce power in any large scale. 2) the table does not include the city’s offshore wind farm and 3) The main cruise season is during summer months where the import of cleaner energy from other Scandinavian countries is generally high.

6. HEALTH COST EXTERNALITY OF AIR POLLUTION IN DENMARK

6.1 INTRODUCTION

Air pollution is high on the international agenda. Consequently, the EU and WHO (Word Heath Organization) provide directives and guidelines regarding limit values to minimise the impact on human health (EU 2008(79); WHO 2006a(80). Urban outdoor air pollution is globally responsible for an estimated 1.4% of premature deaths and 0.5% of disability-adjusted life years lost (Ezzati et al., 2002( 81 )). Studies furthermore indicate that PM is responsible(82) for increased mortality and morbidity. Approx. 3% of adult deaths caused by cardiovascular and respiratory diseases and approx. 5% of lung and trachea cancers are attributable to PM pollution (Cohen et al., 2004, Schlesinger et al., 2006(83)). In Denmark, approx. 3,000-4,000 people die prematurely annually due to atmospheric pollution (Palmgren et al., 2005(84)).

(79)EU, 2008: Directive 2008/50/EC of the European Parliament on ambient air quality and cleaner air for Europe, 21 May 2008. (80)WHO, 2006a: WHO air quality guidelines for particulate matter, ozone, nitrogen dioxide and sulfur dioxide. Global update 2005: Summary of risk assessment. Technical report, World Health Organisation, 2006. (81)Ezzati, et al., 360:1347–1360, 2002. (82)In addition, air pollution is associated with diabetes (Pearson et al., 2010), premature births (Ponce et al., 2005), life expectancy (Pope et al., 2009) and infant mortality (Woodruff et al., 2008). These associations have been demonstrated in both short-term (Maynard et al., 2007) and long-term epidemiological studies (Pelucchi et al., 2009) (83)Cohen, et al., 2004. (84)Palmgren, et al., 2005.

Among the tools used when seeking to optimise regulation strategies(85) and create effective policies addressing air pollution are valuation models. Simulations of specific scenarios can be used to assess the cost- benefit of a hypothetical reduction in emissions, for instance. Generally, such valuations( 86 ) study emission concentrations calculated using a Chemical Transport Model (CTM) that assumes a standardised linear source-receptor relationship( 87 ) between emission changes and subsequent changes in air pollution levels. Model-based valuations are therefore rough approximations in relation to the real effect of emission reductions. This study of health cost externalities of emissions from sea transport adopts an alternative approach, which calculates the emission impacts from every individual scenario without assuming linearity of the – in reality – highly non-linear atmospheric chemistry. The model applied in this study is the External Valuation of Air Pollution Model (EVA).

(85)Amann et al. (2005) and Watkiss et al. (2005) provide recent examples where they model the effects of implementing the EU Directives on atmospheric ozone and PM concentrations. They estimated that the annual external health costs of ozone and PM in the EU25 countries would amount to €276 - €790 billion annually (2000), which would be reduced by €87 - €181 billion annually if regulation was followed. (86)One example is the RAINS/GAINS system (Alcamo et al., 1990; Klassen et al., 2004), as used by Amann et al. (2005) and Watkiss et al. (2005). (87)A slightly more sophisticated approach has also been applied in RAINS, where the linearity assumption has been substituted for a piecewise linear relationship for PM, and for ozone the relationship may be parameterised using polynomials (Heyes et al., 1996).

6.2. THE EXTERNAL VALUATION OF AIR POLLUTION MODEL

The External Valuation of Air Pollution Model (EVA) is based on an impact-pathway chain (e.g. Friedrich and Bickel, 2001(88)) and consists of a three-dimensional Eulerian model for regional-scale air pollutant transport and chemical transformation, the Danish Eulerian Hemispheric Model (DEHM(89 )) and a Gaussian Plume Model for local-scale air pollutant transport. The geographic domain covered by DEHM is the Northern Hemisphere, describing the intercontinental contributions including higher-resolution nesting over Europe. To estimate the effect of a specific emission source or sector and how specific emission sources influence air pollution levels, emission inventories for the specific sources as well natural emission sources are implemented. Using a new “tagging” method, all scenarios are run individually without assuming linear behaviour of atmospheric chemistry (i.e. without using linear extra-/interpolation from standard reductions as for instance used in the RAINS(90)/GAINS(91) system (Alcamo et al., 1990(92), Klassen et

(88)Friedrich R., and P. Bickel, 2001: Environmental External Costs of Transport. Springer, München, 2001. (89)The Danish Eulerian Hemispheric Model (DEHM) developed by the Centre for Energy, Environment and Health (CEEH), is a three-dimensional, offline, large-scale, Eulerian, atmospheric chemistry transport (CTM) (Christensen, 1997; Christensen et al., 2004; Frohn 2004; Frohn et al., 2001; 2002; 2003; Brandt et al., 2001; 2003; 2007; 2009; Geels et al., 2002; 2004; 2007; Hansen et al., 2004; 2008a; 2008b; Hansen et al., 2011; Hedegaard et al., 2008; 2011) developed to study long-range transport of air pollution in the Northern Hemisphere and Europe. The model domain covers most of the Northern Hemisphere, discretised in a 96 × 96 horizontal grid using a polar stereographic projection. (90) Regional Air Pollution Information and Simulation (RAINS) (91) Greenhouse Gas and Air Pollution Interactions and Synergies (GAINS). The GAINS model in its present stage quantifies the potentials and costs of reducing the six greenhouse gases (CO2, CH4, N2O, HFC, PCF and SF6) for 43 regions in Europe. (92)Alcamo et al.,1990.

al., 2004(93)). Using a comprehensive CTM to calculate the effects under specific emission scenarios has the key advantage of accounting for non- linear chemical transformations and feedback mechanisms influencing air pollutants. Non-linearity in the source-receptor relationship is particularly evident for certain atmospheric components, such as NOx,

VOC, ozone, PM, and NH3, in addition to SO2. In order to obtain estimates of location-specific impacts and costs, the EVA model has been specifically developed to couple the results from air pollution models with detailed population data( 94 )for Denmark derived from different sources, including from literature and from costs functions adapted to Danish conditions. Other components of the EVA model are economic valuations of individual impacts and exposure response functions adapted from Watkiss et al. (2005)(95), which are based on assessments from EU and WHO health experts. These health cost estimates are converted to Danish price structures and local preferences based on the methodology of Watkiss et al. (2005).

6.3 DEFINITION OF THE SCENARIOS

Wide-reaching measures have been undertaken in recent years to remove harmful secondary inorganic particles (e.g. lead, benzene, and sulphur from petrol and diesel fuels). Such actions have had a positive, measurable and significant impact on air pollution levels.

(93 ) Klaassen, G., et al., 2004. (94)Denmark has a central registry detailing the addresses, gender and age of every resident in Denmark (the Central Person Register, CPR). For the European scale data was obtained from EUROSTAT 2000. (95)Watkiss, et al., 2005.

However, remote emission sources can also have significant – and sometimes even greater impact – on human health and the environment than local-scale emissions. Air pollution, including emissions from sea transport and industry, can be transported in the atmosphere over thousands of kilometres and harmful compounds, such as NOx, SO2 and PM, can be produced by chemical reactions underway. The EVA model allows us to focus on differentiated scenarios (or “tags”) to estimate the external heath cost of emissions from specific sources or sectors (SNAP categories) in specific regions within a given year. The following scenarios developed using the EVA model seek to answer two questions:  What is the present and future impact on human health and related external costs in Europe and Denmark from ship traffic in the Northern Hemisphere?  What is the present and future impact on human health and related external costs in Europe and Denmark from ship traffic in the Bal- tic Sea and the North Sea?

The scenarios (96) take into account:

 The region is where the emission sources are located, i.e. either Denmark (DK), the whole Northern Hemispheric domain (All/all), or the Baltic Sea and the North Sea (BaS-NoS).  The sectors are defined as 10 major SNAP categories of emissions-producing sectors of human (anthropogenic) industry. See

(96) J. Brandt et al., 2011: Assessment of Health-Cost Externalities of Air Pollution at the National Level using the EVA Model System, CEEH Scientific Report No 3, Centre for Energy, Environment and Health Report series, March 2011, pp. 23.

table 2 (DK/1-DK/10). For this study, SNAP category 15 has been added, which covers “ship traffic in the Northern Hemisphere”. The EVA model generally includes “ship traffic in the Northern Hemisphere” in SNAP category 8, i.e. “other mobile sources”. In this study, SNAP category 8 is defined as “other mobile sources” excluding “ship traffic in the Northern Hemisphere”). The category (All/15)97 is relevant for the calculation of the external health cost of all ship traffic in the Northern Hemisphere.  The emission year. The base emission year is 2000, which is also the base year of many other studies (e.g. the CAFÉ(98) studies) and therefore makes it is easier to compare the results in this study to that of other studies. Scenarios have also been developed for 2007, 2011 and 2020. These particular years are chosen in order to study the impact of regulatory actions for sulphur emission reduction in the SECA areas. The European Commission has set a number of emission reduction targets for 2020, including those defined in the EU Thematic Strategy for Clean Air in Europe(99) and the NEC(100) strategy. This study assumes that these emissions ceilings will be implemented.

(97) The simulations for 2007 and 2011 are based on emissions in the EMEP database (Mareckova et al., 2008) covering Europe for 2007. Figures for 2020 are based on NEC- II emissions. (98) Clean Air for Europe (CAFÉ). The objectives of CAFE are: to develop, collect and validate scientific information on the effects of air pollution (including validation of emission inventories, air quality assessment, projections, cost-effectiveness studies and integrated assessment modelling); to support the correct implementation and review the effectiveness of existing legislation and to develop new proposals as and when necessary; to ensure that the requisite measures are taken at the relevant level, and to develop structural links with the relevant policy areas. (99)The Thematic Strategy on Air Pollution in 2005 identified a number of key measures to be taken and has defined a set of interim objectives for the improvement of human health and the environment to be met by 2020. (100) DIRECTIVE 2001/81/EC OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL of 23 October 2001 on national emission ceilings for certain atmospheric pollutants.

Table12. Shows the health effects and economic valuation applicable for Danish/European conditions currently included in the EVA model system.

Exposure-response coefficient Valutation, Euros Health effects (compounds) (α) (2006-prices)

Morbidity Chronic Bronchitis (PM) 8.2E-5 cases/µgm-3 (adults) 52,962 per case = 8.4E-4 days/µgm-3 (adults) -3.46E-5 days/µgm-3 (adults) Restricted activity days (PM) 131 per day -2.47E-4 days/µgm-3 (adults>65) -8.42E-5 days/µgm-3 (adults) Congestive heart failure (PM) 3.09E-5 cases/µgm-3 16,409 per case Congestive heart failure (CO) 5.64E-7 cases/µgm-3 Lung cancer (PM) 1.26E-5 cases/µgm-3 21,152 per case Hospital admission Respiratory (PM) 3.46E-6 cases/µgm-3 -3 7,931 per case Respiratory (SO2) 2.04E-6 cases/µgm Cerebrovascular (PM) 8.42E-6 cases/µgm-3 10,047 per case Asthma children (7.6 % < 16 years) Bronchodilator use (PM) 1.29E-1 cases/µgm-3 23 per case Cough (PM) 4.46E-1 days/µgm-3 59 per day Lower respiratory symptoms (PM) 1.72E-1 days/µgm-3 16 per day Asthma adults (5.9 % > 15 years) Bronchodilator use (PM) 2.72E-1 cases/µgm-3 23 per case Cough (PM) 2.8E-1 days/µgm-3 59 per day Lower respiratory symptoms (PM) 1.01E-1 days/µgm-3 16 per day Loss of IQ Lead (Pb) (<1 year)* 1.3 points/µgm-3 24,967 per point Mercury (Hg) (fosters)* 0.33 points/µgm-3 24,967 per point Mortality -3 Acute mortality (SO2) 7.85E-6 cases/µgm -3 2,111,888 per case Acute mortality (O3) 3.27E-6*SOMO35 cases/µgm Chronic mortality (PM) 1.138E-3 YOLL /µgm-3 (>30 years) 77,199 per YOLL Infant mortality (PM) 6.68E-6 cases/µgm-3 (> 9 months) 3,167,832 per case Source: Centre for Energy, Environment and Health Report series – Roskilde 2011

National Emission Ceilings (NEC), which was amended in 2009 to include all 27 member states, sets upper limits for each country for the total emissions in 2010 of the four pollutants responsible for acidification, eutrophication and ground-level ozone pollution (SO2, Nox, VOC and ammonia). Member states are to decide on the specific measures to meet the emission ceiling (to be met by 2010). The directive furthermore required member states to develop national programmes by 2002 and revise these in 2006, if needed. Furthermore, member states are to report their emission inventories to the EEA and the European Commission for monitoring. The revision of the NEC Directive was identified as one of the key measures.

PM = Particulate Matter YOLL = Years of Lost Lives SOMO35 (Sum of Ozone Means Over 35ppb) = the sum of means over 35ppb for the daily maximum 8-hour values of ozone.

Table Table 13 Definition of the specific scenarios (or “tags”) in the model. Each scenario is defined by a region and a SNAP category (first column), an emission year (second column), a short description of the emissions of interest in the scenario (column 3)

Region/SNAP Emission year Emission scenario (or the "tag")

2000 Int. ship traffic for the year 2000, (S=2,7%)*, whole model All/15 domain (EMEP=2000) 2007 Int. ship traffic for the year 2007, (S=1,5%)*, whole model All/15 domain (EMEP=2006) 2011 Int. ship traffic for the year 2011, (S=1,0%)*, whole model All/15 domain (EMEP=2016) 2020 Int. ship traffic for the year 2020, (S=0,1%)*, whole model All/15 domain (EMEP=NEC-II)

Region/SNAP Emission year Emission scenario (or the "tag")

2000 Int. ship traffic for the year 2000, (S=2,7%)*, whole model BaS-NoS/15 domain (EMEP=2000) 2007 Int. ship traffic for the year 2007, (S=1,5%)*, whole model BaS-NoS/15 domain (EMEP=2006) 2011 Int. ship traffic for the year 2011, (S=1,0%)*, whole model BaS-NoS/15 domain (EMEP=2016) 2020 Int. ship traffic for the year 2020, (S=0,1%)*, whole model BaS-NoS/15 domain (EMEP=NEC-II) Source: Centre for Energy, Environment and Health Report series – Roskilde 2011  The North Sea (NoS) and Baltic Sea (BaS) are part of the Sulphur Emission Control Areas (SECA).

6.4 PRESENT AND FUTURE HEALTH IMPACT IN EUROPE AND DENMARK OF INTERNATIONAL SHIPPING

Ship traffic in the Northern Hemisphere (scenario All/15) constitutes a major impact on human health.

Table 14. Shows the estimated mortalities in Europe

Health impact Number of cases in Europe Year 2000 2007 2011 2020 Chronic Bronchitis 1.89E+04 1.51E+04 1.31E+04 1.23E+04 Restricted Activity Days 1.94E+07 1.55E+07 1.34E+07 1.26E+07 Respiratory Hospital Admissions 1.16E+03 8.82E+02 7.46E+02 6.60E+02 Cerebrovascular Hospital Admissions 2.43E+03 1.94E+03 1.68E+03 1.58E+03 Congestive Heart Failure 1.25E+03 1.00E+03 8.67E+02 8.14E+02 Lung Cancer 2.90E+03 2.32E+03 2.00E+03 1.88E+03 Bronchodilator Use Children 5.65E+05 4.51E+05 3.90E+05 3.67E+05 Bronchodilator Use Adults 3.71E+06 2.96E+06 2.56E+06 2.41E+06 Cough Children 1.95E+06 1.56E+06 1.35E+06 1.27E+06 Cough Adults 3.82E+06 3.05E+06 2.64E+06 2.48E+06 Lower Respiratory Symptoms Children7.53E+05 6.01E+05 5.20E+05 4.89E+05 Lower Respiratory Symptoms Adults 1.38E+06 1.10E+06 9.51E+05 8.94E+05 Acute YOLL 5.55E+02 2.40E+02 1.43E+02 2.51E+02 Chronic YOLL 2.16E+05 1.72E+05 1.49E+05 1.40E+05 Infant mortality 2.13E+01 1.70E+01 1.47E+01 1.38E+01 Source: Centre for Energy, Environment and Health Report series – Roskilde 2011

Table 14 shows the estimated mortalities in Europe(101) to be 49,000 (in 2000), increasing to 53,400 (in 2020) based on chronic YOLL divided by the factor 10.6 given in the CAFE report, Watkiss et al., 2005(102). Calculations of annual external costs in Europe from sea transport are

(101)According to Corbett and Fischbeck (1997), pollution from international ship traffic causes roughly 60,000 mortalities annually worldwide. (102)A similar study for the USA performed by the US-EPA estimates 21,000 premature deaths with a related external cost of $47-$110 bn in the year 2020 (US-EPS, 2009).

estimated to increase from €58.4 billion (2000) to €64.1 billion( 103 ) annually in 2020. The temporary deviation in the upward trend of increased ship traffic and subsequent increased health costs (2007-2011) is most probably due to the introduction in 2015 of the SECAs in the North Sea and Baltic Sea, which sees the sulphur content in fuel reduced from 2.7% (2000) to 0.1% (from 2015)(104).

The annual external health costs in Denmark related to all shipping (table 15) is expected to decrease from €805 million (2000) to €484 million(105) in 2020. This decrease is most probably the result of the introduction of the SECA area. Table 15 . Total number of health cases in Denmark related to ship emissions in the Baltic and North Sea

Health impact Number of cases in Denmark Year 2000 2007 2011 2020 Chronic Bronchitis 5.56E+02 4.33E+02 3.85E+02 3.35E+02 Restricted Activity Days 5.56E+05 4.42E+05 3.93E+05 3.43E+05 Respiratory Hospital Admissions 3.49E+01 2.57E+01 2.20E+01 1.77E+01 Cerebrovascular Hospital Admissions 7.01E+01 5.45E+01 4.85E+01 4.22E+01 Congestive Heart Failure 3.82E+01 2.97E+01 2.65E+01 2.31E+01 Lung Cancer 8.52E+01 6.62E+01 5.89E+01 5.13E+01 Bronchodilator Use Children 1.51E+04 1.71E+04 1.05E+04 9.10E+03 Bronchodilator Use Adults 1.09E+05 8.46E+04 7.53E+04 6.56E+04 Cough Children 5.21E+04 4.06E+04 3.61E+04 3.15E+04 Cough Adults 1.12E+05 8.71E+04 7.75E+04 6.75E+04 Lower Respiratory Symptoms Children3.34E+04 3.07E+04 2.98E+04 3.01E+04 Lower Respiratory Symptoms Adults 4.04E+04 3.14E+04 2.80E+04 2.43E+04 Acute YOLL 2.14E+01 9.91E+00 5.41E+00 3.05E+00 Chronic YOLL 5.95E+03 4.62E+03 4.11E+03 3.58E+03 Infant mortality 6.99E-01 5.44E-01 4.84E-01 4.21E-01 Source: Centre for Energy, Environment and Health Report series – Roskilde 2011

(103 ) J. Brandt et al., 2011: Assessment of Health-Cost Externalities of Air Pollution at the National Level using the EVA Model System, CEEH Scientific Report No 3, Centre for Energy, Environment and Health Report series, March 2011, pp. 98.http://www.ceeh.dk/CEEH_Reports/Report_3/CEEH_Scientific_Report3.pdf (104)Ibid refers to the work previously quoted. (105)Ibid refers to the work previously quoted.

Table 15 Total number of health cases in Denmark related to the impact of emissions from ship traffic in the Baltic Sea and the North Sea (scenario: BaS-NoS/15) for the four respective years.

The introduction of a SECA in the Baltic Sea and North Sea will have a significant impact on emissions and external health costs in the region, especially considering that shipping in this region is relatively large compared to other regions of the world(106). This especially applies to the Danish straits that connect the North Sea with the Baltic Sea (the Sound and the Great Belt). The total annual health-related external cost in Europe from ship traffic in the Baltic Sea and North Sea is estimated at €22 billion (2000), which is set to fall to €14.1 billion annually in 2020 – a total reduction of 35%. The impact on health is shown on tables 13 and 14. The health-related external costs for Denmark of ship traffic in the Baltic Sea and the North Sea is estimated at €627 million annually (2000), which is set to fall to €357 million annually in 2020 (a total reduction of 43%). This significant reduction in external health costs is most probably due to the introduction of the SECA in the region. Nevertheless, the external health impact from ship traffic in the North Sea and Baltic Sea SECA will remain significant, not least due to NOx emissions, which are not targeted by the introduction of the SECA.

(106)Ibid refers to the work previously quoted.

6.5 EXTERNALITY COSTS PER KG EMISSION

The external health costs per kg(107)for each chemical compound for all international ship traffic (scenario All/15) and ship traffic in the North Sea and Baltic Sea (scenario BaS-NoS/15) are listed in table 15. The listed kg unit prices for each compound vary according to the year of emission and the characteristics associated with each sector/ scenario (i.e. the relationship between the geographical distribution of emission sources and the geographical distribution of the population affected by the emissions).

Table 16: Cost per kg emission (in unit €/kg –C, -S, -N, or –PM2.5) for the 10 major individual SNAP categories for Denmark (DK/1-DK/10)

REGION/SNAP

code Emission year CO [C] SO2[S] Nox [N] PM2,5 All/15 2000 -0,006 26,7 28,5 22,1 All/15 2007 -0,005 23,6 28,0 18,9 All/15 2011 -0,005 22,5 28,2 18,2 All/15 2020 -0,009 20,9 28,6 17,0 BaS-NoS/15 2000 0,001 39,0 31,7 35,0 BaS-NoS/15 2007 0,001 37,1 34,9 35,0 BaS-NoS/15 2011 0,001 34,4 35,9 35,0 BaS-NoS/15 2020 0,000 23,1 45,0 35,3 Source: Centre for Energy, Environment and Health Report series – Roskilde 2011

Table 16 shows the cost per kg emission (in unit €/kg –C, -S, -N, or – PM2.5) for the 10 major individual SNAP categories for Denmark (DK/1-DK/10), for all emissions in Denmark (DK/all), for ship traffic in the Northern Hemisphere (All/15), for ship traffic in the Baltic Sea and

(107)The cost per kg is used by the Centre for Energy, Environment and Health (CEEH) in energy optimization models Balmorel.

the North Sea (BaSNoS/15), and for all emissions in the Northern Hemisphere from whatever source (All/all). For the latter three categories, the calculations were carried out for four different emission years.

To calculate the cost per kg emission specifically related to cruise vessels in Copenhagen, I have used a conversion factor to convert the unit cost per kg S and N into SO2 and NOx.

 The conversion factor between S and SO2 is (32+2*16)/32 = 2.

 The conversion factor between N and NOx is (14+2*16)/14 = 3.2857

Table 17: Externality cost per kg emission – €/kg – scenario All/15

Table 1 -Externality cost per kg emission - Euros/kg Emission per

Region/SNAP code year SO2 [S] NOx [N] PM2.5 All/15 2000 26,7 28,5 22,1 All/15 2007 23,6 28 18,9 All/15 2011 22,5 28,2 18,2 All/15 2020 20,9 28,6 17

Table 2 -Externality cost per kg emission - Euros/kg Emission per

Region/SNAP code year SO2 [SO2] NOx [NO2] PM2.5 All/15 2000 13,35 8,67 22,1 All/15 2007 11,8 8,52 18,9 All/15 2011 11,25 8,58 18,2 All/15 2020 10,45 8,70 17 Source: Centre for Energy, Environment and Health Report series – Roskilde 2011

Table 17 shows Externality cost per €/kg scenario in the Northern

Hemisphere (All/15). The conversion factor between S and SO2 is

(32+2*16)/32 = 2. The conversion factor between N and NOx is (14+2*16)/14 = 3.2857

Table 18: Externality cost per kg emission – €/kg – scenario BaS-NoS/15

Table 1 -Externality cost per kg emission - Euros/kg Emission per

Region/SNAP code year SO2 [S] NOx [N] PM2.5 BaS-NoS/15 2000 39 31,7 22,1 BaS-NoS/15 2007 37,1 34,9 18,9 BaS-NoS/15 2011 34,4 35,9 18,2 BaS-NoS/15 2020 23,1 45 17 Table 2 -Externality cost per kg emission - Euros/kg Emission per

Region/SNAP code year SO2 [SO2] NOx [NO2] PM2.5 BaS-NoS/15 2000 19,5 9,65 35 BaS-NoS/15 2007 18,55 10,62 35 BaS-NoS/15 2011 17,2 10,93 35 BaS-NoS/15 2020 11,55 13,70 35,3 Source: Centre for Energy, Environment and Health Report series – Roskilde 2011

Table 18 shows Externality cost per €/kg scenario in the Baltic Sea and

North Sea (BaS-NoS/15). The conversion factor between S and SO2 is

(32+2*16)/32 = 2. The conversion factor between N and NOx is (14+2*16)/14 = 3.2857

7 PRESENTATION OF STUDY CASE: COPENHAGEN CRUISE PORT

7.1 CRUISE INDUSTRY

The cruise industry currently accounts for 5% of global tourism. Internationally, the number of cruise ships has increased by 30% since 2006 and over the next few years the fleet is expected to grow by 5-10% annually. Europe has seen some of the biggest increases, but South America and Asia are also experiencing strong growth.

7.2 TOTAL TRAFFIC

Copenhagen has established itself as the main cruise gateway to the Baltic Sea and Norway. The city’s leading position is reflected in the total number of visiting vessels and passengers. Copenhagen is a major turnaround port, i.e. receiving calls to port where passengers either begin or terminate their cruise in the city. The number of turnarounds in Copenhagen rose to 173 in 2012, up from 142 in 2010.

Figure 17.Growth of cruise traffic and cruise passengers in Copenhagen

900 820 840 800

700 675 662

600 560 509 500 458 428 362 368 375 Crusie ship 400 334 289 301 307 264 282 280 300 Passengers (1.000) 200

100

0 2004 2005 2206 2007 2008 2009 2010 2011 2012 Source: Copenhagen Malmo Port. (CMS)

Figure 17 shows the growth of cruise traffic and cruise passengers in Copenhagen. The decline in 2010 was due to the economic crisis in 2009, which affected the cruise industry worldwide.

Growth in percentages:

 Total passenger growth from 2005-2012 was 96% (i.e. 16% per annum).

 The rise in cruise vessels calling to port between 2005-2012 was 33% (i.e. 5% per annum).

 The forecasted annual growth in Copenhagen for the next three years is 5-10%, which is in tune with the international trend(108).

(108)G.P. Wild and BREA for Copenhagen Cruise Network , 2012.

The cruise season in Copenhagen runs from early April to late October. In recent years, the season has also resumed temporarily for Christmas cruises in December. In 2012, 6 cruise ships arrived in December, up from 2 in 2011. In 2011, volumes were highest in June, which saw 93 arrivals, followed by July with 90 and August with 87.On the most intensive day, Copenhagen welcomed a total of 30,000 cruise passengers from 156 different countries(109) to Copenhagen.

7.3 SIZE OF VESSELS

Globally, cruise vessels have grown in size in recent years. The biggest cruise vessels operate in the Caribbean and the smallest in Asia and Oceania. Baltic cruise vessels average 60,000 gross register tons (grt) and have an average capacity of 1,700 passengers corresponding to the worldwide average (see Figure 18 and Figure 19). New cruise vessels for the northern European market have a capacity for around 3,000 passengers. For the Baltic Sea, there may be a commercial interest in vessels with a capacity of up to 4,000 passengers. And larger vessels generally also have a growing thirst for energy, averaging around 3kWh per passenger.

(109)Among these approx. 27% were from Germany, 17% from the US/Canada, 13% from the UK, 10% from Spain, and 10% from Italy.

Figure 18 shows the size distribution of cruise vessels worldwide per gross register tonnes

Average Cruise ship size

100000 92344 91845 90000 75436 86170 80000 70000 58618 56134 60000 50927 50000 41089 40000 30679 30000 19081 20000

Gross Gross register ron 10000 Gross register ton 0

Source: Copenhagen Malmo Port. (CMS)

Figure 19 shows the size distribution of cruise vessels worldwide per passengers

Average Cruise ship size

2822 2800 3000 2808 2172

2500 2000 1726 1614 1749 1192 1500 1034

1000 717 Passengers 500 Passengers 0

Source: Copenhagen Malmo Port. (CMS)

Figure 20: The projected increase in size of new cruise vessels Northern Europe.

Source: Copenhagen Malmö Port (CPM).

Figure 20 shows the projected increase in size of new cruise vessels Northern Europe operated by Aida Cruise and TUI Cruises. Figure 21 shows the size distribution of cruise vessels visiting Copenhagen in 2011 and 2012 (number of call).

Copenhagen 2011 and 2012

40 36 35 28 30 23 24 25 22 20 17 13 15 11 Number of calls 10 5 Number Number of per calls year 0 500 501 to 1001 1501 2001 2501 3001 above 1000 to to to to to 3501 1500 2000 2500 3000 3500 Number of passengers

Source: Copenhagen Malmö Port (CPM).

Figure 21 shows the size distribution of cruise vessels visiting Copenhagen in 2011 and 2012 (passengers).

Figure 22 Total number of passengers in relation to specific ship sizes

Copenhagen 2011 and 2012

90000 82000

80000 66000 70000 62000 60000 47000 50000 40000 29000 30000 21000 19000 Passenger total 20000 5000 10000

particular particular vessel size 0 500 501 to 1001 1501 2001 2501 3001 above

Total Total number of passengers in 1000 to to to to to 3501 1500 2000 2500 3000 3500 Number of passengers

Source: Copenhagen Malmö Port (CPM).

Figure 22 shows the total number of passengers in relation to specific ship sizes (501-1,000 passengers, etc.) in cruise ships visiting Copenhagen

Figure 23: The increase in power demand (kWh) in relation to passenger load.

12000 Cruise vessels

y ~ 3 kW per passenger

10000

8000

6000 Power(kW)

4000

2000

0 0 500 1000 1500 2000 2500 3000 3500 4000 Passenger number Source: Copenhagen Malmö Port (CPM).

Figure 23 show the typical Baltic cruise vessels carries 1,700 passengers and the biggest approx. 3,000 passengers. The average power demand for the large vessels is 8,000kWh and peak load is 14,000kWh. The power supply per passenger is 2.67-4.67kWh (with the average around 3kWh).

7.4 COMPETITIVE POSITION

Geographically, Copenhagen is well positioned as the cruise holiday gateway to Norway and the Baltic Sea. However, maintaining the city’s market share also depends on economic and other competitive factors.

Key competitive parameters:

 Copenhagen is the largest cruise hub in the Baltic Sea (passengers and traffic)  Copenhagen is the main turnaround port for cruise ships in the Baltic  Copenhagen Airport is Scandinavia’s largest hub. The airport has been awarded by the Air Transport Research Society (ATRS) as “Europe’s Most Efficient Airport” for the last seven years out of nine, most recently in 2012  As an indicator of competitive standing, Copenhagen has been hailed as “Europe’s Leading Cruise Port” by travel industry players at the World Travel Awards in 2005, 2008, 2010, 2011, and 2012.  Satisfaction among passengers and crewmembers with Copenhagen as a tourist destination in 2011 was 95%, whereas 91%( 110 ) expressed that their experience had exceeded expectation. The overall satisfaction score in Copenhagen is higher than the European average on all parameters

Key parameters that could threaten competitiveness:

 Capacity problems at the Port of Copenhagen (however, with the new cruise pier this is unlikely)

(110)G.P. Wild and BREA for Copenhagen Cruise Network , 2012

 A fall in Baltic cruise tourism due to price hikes as a result of new environmental regulation that may impact the cost of fuel (SECA) or that may impact the cost of port dues or other overheads  Competition from ports in other Baltic cities offering a competitive price structure and/or better infrastructure  Competition from Baltic ports in cities that are top-of-mind among international travellers.  A loss of status at Copenhagen Airport as the Scandinavian region’s major hub (e.g. competition from Berlin may change travel pattern in Scandinavia)

Figure 24 shows passenger growth per year in the five most popular destinations in the Baltic Sea.

Source: Copenhagen Malmö Port (CMP)

Figure 24 shows the growth in cruise passengers between the 5 major destinations in the Baltic Sea (1999-2009). Copenhagen welcomed 840,000 cruise passengers in 2012.

Figure 25: The correlation whereby a visiting cruise vessel is likely to have visited another specific city in the Baltic Sea.

Other harbours visited, counted on cruise vessels visiting Copenhagen

91 100 86 82 75 80

60 35 29 40 28 28 23

harbour 16 13 12 12 12 20 7 5 5 5

0 Probability (%) the vessel visits othervessel the (%)Probability

Source: Copenhagen Malmö Port

Figure 25 shows the correlation whereby a visiting cruise vessel in Copenhagen is likely to have visited another specific city in the Baltic Sea. Those with the highest percentage are likely to be among Copenhagen’s greatest competitors as cruise hub. However, 27% of all cruise passengers(111) starting their Baltic Cruise in Copenhagen in 2012 came from Germany. So German harbours area also potential competitors.

(111)Copenhagen Malmö Port Annual Report 2011

Tourist revenues from the cruise industry in Copenhagen have been estimated at €113,5 million in 2012( 112 ). Adding to this, the cruise industry generated a turnover of €79,35 million at the Port of Copenhagen for fuel, water, repair services and other supplies. The cruise industry accounts for a total of 2,045 jobs in the city.

7.5 LOGISTICS

To maintain its leading competitive position and to accommodate the growth in overall traffic and size of cruise vessels, the Port of Copenhagen development company, By & Havn, has constructed a new 1,100-meter cruise ship pier in Nordhavn (called Oceankaj). The new pier is located at a distance from existing urban environments, although a new urban district is planned on 1 million m2 of reclaimed land by Nordhavn, which will eventually be home to 50,000 people when fully developed in 2040. The new pier will replace cruise port facilities at Orientbassinet and Kronløbsbassinet. Cruise ships will continue to call on the city’s old cruise ship pier, Langelinie.

(112)G.P. Wild & BREA, February 2012.

7.6 ENVIRONMENTAL IMPACT

Noise reduction was the principal motivation for the relocation of cruise port activities from Orientbassinet and Kronløbsbassinet to the new cruise pier, Oceankaj, according to the Environmental Impact Assessment(113). The docklands by Orientbassinet and Kronløbsbassinet are currently under development as a mixed-use urban district.

According to the report, the risk of air emissions reaching limit levels at the cruise pier was negligible for the foreseeable future due to its exposed position in the sea (the Sound) where winds generally carry emissions eastward and due to the fact that urban development in the area around Oceankaj will not commence before 10-15 years time. The pier is nonetheless prepared for cold-ironing as required by the Copenhagen Climate Plan, KBH2025.

An environmental study(114) was carried out in 2004 at all of the city’s cruise ship piers at the time, Orientbassinet, Kronløbsbassinet and Langelinie. The aim was to assess the contribution to air pollution by cruise ships at berth in Copenhagen. The main focus was NO2, SO2 and

PM10. In general, ozone levels limit the amount of NOX that can be converted to NO2, which in terms of limit values is the compound of interest. Atmospheric dispersion calculations were conducted using the OML-Multi 5.03 model based on emissions data, technical data from

(113)Udvidelse af Københavns Nordhavn og ny krydstogtterminal VVM-redegørelse og miljøvurdering, the Danish Coastal Authority and the Municipality of Copenhagen, May 2009 (114)Valuering af krydstogskibes bidrag til luftforurening, The Danish Environmental Agency, 2005.

vessels, meteorological data, receptor height, and background emission concentrations, etc.

The report findings:

3  In relation to NO2, cruise ships only contributed 10 μg/m to the background value of 88 μg/m3 in relation to “the 19th hour”, i.e. below the limit value of 200 μg/m3(115).  In relation to annual average, cruise ships contributed 0.8 μg/m3 to 3 the background NO2 pollution of 23 μg/m , i.e. below limit value of 40 μg/m3.  No other emission particles exceeded EU limit values.

 70% of the NOx emissions were nonetheless concentrated at 2 berths.  The report also noted the comparatively low annual contribution

of NOx from cruise ships (140 tons) in relation to total emissions from all ships in the harbour (600 tons), from international shipping (67,000 tons), from all road traffic in Copenhagen (30,000 tons) and from a local power station, Amagerværket (2,500 tons).

If a similar environmental study were to be conducted today, what factors may have changed?

Factors that may have increased the share of airborne emissions from cruise ships in relation to other sources:

(115)EU directive (99/30/EC) sets a limit for NO2 that is based on hourly concentrations. The hourly concentration of NO2 is allowed to exceed a limit of 200 μg/m3 no more than 18 times a year.

 While cruise traffic has risen at the Port of Copenhagen, cargo traffic has fallen. The number of calls to port (including the rising cruise traffic) has consistently fallen(116). See Table 18 and Figure 26.  Since the 2005 survey (using 2004 data) was carried out, the number of cruise passengers and turnarounds has doubled. See Figure 17.  The size of cruise ships has risen and emissions are also to a cer-

tain extent made at a different height, which may impact NOx levels at certain berths at Langelinie.

 The comparative contribution of NOx and PM from cruise vessels and other sources in Copenhagen may also have changed, e.g. the

local power station, Amagerværket, emitted 2,500 tons of NOx in

2004 (as cited in the report), but in 2011 the NOx emission from 117 the power station was 141 tons( ), i.e. equalling the NOx emissions from cruise ships in 2004.

Factors that may have decreased or left unchanged the comparative impact of emissions from cruise ships at berth in the Copenhagen harbour:

 The new cruise pier is located in the open at some distance from the city centre where meteorological conditions (exposure to wind) will mean lower concentrations of emissions. The new pier mainly handles turnarounds.

 Although NOx emissions from road traffic in Copenhagen has

fallen in recent years, NO2 emissions have not fallen comparative-

(116)Statistics Denmark (2011) http://www.statistikbanken.dk/statbank5a/selectvarval/define.asp?MainTable=SKIB1 01&PLanguage=0&Tabstrip=&PXSId=0&SessID=117889701&FF=2&tfrequency=1 (117)The 2011 Environmental Report, Dong Energy.

ly(118), which may mean that the background air pollution level may not have improved considerably.

Factors that may influence the share of airborne emissions from cruise ships in relation to other sources in the near future:

 Emissions from cruise ships in general may decrease after 2015 as the result of the SECA.  With the introduction of the SECA, the overall background emission level may decrease after 2015.  New cruise vessels constructed after 2016 (with Tier III engines)

will emit less NOx.

The above factors indicate that although limit values in today’s scenario are unlikely to be exceeded by emissions from cruise ships in Copenha- gen, the contribution to overall emissions compared to other sources of air pollution has probably risen.

Table 19.All in calls to port in Copenhagen and gross tonnage handling. Year Total calls to port Cargo (1000 grt) (incl. cruise ships) 2011 2566 5584 2010 2635 5142 2009 2814 5760 2008 3295 7223 2007 3948 7279 Source: Statistics Denmark, 2011

(118)Air Quality Assessment of Clean Air Zones in Copenhagen, Aarhus University 2012.

Figure 26. All in calls to port in Copenhagen and gross tonnage handling

Source: Statistics Denmark, 2011

Table 19 and figure 26 show that despite the rise in cruise ship traffic the overall traffic figures and gross tonnage handling for the Port of Copenhagen has fallen in recent years.

Figure 27. NO2 concentration at Langelinie cruise ship pier in Copenhagen in relation to the limit value of the “19th hour” (2004).

Source: Valuering af krydstogskibes bidrag til luftforurening, The Danish Environmental Agency, 2005.

Figure 27 shows NO2 concentration at Langelinie in Copenhagen in relation to the limit value of the “19th hour”. It shows emissions from cruise ships in relation to urban background pollution, which is assumed constant. The values all range between 98 and 101 μg/m3 (the limit value is 101 μg/m3).

Figure 28 Map of Nordhavn in the Port of Copenhagen.

Map references 1 Oceankaj: Copenhagen’s new 1,100-meter cruise ship pier, which is prepared for cold-ironing. Opens for the season in 2013. Terminal buildings will be completed in 2014. 2 Langelinie: Copenhagen’s classic cruise ship pier. The pier is not prepared for cold-ironing. 3 Ferry terminal: connections to Oslo and Swinoujscie. The terminal is not prepared for cold-ironing. 4 Orientbassinet/Kronløbsbassinet: Until 2012 used as cruise pier. 5 Aarhusgadekvarteret: (phase 1 in orange and phase II in yellow). Currently under development as a mixed-use urban district. 6 Future urban district developed on reclaimed land 7 Frihavnen: mixed-use urban dockland development

8. COLD IRONING FEASIBILITY AND COST BENEFIT

8.1 COST OF ON-BOARD GENERATION OF ELECTRICITY USING AUXILIARY ENGINES

The total costs for on-board generation of electricity depends on the design of the power supply system and the fuel used. Adding to this are capital investment and maintenance costs that vary depending on the type of engine. These are in turn dependant on running hours per year and age of the engine. Specific fuel consumption for engines using MD is assumed to be: 217g/kWh(119).

Figure 29: Coefficient of Rotterdam sport market for 0.1% sulphur MGO and the Bunkerworld Index November 2012 – January 2013.

Source: www.bunkerworld.com 2013-02-02

(119)European Commission Directorate General Environment Service Contract on Ship Emissions: Assignment, Abatement and Market-based Instruments; page 33; Final Report August 2005 ENTEC, UK.

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Figure 30 Bunker fuel prices (US$/ton) in Rotterdam for a running 6-month period.

Source: www.bunkerworld.com 2013-02-02

Figure 30 shows the 5-monthly average bunker price in Rotterdam from Oct 2012 to Feb 2013 for 1.00% sulphur and 0.1% sulphur MGO. Assuming an energy consumption of a hoteling cruise vessel is 10MWh(120) then 2.17 tons of fuel is needed. Using the current five- monthly average oil price ($US946=€708.123)( 121 ) then the cost of generating 10MWh is €1,536.63. One average call to port of 10 hours amounts approximately to: €15,3 million. The total consumption of all cruise vessels calling on Copenhagen during the summer (308 vessels in 2012) amounts to €4.7 million.

(120)P. Ericsson, I. Fazlagic (2008) (121 )Bunker fuel price (USD/ton) in Rotterdam for a running 4 month period. Source www.bunkerworld.com Source: www.bunkerworld.com 2013-02-02 .

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8.2 ELECTRICITY COST: MARKET RATE AND REDUCED RATE

MARKET RATE

The electricity rate per kWh excluding VAT to be paid by cruise operators is about DKK 1.40 kWh= 0.188 €/kWh according to CMP(122). Assuming an energy consumption of 10MWh then the consumption price per hour is €1,880.00. An average 10-hour stay would amount to €18,800.00 The total consumption of all cruise vessels calling on Copenhagen during the summer (308 vessels in 2012) would amount to €5,790,400 if they used shore power.

REDUCED RATE

A very interesting scenario, however, is if Denmark, like Sweden(123) and Germany( 124 ), were to be granted an exemption from Council Directive (2003/96/EC), Article 14(1)(c) to exempt vessels from paying environmental tax on energy consumption as an incentive for cruise

(122)Dong Energy, Denmark’s largest energy supplier, list their industry tariff as €0,167 DKK 1.25 on average. (123)SEE NOTE COUNCIL IMPLEMENTING DECISION of 20 June 2011 authorising Sweden to apply a reduced rate of electricity tax to electricity directly provided to vessels at berth in a port (‘shore-side electricity’) in accordance with Article 19 of Directive 2003/96/EC (2011/384/EU) (124)COM/2011/0302 final - NLE 2011/0133 / COUNCIL DECISION authorising Germany to apply a reduced rate of electricity tax to electricity directly provided to vessels at berth in a port ("shore-side electricity") in accordance with Article 19 of Directive 2003/96/EC Proposal for a COUNCIL DECISION authorising Germany to apply a reduced rate of electricity tax to electricity directly provided to vessels at berth in a port ("shore-side electricity") in accordance with Article 19 of Directive 2003/96/EC.

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operators to use shore power. In this case, the electricity price would be just DKK 0,60kWh(125)= 0,08 €/kWh. Assuming an energy consumption of 10MWh then the consumption price per hour is €880. The total electricity consumption of all cruise vessels calling on Copenhagen during the summer (308 vessels in 2012) would amount to €2,710,400.00.

Table20. Electricity cost €/kWh

Electricity cost – excluding Electricity cost – market AE-power (MGO environmental tax rate (€/kWh) 0,1%) (€/kWh) (€/kWh)

0.188 0.08 0.1537

Table 20 shows the price per €/kWh of market rate and reduced rate electricity provided by cold-ironing and the price per €/kWh of AE- generated power. The reduced rate requires exemption from Council Directive (2003/96/EC), Article 14(1)(c)(126).

8.3 COLD-IRONING BUSINESS CASE

The aim of environmental taxes is to create an incentive for consumers and companies to make sustainable choices. However, the environmental taxes levied on shore power have the opposite effect – dissuading cruise operators from using shore power in favour of AE-generated power. However, based on the assumption that Denmark could achieve an exemption from Council Directive (2003/96/EC) Article 14(1)(c) to exempt vessels from paying environmental tax on electricity (as is the

(125)Source: CMP, 2012.

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case with Sweden and Germany) there could be a business case for introducing cold-ironing in Copenhagen. This scenario would offer an economic incentive to use shore power, even with today’s bunker price for 0.1% sulphur MGO.

Table 21. Coefficient of electricity rates

Total saving cost Electricity cost Energy need per Avarage call per year, per Time pier (h) €/kWh berth (kW) per year vessels using cold ironing

AE-power (MGO 0,1%) 0,1537 10 10000 10 € 153.700 (€/kWh) Electricity cost – excluding 0,08 10 10000 10 € 80.000 environmental tax (€/kWh) Cost per year using cold iroing € 73.700

Table 21 shows the total saving per year using cold-ironing in relation to AE-generated power, provided Denmark is given an exemption from Council Directive (2003/96/EC) Article 14(1)(c) to exempt vessels from paying environmental tax on electricity

With the difference in price between AE-generated electricity and shore power, a cruise vessel with an energy demand of 10MWh staying an average 10 hours in Copenhagen a total of 10 times during the May - August season would save €73,700 annually, excluding the savings on manpower and maintenance of the AE. With this annual saving, the payback time for retrofitting a cruise vessel (an average of €0.75 million per cruise vessel) would be 10-12 years with an annual interest rate of 4%. This does not indicate a very good return on invest for cruise

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operators. But if 2 major cruise ship ports in the Baltic Sea were to introduce shore power, the payback time would be 5.1 years.

Table 22. Total annual saving and payback time of retrofitting a vessel with cold- ironing capability

Total saving cost Total saving cost Total saving cost per Total saving cost Total saving cost Capital cost per year per port per year per 2 year per 3port per year per 4 port per year per 5 Ship cost retrofit € 750.000 € 73.700 € 147.400 € 221.100 € 294.800 € 368.500 per vessels N° of year for 10,2 5,1 3,4 2,5 2,0 pay back Table 22 shows the total annual saving in electricity supply and total payback time of retrofitting a vessel with cold-ironing capability if the number of major cruise destinations offering shore power were to increase.

To establish cold-ironing in the Port of Copenhagen on purely market terms, the capital investment in land-based shore power infrastructure must be paid for by levying a fee on shore power users. Based on the assumption of almost full capacity supply of electricity of all cruise vessels visiting the Oceankaj pier in Copenhagen (30MW x 20 hours/day x 150 days in the May-August high season), a service fee of 0.027 €/kWh would be required to co-finance the shore-side facilities of €36,800,000 (Table 36 ) in 16 years with a 4% interest rate. Even if Copenhagen were the only city in the Baltic Region to offer shore power the project would still be economically feasible. The fee of approx.. €0.027kWh would mean that the electricity price paid by vessels using shore power would total €0.107, which is still cheaper than AE- generated power and enough to finance retrofitting although more time would be needed for cruise operators to recover their investment. But the

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more Baltic destinations to offer shore power, the greater the savings for cruise operators.

Table 23 Coefficient of electricity rates (including fee to port to co-finance shore- side facility)

Electricity cost Energy need per Avarage call Total saving cost Time pier (h) €/kWh berth (kW) per year per year AE-power (MGO 0,1%) 0,1537 10 10000 10 € 153.700 (€/kWh) Electricity cost – excluding 0,107 10 10000 10 € 107.000 environmental tax (€/kWh) Total saving cost per year using cold iroing € 46.700

Table 24. Total payback time of retrofitting a vessel with cold-ironing capability (fee for co-financing port shore-power facility included).

Total saving cost Total saving cost Total saving cost Total saving cost per Total saving cost Capital cost per year per 2 per year per 5 per year per port year per 3port per year per 4 port port port Ship cost retrofit € 750.000 € 46.700 € 93.400 € 140.100 € 186.800 € 233.500 per vessels N° of year for 16,1 8,0 5,4 4,0 3,2 pay back

Table 24 shows the total annual saving in electricity supply and total payback time of retrofitting a vessel with cold-ironing capability if the number of major cruise destinations offering shore power were to increase.

Advantages to pooling:  If several major Baltic Sea destinations were to offer shore power then for each additional member of the pool the economic feasibility of offering shore power increases

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 It would be a win-win-win situation for the environment and the competitive standing of the cruise industry in the Baltic Sea and the ports involved

 It would speed up retrofitting in general and encourage other regions and cities to follow the example

 It would offer greater stability in pricing in a time where operational costs for cruise operators are rising due to rise in fuel costs

This business scenario is tentative since it would require the shore power facility to run at almost full capacity and for cruise operators to retrofit their vessels from year one. This would not be possible without a concerted effort to establish a pool of Baltic Sea destinations offering shore power.

Business case requirements:  For shore power to be a feasible option for cruise operators, electricity prices need to be exempt from environmental taxes

 For shore power to be a feasible option for cruise operators several major destinations in the Baltic Sea need to join Copenhagen in introducing shore power.

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8.4 CALCULATION OF EMISSION FACTORS OF AUXILIARY ENGINES

EMISSION FACTORS

Table 25: Emissions (g/kWh) from AE electricity in relation to emissions from the Nordic Energy Mix

Production/ CO2 NOX SO2 PM emissions (g/kWh) (g/kWh) (g/kWh) (g/kWh) AE using 0.1% 645 13.2 0.2 0,3 sulphur MGO Nordic Energy 426 0.32 0.07 0,03 Mix(127)

Source: Copenhagen and Malmö Port (CMP), 2012.

Table 25 shows emissions (g/kWh) from AE electricity in relation to emissions from Nordic Energy Mix.

8.5 TOTAL EMISSIONS REDUCTION

The total emissions from the 70 cruise vessels (with a total of 308 calls) visiting the Port of Copenhagen in the summer season of 2012 (May-

October) were approx. 408 tons of NOx, 4 tons of PM and 9 tons of SO2.

(127)ENTEC, (2005a).

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Table 26: Total reduction of emissions in percentages if 100% of vessels visiting Copenhagen (May-August) in 2012 had used shore power.

Energy demand SO2 (t) NOX (t) PM (t) CO2 (t) (MWh/season)

Emissions from AEs using (0.1% sulphur 6 418 10 2043 31674 MGO)

Emission from shore power using Nord 2 10 1 13493 31674 Energy Mix Difference 4 408 9 6937 Percentage 65% 98% 90% 34%

Table 26 shows the total emissions reduction (in percentages) if 100% of vessels visiting Copenhagen (May-August) in 2012 had used shore power (based on emission factors of the Nordic Energy Mix) rather than AE-generated power 0.1% sulpher MGO).

Table 27 Total reduction of emissions (in percentages) if 60% of vessels visiting Copenhagen (May-August) in 2012 used shore power.

Energy demand SO2 (t) NOX (t) PM (t) CO2 (t) (MWh/season)

No shore power: all vessels use AE-generated power (0.1 sulphur MGO)

31674 6,3 418,1 9,5 20429,5 Vessels using AE 60% vessels adapted to shore power (based on Nordic Energy Mix). All others use AE- generated power (0.1 sulphur MGO) Energy demand SO2 (t) NOX (t) PM (t) CO2 (t) (MWh/season) Vessels with shore power 19004 1,3 6,1 0,6 8095,8 Vessels with AE engines 12669 2,5 167,2 3,8 8171,8 TOTAL 31674 3,9 173,3 4,4 16267,6 DIFFERENCE 2 245 5 4162 PERCENTAGE 39 59 54 20

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Figure 31. Shows the total reduction of emissions (in percentages) if 60% of vessels visiting Copenhagen (May-August) in 2012 had used shore power (based on emission factors of the Nordic Energy Mix) rather than AE-generated power.

Emission saving using cold iroing

59% 60% 54%

50% 39% 40%

30% Emission saving % 20% 20%

10%

0% SO2 (t) NOX (t) PM (t) CO2 (t)

8.6 EXTERNAL HEALTH COST

The external health cost of providing shore power to cruise vessels in Copenhagen is an important factor in establishing the socio-economic impact of hazardous emissions. The benefit to society of using shore power is substantial: €4,805,847 annually. Naturally, if 60% of vessels used shore power, the socio-economic impact is less. Table 28 External annual health cost benefit with 0% and 100% of cruise vessels using cold-ironing.

SO2 NOX PM CO2 Total Emission Cost using AE € 73.166 € 4.569.755 € 332.574 € 408.591 € 5.384.086 (0.1% sulphur MGO) Emission cost using shore power € 25.608 € 110.782 € 33.257 € 269.860 € 439.507 (Nordic Energy Mix) Difference € 47.558 € 4.458.973 € 299.316 € 138.731 Percentage 65 98 90 34 Total external saving cost using cold iroing € 4.805.847 Total external saving cost using cold iroing (Including the CO) € 4.944.578

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Table 28 shows the annual external health cost in percentages, comparing the cost of emissions in €/tons from AE-generated power (1.0% sulphur MGO) and from shore power (using the values of the Nordic Energy Mix). The assumption is that all vessels either use shore power or AE-generated power. The total cost of €4,805,847 excludes the cost of CO2 emission and the total cost of €4,944,578 includes the cost of CO2 emission.

Table 29 External health costs with 60% of vessels using shore power

Energy demand Vessels SO2 NOX PM CO2 (MWh/season) No Facility for shore power. All vessels use AE-generated power (0.1 sulphur MGO)

€ 73.166,25 4569754,7 € 332.573,85 € 408.590,73 31,674 Vessels using AE power 60% vessels adapted to shore power (based on Nordic Energy Mix). All others use AE-generated power (0.1 sulphur MGO)

SO2 NOX PM CO2

Vessels using shore € 15.365 € 66.469 € 19.954 € 161.916 19004 power Vessels using AE power € 29.266 € 1.827.902 € 133.030 € 163.436 12669 TOTAL € 44.631 € 1.894.371 € 152.984 € 325.352 31,674 DIFFERENCE € 28.535 € 2.675.384 € 179.590 € 83.238 PERCENTAGE 48 96 85 1 Total external saving cost using cold iroing € 2.883.508 Total external saving cost using cold iroing (Including the CO) € 2.966.747

Table 29 shows the external health cost in percentages, comparing the cost of emissions in €/tons from AE-generated power (0.1% sulphur MGO) and from shore power (using the values of the Nordic Energy Mix). The assumptions are that all vessels either use AE-generated power or that 60% of vessels use shore power. The total cost of €

2,966,747 includes the cost of CO2 emission and the total cost of

€ 2,883,508 excludes the cost of CO2 emission.

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Figure 32: External health cost where 60% of cruise vessels use shore power

External cost €2.000.000 €1.800.000 €1.600.000 €1.400.000 €1.200.000 €1.000.000 AE engine €800.000 Shore power €600.000 €400.000 €200.000 €- SO2 NOX PM CO2

EXTERNAL HEALTH COST (€/kWh)

From a business perspective, cruise operators would choose to use AE- generated power over market rate shore power since the difference in rate is 0.0343 €/kWh in favour of AE power. But if cruise operators had to pay the external health cost per kWh the price difference would be 0.13 €/kWh in favour of shore power at regular market rate in Denmark. The difference in rate between AE power (including added external health cost) and shore power at reduced rate (without environmental tax) is 0.23 €/kWh. Naturally, all thermal electricity supply involves external health cost. The added external health cost of AE power in this calculation is the

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difference between the external health cost of the Nordic Energy Mix and AE-generated power.

Table 30. Electricity cost €/kWh

Electricity cost – excluding Electricity cost – market AE-power (MGO environmental tax rate (€/kWh) 0,1%) (€/kWh) (€/kWh)

€ 0.188 € 0.08 € 0.1537

Table 31 Added external health cost of using AE-generated power (€/kWh) in relation to market rate and reduced market rate shore power

AE-power Added AE-power Difference between Difference between (MGO 0,1%) external including AE power and market AE power and (€/kWh) health cost added external rate including added reduced market €/kWh health cost external health cost rate including (€/kWh) (€/kWh) added external health cost (€/kWh) € 0.15 € 0.16 € 0.31 € 0.13 € 0.23

EXTERNAL HEALTH COST PER PASSENGER

A popular cruise holiday in the region is a cruise of the Norwegian fiords, such as the 7-day itinerary in Figure 33. To calculate the total external health cost per passenger related to the power generated at berth by Auxiliary Engine at these destinations I assumed that the electricity consumption of each passenger is 3kWh. The time spent in harbour during the entire cruise trip is 36.5 hours (= 28% of total duration of the cruise), averaging 4.6 hours per day. The external health cost per

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passenger averages €0.5 per hour spent at harbour, or €2.30 per day. The total external health cost for the entire cruise trip is €19 per passenger. The total health cost of all 2,550 passengers (max capacity) on board the MSC Musica is €47,480.00 per cruise holiday. Note that like many Baltic Sea and North Sea cruises, turnaround is in Copenhagen, which means the ship spends time hoteling in Copenhagen in-between departures while passengers disembark and new passengers board. This extra time is not included in the calculation.

Figure 33 The MSC Musica Norwegian fiord cruise itinerary (map)

Source: MSC Crociere – www.msccruises.com

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FACTS ABOUT MSC MUSICA: Year Built: 2006 Last Refurbished: NA Gross Tonnage: 92,400 tons Passenger Capacity: 2,550 Crew Size: 987

Table 32 The MSC Musica Norwegian fiord cruise itinerary (timetable)

Source: MSC Crociere – www.msccruises.com

Table 33The MSC Musica Norwegian fiord cruise itinerary timetable showing time spent in harbour and navigation (hours).

Day Data Port Arrival Departure Activity Time harbour Time navigation 1 10/08/2013 Copenhagen 0 18 Docked 0 6 2 11/08/2013 Kiel 8 16 Docked 8 16 3 12/08/2013 At Sea 0 0 ... 0 24 4 13/08/2013 Hellesylt/Geiranger 9 17,30 Docked 8,5 15,5 5 14/08/2013 Bergen 9 18 Docked 9 15 6 15/08/2013 Stavanger 7 13 Docked 6 18 7 16/08/2013 Oslo 13 18 Docked 5 19 8 17/08/2013 Copenhagen 10,30 0 Docked 10,5 36,5 124

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Table 34 Total external health cost per passenger per stay in harbour based on an energy consumption of 3kWh per passenger

Emission Emission coeffient - AE Emission factor Emission factor per External External component engine MGO (0,1% per 3kWh 3kWh passsenger health cost health cost sulphur) passsenger g/kwh g/kWh Kg/kWh Euro/kg Euro

CO2 645 1935 1,935 € 0,02 € 0,04 NOx 13,2 39,6 0,0396 € 10,93 € 0,43

SO2 0,2 0,6 0,0006 € 11,93 € 0,01 PM 0,3 0,9 0,0009 € 35,00 € 0,03 Total external cost per passenger € 2,30

8.7 COST-BENEFIT ANALYSIS (CBA)

The socio-economic impact of exhaust emissions from cruise ships in the Port of Copenhagen is substantial. A scenario of 60% of vessels calling on Copenhagen in the summer season (May-August) using shore power rather than AE-generated power would offer an external health cost benefit to society of €4,944,578.00 annually. The total capital cost of establishing a shore power utility in Copenhagen providing electricity to three berths simultaneously as described in Table 30 is €36.866.548. From a socio-economic perspective, this capital cost would be recovered by saved health costs in 10-15 years. See table 31.

The full capacity of the proposed shore power utility on Oceankaj may support more than 60% of the visiting vessels in relation to total electricity consumption. But to offer all cruise ships visiting Copenhagen shore power would naturally mean greater costs and it would therefore require more time for the cost-benefit to balance.

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Table 35: Externality cost per kg emission – €/kg – scenario BaS-NoS/15

Table36 – Cost estimate of cold-ironing infrastructure at Oceankaj

HARBOUR INSTALLATION AND EQUIPMENT System deliverance DKK 160 million 21.449.628

Primary supply systems, switches, and meter incl. DKK 2 million 268.120 technical room

Light building for shore DKK 25 million 3.351.504 power system Cabling (cable chains) on the quay including three 20 MW DKK 21 million 2.815.264 cable reel towers Connection fee to the utility company for 60 MW incl. DKK 40 million 5.362.407 primary plant Contingencies DKK 27 million 3.619.625 Total DKK 275 million 36.866.548

Table 37: Cost benefit analysis of 60% of vessels using shore power

Total reduction of emission per season - 60% of vessels using Cost of shore power utility cold ironing SOx emissions NOx emissions PM emissions CO2 emissions Shore-side cost (3 berths) Tons/season Tons/season Tons/season Tons/season

€36,866,547.84 2,5 244,8 5,1 4161,9

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Table 38: Cost benefit of 60% of cruise vessels using shore power in the Port of Copenhagen (summer season 2012).

Emission 1st Year 5th Year 10th Year 15th Year 20th Year

SO2 € 28.535 € 142.674 € 285.348 € 428.023 € 570.697 NOx € 2.675.384 € 13.376.918 € 26.753.837 € 40.130.755 € 53.507.674 PM € 179.590 € 897.949 € 1.795.899 € 2.693.848 € 3.591.798 TOTAL € 2.883.508 € 14.417.542 € 28.835.084 € 43.252.626 € 57.670.168

CO2 € 83.238 € 416.192 € 832.385 € 1.248.577 € 1.664.770 TOTAL € 2.966.747 € 14.833.734 € 29.667.469 € 44.501.203 € 59.334.938

Table 36 shows the cost benefit of 60% of cruise vessels using shore power in the Port of Copenhagen during the summer season (May-

August). The totals in green (€) include the benefits without CO2 emissions and the totals in orange (€) include the benefit of CO2 reductions.

Figure 34– Estimate total external health cost benefit of 60% of vessels using cold- ironing.

€60.000.000

€50.000.000

€40.000.000 SO2 NOx €30.000.000 PM €20.000.000 CO2

€10.000.000

€0 1st Year 5th Year 10th Year 15th Year 20th Year

The total external health cost of all cruise vessels using AE-generated power visiting Copenhagen during the summer season of 2012 amounted to €5,384,086. Over a 20-year period, the total socio-economic external health cost of the cruise industry in Copenhagen is €107,681,711.

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Table 39: External health cost of 100% of cruise vessels using AE-generated power during the summer season of 2012

Emission 1st Year 5th Year 10th Year 15th Year 20th Year

SO2 73166,25 € 365.831 € 731.662 € 1.097.494 € 1.463.325 NOx 4569754,74 € 22.848.774 € 45.697.547 € 68.546.321 € 91.395.095 PM 332573,85 € 1.662.869 € 3.325.739 € 4.988.608 € 6.651.477 TOTAL € 4.975.495 € 24.877.474 € 49.754.948 € 74.632.423 € 99.509.897

CO2 408590,73 € 2.042.954 € 4.085.907 € 6.128.861 € 8.171.815 TOTAL € 5.384.086 € 26.920.428 € 53.840.856 € 80.761.284 € 107.681.711

Table 38 shows the external health cost of all cruise vessels using AE- generated power during the summer season. The totals in green (€) include the benefits without CO2 emissions and the totals in orange (€) include the benefit of CO2 reductions.

Figure 35External health cost of 100% of cruise vessels using AE-generated power during the summer season of 2012

€ 90.000.000

€ 80.000.000

€ 70.000.000

€ 60.000.000 SO2 € 50.000.000 NOx € 40.000.000 PM

€ 30.000.000 CO2

€ 20.000.000

€ 10.000.000

€ 0 1st Year 5th Year 10th Year 15th Year 20th Year

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9. ANALYSIS AND CONCLUSIONS

Airborne emissions from international shipping represent a rising challenge, causing serious socio-economic impact and requiring international regulation. Annex VI of the MARPOL Convention (IMO) and a number of EU directives, principally Council Directive 1999/32/EC, set the regulatory framework for the shipping industry as well as member states to the treaties and the European Union in tackling the issue of ship engine exhaust emissions. These regulatory measures set minimum values and standards, requiring industry players and authorities to take action, although at the same time limiting the options given to individual states to set out their own regulatory measures and adopt new unilateral controls. In 2015, the North Sea and Baltic Sea will become a Sulphur Emissions Control Area (SECA) under the IMO, which will result in the reduction of SO2 emissions from shipping. In 2016, the region is also expected to become a Nitrogen Oxide Emissions

Control Area (NECA) under the IMO, which will target NOx emissions in the region, although the effect will be decidedly incremental since the NECA regulatory measures deal with engine design. It would therefore require a near total renewal of the commercial fleet in the region to achieve the full potential benefit of NOx emissions reduction. With the introduction of the SECA, shipping companies have been given the option of reducing SO2 emissions, either by using marine fuels with a maximum content of 0.1% sulphur, or by using abatement technologies. As demonstrated in this thesis, many abatement technologies not only reduce SO2 emissions with up to 80-90%, as an added benefit they also reduce other harmful airborne emissions, including NOX and PM. The overall level of reduction in NOx and PM emissions in the Baltic Sea and

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North Sea in the coming years will therefore depend on the choice of technologies and investment strategies that shipping companies make within the framework of SECA and NECA requirements. In the coming years, the main political focus in the region will no doubt shift to further measures in maritime NOx and PM emission control. Within the current framework of international law, individual states have limited options to take unilateral measures to curb NOx emissions from shipping. This thesis has studied some of the best-practice examples, including the mandatory Norwegian NOx tax introduced in 2003, which also applies to shipping, but is nonetheless limited by a number of exceptions due to legal constraints within international law, which render this taxation instrument limited both in scope and impact. The differentiated harbour dues introduced in Sweden in 2002 have also proved too limited an incentive for shipping companies to invest in abatement technology to reduce emissions. The core of this thesis has been focused on a study case that represents an example of the range of challenges, legally and economically, that individual states experience when seeking to adopt unilateral initiatives to curb harmful exhaust emissions from shipping. The study case has been the Port of Copenhagen, Denmark, where over the past decade the considerable rise in cruise ship holidaymaking in the North Sea and Baltic Sea has made the Danish capital the region’s leading cruise ship hub (passenger growth was 96% from 2004-2012). An environmental impact assessment of the cruise ship industry in Copenhagen was conducted in 2005, which found the overall exhaust emissions levels from cruise ships to be well below EU limit values. Since this assessment was conducted, wide-reaching measures have been undertaken by the city of Copenhagen, by the Danish state and by the

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EU in general to curb air pollution from land-based sources, a process that is ongoing. In 2009, the city of Copenhagen adopted an ambitious climate plan, KBH2025, and in 2012 the Danish government adopted an Energy Agreement that calls for the phasing out of fossil fuels and a shift within all energy producing and energy consuming sectors to renewable energy by 2050. There is, therefore, a considerable level of political readiness in Denmark to reduce airborne emissions. And although exhaust emissions from cruise ship hoteling in the Port of Copenhagen may seem a minor issue in context with overall emissions from terrestrial, shipping and air traffic in general, the relative contribution of exhaust emissions from the growing cruise ship industry in relation to other sources is most probably on the rise. To accommodate the growing cruise ship traffic and to reduce the local environmental impact in urban areas close to the harbour, the Copenhagen harbour development company, By & Havn, has constructed a new cruise ship pier at some distance from urban environments; a project that is prepared for the introduction of cold-ironing, a technology that aims to offer a considerable reduction in airborne exhaust emissions by allowing ships at berth to use shore power rather than power generated by Auxiliary Engine (AE). To assess the external health cost of each individual compound of ship exhaust emission in the Port of Copenhagen, I modified individual standards in the applied External Valuation of Air Pollution Model (EVA), an advanced model developed by the University of Aarhus. The key advantage to this model, which tracks the impact pathway of regional-scale air pollutant and chemical transportation, is that it can account for the non-linear chemical transformations and feedback mechanisms influencing air pollutants from a particular regional source

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(in this case international shipping) within a given geographical region (in this case the Baltic Sea and the North Sea) and within a given timeframe (in this case May-August 2012). The model is based on local- scale information from the Centre for Energy, Environment and Health, CEEH. I furthermore modified the standard scenario of the EVA model to focus on the specific harbour environment rather than the sea environment (i.e. SNAP category BaS-NoS/15). In addition, I obtained location-specific shipping data from 2012 from the Copenhagen Malmö Port (CMP) and port authority on the basis of which I calculated the average energy consumption of each vessel, etc. Based on the compiled data I have calculated the total external health cost of emissions from cruise ships at berth in Copenhagen within this the summer season (May-August 2012) to be €5,384,086. Although cold-ironing is a fully developed technology it has a very low penetration in the North Sea and Baltic Sea where few vessels have cold- ironing capability and no ports offer shore power to cruise ships. Globally, cold-ironing is only used commercially for cruise ships where regulatory mechanisms specifically require companies to use this technology. The capital cost of the projected shore power infrastructure for the city’s new cruise ship pier, Oceankaj, amounts to €36.866.548. My calculations show that the annual benefit in emissions reduction based on a scenario of 60% of visiting cruise ships using shore power rather than AE-generated power (i.e. approx. the total capacity of the proposed shore power utility) is €2,675,384 in reduced NOx emissions,

€28,535 in reduced SO2 emissions and €175,590 in reduced PM emissions (within the given 5-month timeframe). The cost-benefit of introducing cold ironing at the pier would therefore in a socio-economic

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perspective be considerable. The external health costs would balance the capital cost in harbour-side infrastructure in 10-15 years. To give an illustrative example of the socio-economic impact of emissions from cruise ships at berth I calculated the external health cost per passenger of AE power during a visit to one port in a specific holiday itinerary (the average stay is 4.6 hours) to be €2.30. The total external health cost of AE power generated at port for a cruise ship of 2,550 passengers making 7 calls of port on a North Sea cruise amounts to €47,480.00 (Note this does not include the external health cost of navigation, manoeuvring or the added time for hoteling during turnaround in Copenhagen). Cruise operators make business choices on the basis of cost and this also applies to electricity supply. The cost of AE power is 18% cheaper than shore power at regular electricity rate. However, if you add the external health cost, the cost of AE power is more than 100% higher than shore power at regular electricity rates. In this thesis I have identified two prerequisites under which introducing cold-ironing technology could tentatively become economically feasible for both CMP and the region’s cruise operators. The first prerequisite relates to international law. For the project to be economically feasible, Denmark needs to obtain an exemption from Community Directive (2003/96/EC), Article 14(1)(c) to exempt vessels from paying local Danish environmental tax on electricity supplied from the national grid. Such exemptions have already been granted to Germany and Sweden. Generally, environmental taxes are created to encourage consumers and companies to make sustainable choices but in the case of shore power, Danish environmental taxes on electricity do the opposite by failing to offer shipping companies an incentive to use environmentally friendly

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shore power. If Denmark were to be exempt from the directive, the subsequent lower electricity rate would give cruise companies an economic incentive to invest in retrofitting their vessels for cold-ironing. The second prerequisite pertains to the necessary critical mass. For cold- ironing to become economically feasible for both cruise operators and ports, a business model should be developed that encourages leading Baltic Sea cruise destinations to join Copenhagen to create a pool of port operators in the region introducing cold-ironing as a benchmark incentive-based technology to reduce NOx and other harmful emissions in harbour environments. As already mentioned, in the Baltic region only Sweden and Germany are exempt from Community Directive (2003/96/EC), Article 14(1)(c). But if this directive were to be amended to offer incentives for shipping companies to use shore power in a wider European context then a new regulatory framework would be established with which to encourage sustainable growth in the cruise industry in general to the benefit of the environment, public health and the wider economy.

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10. FUTURE RESEARCH

My future research on the issue of cold-ironing will be focused on the further development of cost-benefit analyses in the Port of Copenhagen and other Baltic destinations that could potentially be involved in the development of a business plan for cold-ironing pooling. Furthermore, I my research will focus on multi-criteria analysis of the cost-benefit of LNG as an alternative maritime fuel.

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Appendix 1 Cruise ship vessels –summer season 2012 (May – August)

SHIPS VISITING COPENAGHEN 2012 - Summer season (May- August) Time Energy Total Number Gross Match Voltage Frequen along Cruise liner Vessels Loa (m) Pass do pme kW consumption Passngens passengers of visit tonnage type (Kw) cy (Hz) side MW/h* of all call quay (h) Emerald Princess 11 112894 289 3100 69205 DE 11 143 1001 3782 41602 Caribbean Princess 1 112894 19 133 3592 3592 Costa Fortuna 14 102587 3470 81 568 3470 48580 Grand Princess 3 107517 3300 47 329 3300 9900 Celebrity Eclipse 5 121878 304 2852 67200 DE 11 80 560 3129 15645 Azura 2 113651 289 3092 571108 DE 11 19 133 3096 6192 MSC Poesia 17 92409 294 2550 58000 DE 10 166 1159 3013 51221 MSC Magnifica 12 95128 3013 115 805 3013 36156 Costa Deliziosa 1 92720 294 2260 65000 DE 11 9 63 2826 2826 Costa Luminosa 13 97720 294 220 64000 DE 11 143 1001 2826 36738 Mein Schiff 2 4 76998 264 1922 28250 DN 7 60 40 281 2681 10724 Jewel of the Seas 8 90090 293 2110 50000 GDE 11 60 150 1048 2501 20008 Brilliance of the Seas 5 90090 53 371 2501 12505 Norwegian Sun 14 78309 259 1976 49212 DE 10 60 143 1004 2450 34300 Celebrity Constellation 6 90228 294 2044 50000 GDE 11 60 54 378 2450 14700 Vision of the Seas 6 78340 279 1998 50400 DE 7 50 350 2435 14610 Arcadia 4 83521 285 2064 51840 DE 11 34 235 2388 9552 AidaBlu 11 69203 252 2050 36000 DE 11 73 511 2192 24112 Aidasol 11 69203 251 2050 36000 DE 11 102 714 2174 23914 MSC Lirica 4 59058 35 242 2069 8276 Empress 8 48563 2020 104 725 2020 16160 Queen Victoria 2 90049 294 2014 63360 DE 11 19 133 2014 4028 Eurodam 8 86273 285 2108 64000 DE 11 79 553 2014 16112 Queen Elizabeth 2 90901 23 158 2014 4028 Aurora 3 76152 270 1878 58800 DE 7 60 28 193 1950 5850 Oriana 3 69153 260 1088 39750 DM 7 60 28 194 1928 5784 Costa neoRomantica 12 57150 109 760 1782 21384 MSC Opera 2 59058 9 63 1756 3512 Grand Mistral 12 47275 216 1196 31688 DE 7 140 978 1700 20400 Ryndam 2 55819 219 1260 34560 DE 7 20 139 1613 3226 Rotterdam 2 61849 234 1404 57600 DE 7 20 140 1404 2808 Artania 2 44588 231 1192 29160 DM 7 60 16 112 1260 2520 Marina 4 66000 252 1252 42000 DE 7 60 54 378 1260 5040 Aidacara 11 38351 193 1180 21720 DM 1 60 100 700 1230 13530 Balmoral 2 34242 188 1052 21300 DM 0 60 20 140 1230 2460 Thomson Spirit 1 33930 15 105 1224 1224 Crystal Symphony 4 50200 238 960 38880 DE 7 39 270 1010 4040 Braemar 1 19089 164 816 132 DM 0 60 10 70 929 929 Marco Polo 2 22086 176 850 15445 DM 16 112 922 1844 Costa Voyager 1 24430 10 70 836 836 Prinsendam 2 37845 204 756 21120 DM 0 60 19 133 835 1670 Ocean Princess 2 77489 824 26 182 824 1648 Ocean Countess 1 17856 164 846 15444 DM 0 60 9 63 800 800 Seven Seas Voyager 4 41500 207 706 23760 DE 7 60 53 371 730 2920 Adonia 1 30277 9 63 710 710 Discovery 2 20216 169 472 13240 DM 0 60 22 151 698 1396 Azamara Journey 2 30227 21 147 694 1388 Nautica 4 30300 181 702 19440 DE 7 60 47 330 684 2736 Columbus 2 3 30277 35 245 684 2052 Astor 1 20606 177 570 15400 DM 11 77 650 650 Black Watch 2 28668 206 828 14000 DM 0 60 24 168 589 1178 Boudicca 1 28372 206 874 14000 DM 0 60 9 63 536 536 Delphin 2 16124 21 147 470 940 Seabourn Sojourn 7 32000 198 450 23040 DE 7 60 70 491 450 3150 Quest for Adventure 2 18627 19 133 446 892 Europa 2 28437 199 408 21590 DE 7 60 22 154 408 816 Athena 2 16144 160 500 19826 DM 0 60 16 112 390 780 Silver Whisper 5 28258 186 388 15600 DM 64 445 388 1940 Kristina Katarina 1 12907 380 0 380 380 Minerva 1 12500 6 43 350 350 Fram 1 11647 114 272 7920 DE 1 9 63 328 328 Wind Surf 2 14745 312 11 78 312 624 Silver Cloud 3 16927 116 38 266 296 888 Le Boreal 3 10944 142 268 6400 DE 1 27 189 264 792 Seabourn Pride 3 9975 133 208 7280 DM 0 60 30 210 208 624 Star Flyer 6 2280 180 78 546 180 1080 Le Diamant 1 8282 8 53 165 165 National 1 6471 112 162 4708 DM 0 50 11 80 154 154 Geographic Explorer Clipper Odyssey 1 5218 103 120 5192 DM 0 60 7 46 128 128 Clipper Adventurer 2 5218 101 128 3496 DM 0 50 22 154 122 244 Island Sky 2 4200 91 228 3560 DM 0 60 14 95 114 228

140

Appendix 2- Cruise ship vessels 2012. ARRIVAL ETA DEPARTURE ETD SHIP 06-04-2012 09:00 06-04-2012 18:00 Aidacara 13-04-2012 09:00 13-04-2012 18:00 Aidacara 20-04-2012 09:00 20-04-2012 18:00 Aidacara 22-04-2012 09:30 22-04-2012 19:00 Aidasol 26-04-2012 11:00 26-04-2012 18:00 Aidasol 27-04-2012 08:00 27-04-2012 18:00 MSC Lirica 27-04-2012 09:00 27-04-2012 18:00 Aidacara 30-04-2012 11:00 30-04-2012 18:00 Aidasol 01-05-2012 09:00 01-05-2012 18:00 Aidacara 04-05-2012 07:00 04-05-2012 17:00 Norwegian Sun 04-05-2012 09:00 04-05-2012 17:00 Aidacara 05-05-2012 10:30 05-05-2012 19:00 MSC Lirica 06-05-2012 07:55 06-05-2012 18:00 Mein Schiff 2 06-05-2012 08:00 06-05-2012 18:00 MSC Poesia 06-05-2012 08:00 06-05-2012 18:00 Aurora 06-05-2012 12:00 06-05-2012 21:00 Fram 10-05-2012 11:00 10-05-2012 20:00 Aidasol 11-05-2012 09:00 11-05-2012 18:00 Aidacara 11-05-2012 09:00 11-05-2012 13:30 MSC Opera 12-05-2012 05:00 12-05-2012 18:00 Emerald Princess 12-05-2012 07:30 12-05-2012 22:00 Empress 12-05-2012 08:00 12-05-2012 17:00 Queen Victoria 13-05-2012 07:00 13-05-2012 17:00 Norwegian Sun 13-05-2012 07:30 13-05-2012 18:00 MSC Poesia 14-05-2012 08:00 14-05-2012 18:00 Le Boreal 14-05-2012 09:00 14-05-2012 17:00 Aidacara 14-05-2012 09:00 14-05-2012 21:30 Discovery 16-05-2012 08:00 16-05-2012 17:00 Costa Deliziosa 17-05-2012 08:00 17-05-2012 18:00 Grand Mistral 18-05-2012 10:00 18-05-2012 18:00 Aidacara 19-05-2012 08:00 19-05-2012 18:00 Mein Schiff 2 19-05-2012 09:30 19-05-2012 18:30 MSC Lirica 20-05-2012 08:00 20-05-2012 18:00 MSC Poesia 21-05-2012 09:00 21-05-2012 17:00 Aidacara 21-05-2012 09:00 21-05-2012 13:30 MSC Opera 22-05-2012 07:00 22-05-2012 17:00 Norwegian Sun 22-05-2012 09:00 22-05-2012 18:00 Azura 23-05-2012 05:00 23-05-2012 18:00 Emerald Princess 23-05-2012 08:00 23-05-2012 17:00 Eurodam 24-05-2012 08:00 24-05-2012 17:00 Quest for Adventure

141

24-05-2012 10:00 24-05-2012 17:00 Artania 24-05-2012 11:00 24-05-2012 20:00 Aidasol 25-05-2012 08:00 25-05-2012 17:00 Jewel of the Seas 25-05-2012 11:00 25-05-2012 19:00 Aidacara 26-05-2012 08:00 26-05-2012 22:00 Empress 26-05-2012 11:00 26-05-2012 18:00 AidaBlu 27-05-2012 08:00 27-05-2012 19:00 Costa Fortuna 27-05-2012 08:00 27-05-2012 18:00 MSC Poesia 29-05-2012 07:00 29-05-2012 17:00 Jewel of the Seas 30-05-2012 07:00 30-05-2012 19:00 Silver Cloud 30-05-2012 08:00 30-05-2012 17:00 Celebrity Constellation 30-05-2012 08:00 30-05-2012 18:00 AidaBlu 30-05-2012 08:00 30-05-2012 18:00 Le Boreal 30-05-2012 09:00 30-05-2012 16:30 MSC Lirica 31-05-2012 07:00 31-05-2012 17:00 Norwegian Sun 31-05-2012 08:00 01-06-2012 18:00 Prinsendam 31-05-2012 09:00 31-05-2012 18:00 Adonia 01-06-2012 08:00 01-06-2012 18:00 Aidacara 02-06-2012 08:00 02-06-2012 19:00 Costa Luminosa 02-06-2012 08:00 02-06-2012 22:00 Star Flyer 02-06-2012 08:00 02-06-2012 18:00 Balmoral 02-06-2012 09:00 02-06-2012 18:00 MSC Magnifica 03-06-2012 05:00 03-06-2012 18:00 Emerald Princess 03-06-2012 08:00 03-06-2012 18:00 Seabourn Sojourn 03-06-2012 08:00 03-06-2012 19:00 Costa Fortuna 03-06-2012 08:00 03-06-2012 17:00 Artania 03-06-2012 09:00 03-06-2012 18:00 MSC Poesia 03-06-2012 11:00 03-06-2012 20:00 Aidasol 03-06-2012 12:40 03-06-2012 19:00 Minerva 04-06-2012 07:00 04-06-2012 00:19 Silver Whisper 04-06-2012 07:00 04-06-2012 16:30 Costa neoRomantica 04-06-2012 08:00 04-06-2012 17:00 Rotterdam 05-06-2012 08:00 05-06-2012 23:00 Aidacara 05-06-2012 09:00 06-06-2012 04:00 Grand Princess 05-06-2012 10:00 05-06-2012 23:00 Ocean Princess 06-06-2012 08:00 06-06-2012 20:00 Clipper Adventurer 06-06-2012 08:00 06-06-2012 18:00 Azura 06-06-2012 08:00 06-06-2012 23:59 Celebrity Eclipse 06-06-2012 08:00 06-06-2012 18:00 Mein Schiff 2 06-06-2012 09:30 06-06-2012 18:00 Arcadia 08-06-2012 08:00 09-06-2012 22:00 Nautica 08-06-2012 09:00 08-06-2012 18:00 Aidacara 08-06-2012 09:00 08-06-2012 15:00 Vision of the Seas

142

08-06-2012 09:00 08-06-2012 17:00 Marco Polo 09-06-2012 07:00 09-06-2012 17:00 Norwegian Sun 09-06-2012 08:00 09-06-2012 19:00 Costa Luminosa 09-06-2012 08:00 09-06-2012 22:00 Empress 09-06-2012 11:00 09-06-2012 18:00 AidaBlu 10-06-2012 07:00 10-06-2012 16:00 Jewel of the Seas 10-06-2012 08:00 10-06-2012 22:00 Star Flyer 10-06-2012 08:30 10-06-2012 19:00 Costa Fortuna 10-06-2012 09:00 10-06-2012 18:30 MSC Lirica 10-06-2012 09:00 10-06-2012 18:00 MSC Poesia 11-06-2012 07:00 11-06-2012 17:00 Clipper Adventurer 11-06-2012 08:00 11-06-2012 17:00 Celebrity Constellation 11-06-2012 10:10 11-06-2012 20:00 Ryndam 12-06-2012 07:00 12-06-2012 16:00 Costa neoRomantica 12-06-2012 09:00 13-06-2012 02:00 Azamara Journey 13-06-2012 08:00 13-06-2012 17:00 Oriana 13-06-2012 11:00 13-06-2012 20:00 Aidasol 14-06-2012 05:00 14-06-2012 18:00 Emerald Princess 14-06-2012 07:00 14-06-2012 17:00 Eurodam 14-06-2012 08:00 14-06-2012 18:30 Delphin 14-06-2012 12:30 14-06-2012 20:00 Le Diamant 14-06-2012 15:30 14-06-2012 22:30 Le Boreal 15-06-2012 7:00:00 15-06-2012 17:00:00 Seabourn Sojourn 15-06-2012 08:00 15-06-2012 23:00 Thomson Spirit 15-06-2012 09:00 15-06-2012 15:00 Vision of the Seas 15-06-2012 09:00 15-06-2012 22:00 Queen Elizabeth 16-06-2012 07:00 16-06-2012 18:00 Grand Mistral 16-06-2012 08:00 16-06-2012 19:00 Costa Luminosa 16-06-2012 08:00 16-06-2012 18:00 MSC Magnifica 16-06-2012 08:00 16-06-2012 18:00 Star Flyer 17-06-2012 08:00 17-06-2012 18:00 MSC Poesia 17-06-2012 08:30 17-06-2012 19:00 Costa Fortuna 17-06-2012 09:00 17-06-2012 17:00 Vision of the Seas 18-06-2012 07:00 18-06-2012 19:00 Silver Whisper 18-06-2012 07:00 18-06-2012 17:00 Costa Voyager 18-06-2012 07:00 18-06-2012 17:00 Norwegian Sun 18-06-2012 07:00 18-06-2012 18:00 Rotterdam 19-06-2012 08:00 19-06-2012 17:00 Crystal Symphony 19-06-2012 10:00 19-06-2012 23:59 Star Flyer 19-06-2012 11:00 19-06-2012 18:00 AidaBlu 20-06-2012 07:00 20-06-2012 16:00 Costa neoRomantica 20-06-2012 08:00 20-06-2012 23:59 Celebrity Eclipse 21-06-2012 08:00 21-06-2012 21:00 Columbus 2

143

23-06-2012 07:00 23-06-2012 18:00 Silver Cloud 23-06-2012 07:00 23-06-2012 18:00 Grand Mistral 23-06-2012 08:00 23-06-2012 20:00 Empress 23-06-2012 08:00 23-06-2012 20:00 Europa 23-06-2012 08:00 23-06-2012 19:00 Costa Luminosa 23-06-2012 09:00 23-06-2012 18:00 MSC Magnifica 23-06-2012 09:30 23-06-2012 18:30 Oriana 23-06-2012 11:00 23-06-2012 20:00 Aidasol 24-06-2012 07:00 24-06-2012 17:00 Eurodam 24-06-2012 08:30 24-06-2012 20:00 Costa Fortuna 24-06-2012 09:00 24-06-2012 18:00 MSC Poesia 25-06-2012 05:00 25-06-2012 18:00 Emerald Princess 25-06-2012 07:00 25-06-2012 18:00 Seven Seas Voyager 26-06-2012 07:00 26-06-2012 17:00 Seabourn Pride 27-06-2012 07:00 27-06-2012 17:00 Norwegian Sun 28-06-2012 07:00 28-06-2012 16:00 Costa neoRomantica 28-06-2012 08:00 28-06-2012 20:00 Nautica 29-06-2012 07:00 29-06-2012 17:00 Seabourn Sojourn 29-06-2012 11:00 29-06-2012 18:00 AidaBlu 30-06-2012 00:00 30-06-2012 21:00 Kristina Katarina 30-06-2012 07:00 30-06-2012 19:00 Grand Mistral 30-06-2012 07:45 30-06-2012 18:00 MSC Magnifica 30-06-2012 08:00 30-06-2012 19:00 Costa Luminosa 30-06-2012 13:00 30-06-2012 19:00 Athena 01-07-2012 08:00 01-07-2012 17:00 Discovery 01-07-2012 08:00 01-07-2012 18:00 MSC Poesia 01-07-2012 08:30 01-07-2012 19:00 Costa Fortuna 02-07-2012 07:00 02-07-2012 19:00 Silver Whisper 02-07-2012 08:00 02-07-2012 22:00 Marina 03-07-2012 08:00 03-07-2012 18:00 Queen Victoria 03-07-2012 11:00 03-07-2012 20:00 Aidasol 04-07-2012 06:00 04-07-2012 17:00 Eurodam 04-07-2012 07:00 04-07-2012 16:00 Jewel of the Seas 04-07-2012 07:30 04-07-2012 17:00 Black Watch 04-07-2012 08:00 04-07-2012 23:59 Celebrity Eclipse 04-07-2012 09:00 05-07-2012 04:00 Caribbean Princess 04-07-2012 20:00 07-07-2012 23:59 Azamara Journey 05-07-2012 07:00 05-07-2012 16:00 Boudicca 05-07-2012 08:00 05-07-2012 13:00 Island Sky 05-07-2012 10:00 05-07-2012 23:00 Ocean Princess 06-07-2012 05:00 06-07-2012 18:00 Emerald Princess 06-07-2012 07:00 06-07-2012 16:00 Costa neoRomantica 06-07-2012 07:00 06-07-2012 17:00 Norwegian Sun

144

06-07-2012 08:00 07-07-2012 17:00 Aurora 07-07-2012 07:00 07-07-2012 19:00 Grand Mistral 07-07-2012 08:00 09-07-2012 18:00 Crystal Symphony 07-07-2012 08:00 07-07-2012 19:00 Costa Luminosa 07-07-2012 08:00 07-07-2012 20:00 Empress 07-07-2012 09:00 07-07-2012 18:00 MSC Magnifica 08-07-2012 08:00 08-07-2012 18:00 MSC Poesia 08-07-2012 08:00 08-07-2012 18:00 Mein Schiff 2 08-07-2012 08:00 08-07-2012 19:00 Costa Fortuna 09-07-2012 07:00 09-07-2012 18:00 Silver Whisper 09-07-2012 10:00 09-07-2012 20:00 Ryndam 09-07-2012 11:00 09-07-2012 18:00 AidaBlu 10-07-2012 07:00 10-07-2012 17:00 Seabourn Pride 10-07-2012 07:00 10-07-2012 22:00 Silver Cloud 10-07-2012 08:00 10-07-2012 17:00 Grand Princess 12-07-2012 05:30 12-07-2012 20:00 Seven Seas Voyager 13-07-2012 07:00 13-07-2012 17:00 Seabourn Sojourn 13-07-2012 11:00 13-07-2012 20:00 Aidasol 14-07-2012 06:00 14-07-2012 17:00 Eurodam 14-07-2012 07:00 14-07-2012 16:00 Costa neoRomantica 14-07-2012 07:00 14-07-2012 20:00 Grand Mistral 14-07-2012 08:00 14-07-2012 19:00 Costa Luminosa 14-07-2012 08:45 14-07-2012 18:00 MSC Magnifica 15-07-2012 07:00 15-07-2012 17:00 Norwegian Sun 15-07-2012 08:15 15-07-2012 18:30 Costa Fortuna 15-07-2012 09:00 15-07-2012 18:00 MSC Poesia 16-07-2012 07:00 16-07-2012 16:00 Jewel of the Seas 17-07-2012 05:00 17-07-2012 18:00 Emerald Princess 17-07-2012 07:30 17-07-2012 17:00 Queen Elizabeth 17-07-2012 08:00 17-07-2012 17:00 Celebrity Constellation 19-07-2012 11:00 19-07-2012 18:00 AidaBlu 20-07-2012 09:00 20-07-2012 17:00 Arcadia 21-07-2012 05:00 21-07-2012 18:00 Grand Mistral 21-07-2012 07:45 21-07-2012 18:00 MSC Magnifica 21-07-2012 08:00 21-07-2012 20:00 Empress 21-07-2012 08:00 21-07-2012 19:00 Costa Luminosa 21-07-2012 13:00 22-07-2012 21:30 Island Sky 22-07-2012 07:00 22-07-2012 16:00 Costa neoRomantica 22-07-2012 07:00 22-07-2012 22:00 Marina 22-07-2012 08:00 22-07-2012 18:30 Costa Fortuna 22-07-2012 08:00 22-07-2012 21:00 Columbus 2 22-07-2012 08:00 22-07-2012 18:00 MSC Poesia 23-07-2012 11:00 23-07-2012 20:00 Aidasol

145

24-07-2012 05:45 24-07-2012 16:30 Eurodam 24-07-2012 07:00 24-07-2012 17:00 Norwegian Sun 27-07-2012 05:30 27-07-2012 12:00 Clipper Odyssey 27-07-2012 07:00 27-07-2012 17:00 Seabourn Sojourn 28-07-2012 04:30 28-07-2012 19:00 Grand Mistral 28-07-2012 05:00 28-07-2012 18:00 Emerald Princess 28-07-2012 07:00 28-07-2012 16:00 Jewel of the Seas 28-07-2012 07:00 28-07-2012 17:00 Brilliance of the Seas 28-07-2012 08:00 28-07-2012 18:00 MSC Magnifica 28-07-2012 08:00 28-07-2012 19:00 Costa Luminosa 29-07-2012 05:30 29-07-2012 20:00 Seven Seas Voyager 29-07-2012 08:00 29-07-2012 19:00 Costa Fortuna 29-07-2012 08:00 29-07-2012 17:00 Celebrity Constellation 29-07-2012 08:00 29-07-2012 18:00 MSC Poesia 29-07-2012 11:00 29-07-2012 18:00 AidaBlu 29-07-2012 14:00 30-07-2012 20:00 Wind Surf 30-07-2012 07:00 30-07-2012 18:00 Astor 30-07-2012 07:00 30-07-2012 16:00 Costa neoRomantica 31-07-2012 08:00 31-07-2012 18:00 Balmoral 01-08-2012 08:00 01-08-2012 23:59 Celebrity Eclipse 02-08-2012 07:00 02-08-2012 17:00 Norwegian Sun 02-08-2012 08:00 03-08-2012 18:00 Crystal Symphony 02-08-2012 10:00 02-08-2012 20:00 Aidasol 04-08-2012 05:45 04-08-2012 17:00 Brilliance of the Seas 04-08-2012 07:00 04-08-2012 20:00 Empress 04-08-2012 07:45 04-08-2012 18:00 MSC Magnifica 04-08-2012 08:00 04-08-2012 19:00 Costa Luminosa 04-08-2012 08:30 04-08-2012 18:00 Grand Mistral 05-08-2012 07:30 05-08-2012 18:00 Costa Fortuna 05-08-2012 08:00 05-08-2012 17:00 Prinsendam 05-08-2012 08:00 05-08-2012 18:00 MSC Poesia 06-08-2012 07:00 06-08-2012 17:00 Seabourn Sojourn 06-08-2012 09:00 06-08-2012 19:00 Athena 07-08-2012 07:00 07-08-2012 16:00 Costa neoRomantica 07-08-2012 07:15 07-08-2012 17:00 Oriana 07-08-2012 09:30 07-08-2012 18:00 Aurora 07-08-2012 10:00 07-08-2012 22:00 Star Flyer 08-08-2012 05:00 08-08-2012 18:00 Emerald Princess 08-08-2012 07:45 08-08-2012 17:00 Eurodam 08-08-2012 09:30 08-08-2012 17:30 Marco Polo 08-08-2012 11:00 08-08-2012 18:00 AidaBlu 09-08-2012 07:00 09-08-2012 16:00 Jewel of the Seas 09-08-2012 07:00 09-08-2012 17:00 Vision of the Seas

146

10-08-2012 08:00 10-08-2012 17:00 Celebrity Constellation 10-08-2012 08:00 10-08-2012 17:00 Nautica 11-08-2012 06:00 11-08-2012 17:00 Brilliance of the Seas 11-08-2012 07:00 11-08-2012 20:00 Grand Mistral 11-08-2012 07:00 11-08-2012 17:00 Norwegian Sun 11-08-2012 08:00 11-08-2012 19:00 Costa Luminosa 11-08-2012 08:00 11-08-2012 22:00 Marina 11-08-2012 09:00 11-08-2012 18:00 MSC Magnifica 12-08-2012 08:30 12-08-2012 19:00 Costa Fortuna 12-08-2012 09:00 12-08-2012 18:00 MSC Poesia 12-08-2012 10:00 12-08-2012 20:00 Aidasol 14-08-2012 07:00 14-08-2012 18:00 Quest for Adventure 14-08-2012 08:00 14-08-2012 22:00 Star Flyer 15-08-2012 07:00 15-08-2012 20:00 Seven Seas Voyager 15-08-2012 07:00 15-08-2012 16:00 Costa neoRomantica 15-08-2012 08:00 15-08-2012 17:00 Columbus 2 17-08-2012 09:00 17-08-2012 18:00 Ocean Countess 17-08-2012 13:00 17-08-2012 23:00 Braemar 18-08-2012 07:00 18-08-2012 17:00 Brilliance of the Seas 18-08-2012 08:00 18-08-2012 19:00 Costa Luminosa 18-08-2012 08:00 18-08-2012 20:00 Empress 18-08-2012 08:15 18-08-2012 18:00 Grand Mistral 18-08-2012 09:00 18-08-2012 18:00 MSC Magnifica 18-08-2012 10:20 18-08-2012 18:00 AidaBlu 19-08-2012 05:00 19-08-2012 18:00 Emerald Princess 19-08-2012 08:30 19-08-2012 19:00 Costa Fortuna 19-08-2012 09:00 19-08-2012 17:00 Eurodam 19-08-2012 09:00 19-08-2012 17:00 Arcadia 20-08-2012 06:35 20-08-2012 18:00 Norwegian Sun 20-08-2012 06:50 20-08-2012 17:00 Seabourn Sojourn 21-08-2012 07:00 21-08-2012 16:00 Jewel of the Seas 21-08-2012 07:00 21-08-2012 17:00 Vision of the Seas 22-08-2012 08:00 22-08-2012 17:00 Celebrity Constellation 22-08-2012 10:00 22-08-2012 20:00 Aidasol 23-08-2012 07:00 23-08-2012 16:00 Costa neoRomantica 23-08-2012 07:55 24-08-2012 13:00 Wind Surf 23-08-2012 08:25 23-08-2012 18:00 Crystal Symphony 24-08-2012 09:00 24-08-2012 18:00 MSC Poesia 25-08-2012 06:15 25-08-2012 17:00 Brilliance of the Seas 25-08-2012 07:00 25-08-2012 18:00 Grand Mistral 25-08-2012 08:00 25-08-2012 19:00 Costa Luminosa 25-08-2012 08:00 25-08-2012 18:00 MSC Magnifica 26-08-2012 07:00 26-08-2012 18:00 MSC Poesia

147

26-08-2012 07:00 26-08-2012 17:00 Vision of the Seas 26-08-2012 08:00 26-08-2012 18:30 Delphin 26-08-2012 08:30 26-08-2012 19:00 Costa Fortuna 27-08-2012 07:00 27-08-2012 17:00 Seabourn Pride 27-08-2012 08:00 27-08-2012 18:00 Europa 27-08-2012 08:00 27-08-2012 17:00 Arcadia 28-08-2012 07:50 28-08-2012 20:00 Nautica 28-08-2012 09:00 29-08-2012 04:00 Grand Princess 28-08-2012 10:30 28-08-2012 18:00 AidaBlu 29-08-2012 05:00 29-08-2012 17:00 Norwegian Sun 29-08-2012 08:00 30-08-2012 00:05 Celebrity Eclipse 30-08-2012 05:00 30-08-2012 18:00 Emerald Princess 30-08-2012 06:20 30-08-2012 18:00 Silver Whisper 30-08-2012 06:35 30-08-2012 18:00 National Geographic Explorer 30-08-2012 07:30 30-08-2012 22:00 Black Watch 30-08-2012 10:00 30-08-2012 18:00 Aidacara 31-08-2012 07:00 31-08-2012 18:00 Marina 31-08-2012 07:00 31-08-2012 16:00 Costa neoRomantica 01-09-2012 07:00 01-09-2012 17:00 Brilliance of the Seas 01-09-2012 08:00 01-09-2012 19:00 Costa Luminosa 01-09-2012 08:00 01-09-2012 20:00 Empress 01-09-2012 09:00 01-09-2012 18:00 MSC Magnifica 01-09-2012 09:00 01-09-2012 20:00 Deutschland 01-09-2012 10:00 01-09-2012 20:00 Aidasol 02-09-2012 07:30 02-09-2012 18:00 MSC Poesia 02-09-2012 08:00 02-09-2012 17:00 Vision of the Seas 02-09-2012 08:00 02-09-2012 16:00 Seven Seas Voyager 02-09-2012 08:10 02-09-2012 19:00 Costa Fortuna 02-09-2012 12:15 02-09-2012 18:00 Astor 03-09-2012 10:00 03-09-2012 18:00 Aidacara 03-09-2012 10:00 03-09-2012 18:00 Celebrity Constellation 04-09-2012 08:00 04-09-2012 17:30 Oriana 04-09-2012 20:00 05-09-2012 18:00 Ocean Countess 05-09-2012 07:00 05-09-2012 18:00 Seabourn Sojourn 05-09-2012 08:00 05-09-2012 17:30 Hamburg 05-09-2012 09:30 05-09-2012 19:00 Aidasol 05-09-2012 13:30 05-09-2012 21:30 Discovery 06-09-2012 08:00 06-09-2012 18:00 Mein Schiff 2 06-09-2012 08:30 06-09-2012 17:00 Rotterdam 07-09-2012 07:00 07-09-2012 17:00 Norwegian Sun 07-09-2012 07:10 07-09-2012 17:00 Vision of the Seas 07-09-2012 07:35 07-09-2012 18:00 Aidasol 07-09-2012 08:00 07-09-2012 17:00 Nautica

148

07-09-2012 10:00 07-09-2012 18:00 Aidacara 07-09-2012 11:00 07-09-2012 18:00 AidaBlu 08-09-2012 07:00 08-09-2012 16:30 Brilliance of the Seas 08-09-2012 08:00 08-09-2012 18:00 Costa Luminosa 08-09-2012 08:00 08-09-2012 18:20 MSC Magnifica 09-09-2012 07:30 09-09-2012 18:00 MSC Poesia 10-09-2012 05:00 10-09-2012 18:00 Emerald Princess 13-09-2012 07:30 13-09-2012 13:30 Astor 14-09-2012 07:00 14-09-2012 17:00 Vision of the Seas 14-09-2012 09:00 14-09-2012 18:00 Aidacara 15-09-2012 06:30 15-09-2012 20:00 Empress 15-09-2012 06:45 15-09-2012 18:00 MSC Magnifica 15-09-2012 08:00 15-09-2012 19:30 Astor 16-09-2012 07:00 16-09-2012 17:00 Norwegian Sun 17-09-2012 10:35 17-09-2012 18:00 AidaBlu 21-09-2012 07:00 21-09-2012 18:30 National Geographic Explorer 21-09-2012 09:00 21-09-2012 18:00 Aidacara 21-09-2012 11:00 21-09-2012 18:00 AidaBlu 22-09-2012 07:30 22-09-2012 18:00 Black Watch 25-09-2012 08:00 25-09-2012 20:00 Nautica 25-09-2012 11:00 25-09-2012 18:00 AidaBlu 25-09-2012 12:30 25-09-2012 18:00 Marco Polo 28-09-2012 09:00 28-09-2012 18:00 Aidacara 29-09-2012 11:00 29-09-2012 18:00 AidaBlu 30-09-2012 07:00 30-09-2012 17:00 Norwegian Sun 01-10-2012 08:00 01-10-2012 18:00 AidaBlu 03-10-2012 07:00 03-10-2012 14:00 Braemar 05-10-2012 09:00 05-10-2012 18:00 Aidacara 08-10-2012 09:00 08-10-2012 17:00 Aidacara 10-10-2012 09:00 10-10-2012 16:00 Aidacara 15-11-2012 08:30 16-11-2012 15:00 Sorolla 25-11-2012 08:30 25-11-2012 18:00 Black Watch 08-12-2012 17:00 09-12-2012 17:00 Oriana 16-12-2012 10:00 16-12-2012 22:30 Queen Victoria 16-12-2012 12:30 16-12-2012 22:00 Amadea 17-12-2012 09:00 17-12-2012 18:00 Balmoral 26-12-2012 08:20 26-12-2012 23:59 Oceana

149

Appendix 3: The Norwegian NOX Fund

From 1.1.2011 the NOX Fund may grant according to the following support rates:

150