SOx Regulations andPrinciples / Economics of ScrubbersCanadian Shipowners Association, Lake Carriers’ Association74thAnnual International Joint ConferenceNiagara on the Lake, OntarioJune 20-21, 2010John F. Hatley PEAmericas Vice President Ship PowerWartsila North America, Inc.281 221 4209john.hatley@wartsila.comwww.wartsila.comAgendaEnvironmental RegulationsScrubber PrinciplesInstallation CaseEconomicsConclusionsAgendaEnvironmental RegulationsScrubber PrinciplesInstallation CaseEconomicsConclusionsUntil Now... History IMO & EU2008200620072010200520092004Ratification ofIMO Annex VI•19 May 20040,5%S0,1%SSECA North Seaand English Channel1,5% Sulphur max.or exhaust cleaningto 6 g/kWh•August 20070,1% Sulphur max.On all marine fuelin EU ports and inlandvesselsAlternatively exhaustcleaning to 0.4 g/kWh•01 January 2010Entry into force ofIMO Annex VIGlobal limit 4,5%S•19 May 2005EU Parliament passesSulphur Directive1999/32/EC•14 April 2005Publication ofSulphur Directive2005/33/EC•22 July 20051,5%SEU directive entersinto force:- 1,5%S max in Baltic- 1.5%S max forpassenger ship andEU territorial seas inregular service to orfrom EU ports- Alternatively exhaustcleaning to 6 g/kWk•11 August 2006SECA Baltic sea1,5% Sulphur max.or exhaust cleaningto 6 g/kWh•19 May 20061,5%SSECA North Seaand English Channel1,5% Sulphur max.or exhaust cleaningto 6 g/kWh•22 Nov. 2007EU review on furtherproposal for:- new SECAs- 0,5%S max.- alternative measuresincluding trading•in 2008possiblySECA next sulphurstep??Looking Ahead ... IMO Legislation0246810121416180 200 400 600 800 1000 1200 1400 1600 1800 2000 2200Rated engine speed (rpm)

NOx (g/kWh)Tier I - 130 kW - New ships 2000Tier II - 130 kW - New ships 2011Revised Marpol Annex VI (9.10.2008)Tier III - 600 kW - New ships 2016 in designated areas2011 Tier2 limit11.6 – 9.0 g/kWh ISO NOx2000 Tier1 limit14.1 – 11.3 g/kWh ISO NOx2016 Tier3 limit2.5 – 2.3 g/kWh ISO NOxOnly designated area (ECA)(Baltic Seat, NorthSea, Costal Water)-20%-80%Wärtsilä 4-strokeCycle NOxUS EPA Emission Engine ClassesLiters Cylinder Volumetric DisplacementCategory 1 Engines Below 7 Liters per CylinderCategory 2 Engines At & Above 7 Liters per CylinderBelow 30 Liters per CylinderCategory 3 EnginesAt & Above 30 Liters per CylinderSub Category: Engine Power Output kilowatts kwUS EPA and International Regulations different class criteria...EPA Volumetric per Cylinder ... IMO Engine RPMUS / Canada Emission Control Area “ ECA ”US & CanadaSubmitted IMO 27 March 2009200 Nautical Miles off CoastlinesExclusive Economic Zone EEZMEPC 60Committee approved March 2010IMONorth American ECA in force 1 August 2011Targets SOx, NOx, PMHistory “ SECA”Exclusively Control SOx1stBaltic Sea enforced May 20052ndNorth Sea November 2006ECA & Global RequirementsSubject to fuel availability in2018... extend to 2025 ?Source: US EPA websitehttp://www.epa.gov/oms/regs/nonroad/marine/ci/420f10015.htmAll ships regardless of age must comply ... only sulphur contentregulated not fuel type...regulation 4 allows exhaust gas cleaning5 © Wärtsilä Wärtsilä SOx Scrubber - Leading the way in SOx abatement–97%–86%–71%–78%–67%IMO & EU Sulphur Limits0.14.53.51.51.00.5 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022WorldEU in portsSECASulphur limit (%)SOxReduction MethodsLakers ... no competitive middle ground, choices limited to adopting scrubbersfor OPEX fuel savings or accept 100% LSD and incur added costsAgendaEnvironmental RegulationsScrubber PrinciplesInstallation CaseEconomicsConclusions2 © Wärtsilä Wärtsilä SOx Scrubber - Leading the way in SOx abatementWhat is it?Sulphur Oxides SOx ( SO2)Formed from sulphurcontained in oil duringcombustion and refiningprocessesSO2dissolves within watervapour forming airborneacids44 © Wärtsilä Wärtsilä SOx Scrubber - Leading the way in SOx abatementScrubber BasicsFresh Water Closed LoopWater ph elevated with alkali ...sodium hydroxide ( NaOH )Entering exhaust gas streamsulphur oxides are capturedand neutralized by scrubbingwater chemically formingsulphatesCleaned exhaust gas exitsWater and sulphides return toprocess collection tankExhaust gas inExhaust gas outPacked bedWater sprayWater + NaOHWater + SulphidesPacked bed spray scrubber10 © Wärtsilä Wärtsilä SOx Scrubber - Leading the way in SOx abatementClosed Loop Fresh water scrubber systemClosed loop works with freshwaterto which NaOH is added for theneutralization of SOXClosed-loop = zero dischargePower Requirement about 1⁄2 0f 1%of the fuel consumptionScrubberpHpHNaOH unitFresh waterWater TreatmentCoolingExhaust gasSeawaterProcess tankHolding tankSludge tank10 m3/MWh0.1 m3/MWh0.1 m3/MWh0.1 m3/MWh1.3 dm3/MWh10 © Wärtsilä Wärtsilä SOx Scrubber - Leading the way in SOx abatementFresh Water MakeupClosed loop works with freshwater towhich NaOH is added for theneutralization of SOXClosed-loop = zero dischargePower Requirement about 1⁄2 0f 1%of the fuel consumptionScrubberpHpHNaOH unitFresh waterWater TreatmentCoolingExhaust gasSeawaterProcess tankHolding tankSludge tank10 m3/MWh0.1 m3/MWh0.1 m3/MWh0.1 m3/MWh1.3 dm3/MWhFresh Water compensates for lossesfrom evaporation and bleed offextraction.Consumption dependent on ambientconditions; sea water temperature,exhaust inlet temperature, and chloridecontent of water; generally about 0.1m3/ MW hr10 © Wärtsilä Wärtsilä SOx Scrubber - Leading the way in SOx abatementSea Water CoolingScrubberpHpHNaOH unitFresh waterWater TreatmentCoolingExhaust gasSeawaterProcess tankHolding tankSludge tank10 m3/MWh0.1 m3/MWh0.1 m3/MWh0.1 m3/MWh1.3 dm3/MWhThe seawater cooling minimizes freshwater vapor entrapment by cleanedexhaust gases exiting the scrubber toreduce both the plume opacity andfresh water consumption.Cooling does not impact sulphurremoval efficiency from exhaust gases.10 © Wärtsilä Wärtsilä SOx Scrubber - Leading the way in SOx abatementSodium Hydroxide NaOH UnitScrubberpHpHNaOH unitFresh waterWater TreatmentCoolingExhaust gasSeawaterProcess tankHolding tankSludge tank10 m3/MWh0.1 m3/MWh0.1 m3/MWh0.1 m3/MWh1.3 dm3/MWhThe alkali, NaOH, is added tothe scrubbing water to boostph and improve sulphur oixideremoval efficiency. Typical50% concentration of NaOH (sodium hydroxide, aka lye orcaustic soda ) is used asalkali.Input data for alkali feedcontrol are sulphur contentand engine load.Alakli consumption dependson concentration level, enginepower, fuel sulphur % level,and desired Sox reduction.10 © Wärtsilä Wärtsilä SOx Scrubber - Leading the way in SOx abatementWater TreatmentScrubberpHpHNaOH unitFresh waterWater TreatmentCoolingExhaust gasSeawaterProcess tankHolding tankSludge tank10 m3/MWh0.1 m3/MWh0.1 m3/MWh0.1 m3/MWh1.3 dm3/MWhA small bleed off passes through thewater treatment unit containing tracesof oil and combustion products atneutral ph.Effluent is cleaned from the bleed off,is monitored, and discharged to sea ifsatisfactory.Sludge impurities are placed into aholding tank for future disposal inqualified shoreside treatment facility.10 © Wärtsilä Wärtsilä SOx Scrubber - Leading the way in SOx abatementClosed Loop Fresh water scrubber systemClosed loop works with freshwater towhich NaOH is added for theneutralization of SOXClosed-loop = zero dischargePower Requirement about 1⁄2 0f 1%of the fuel consumptionScrubberpHpHNaOH unitFresh waterWater TreatmentCoolingExhaust gasSeawaterProcess tankHolding tankSludge tank10 m3/MWh0.1 m3/MWh0.1 m3/MWh0.1 m3/MWh1.3 dm3/MWhAgendaEnvironmental RegulationsScrubber PrinciplesInstallation CaseEconomicsConclusions42 © Wärtsilä Wärtsilä SOx Scrubber - Leading the way in SOx abatementWärtsilä Scrubber Fresh Water PrototypeMT SuulaClosed-loop, fresh water scrubberMarpol CompliantDNV, GL Certifications43 © Wärtsilä Wärtsilä SOx Scrubber - Leading the way in SOx abatementInstallation Wärtsilä Fresh Water ScrubberScrubber module liftonboard MT “Suula”SCP, ETM, OMM, RecordBook, Test plan and SafetyConcept approved.Test duration 2008-2010,including certification.44 © Wärtsilä Wärtsilä SOx Scrubber - Leading the way in SOx abatementMT Suula ScrubberExhaust gas inExhaust gas outPacked bedWater sprayWater + NaOHWater + SulphidesPacked bed spray scrubber45 © Wärtsilä Wärtsilä SOx Scrubber - Leading the way in SOx abatementWärtsilä Scrubber – First Start 10 November 200846 © Wärtsilä Wärtsilä SOx Scrubber - Leading the way in SOx abatementWärtsilä Scrubber – Running on HFO June 200947 © Wärtsilä Wärtsilä SOx Scrubber - Leading the way in SOx abatementWärtsilä Scrubber – Running on HFO June 200948 © Wärtsilä Wärtsilä SOx Scrubber - Leading the way in SOx abatementMT Suula Scrubber Test Results< d.l. = below reliable determination limit of analysis methodTests @ 3.4%, 1.5% sulphur fuel content demonstrate 99% sulphurdioxide removal efficiency across operating conditionsAgendaEnvironmental RegulationsScrubber PrinciplesInstallation CaseEconomicsConclusions30© Wärtsilä 10 February 2010 WFI0054_SOx_Reducer.ppt / A. Suopanki, D. Pettersson, DocumentID: DBAB285337Design parametersEquipment on boardMain engine(s)Auxiliary enginesBoiler(s)Vessel operation and routesOperation profileOpex hours in SECA watersCurrent configurationTank arrangementExisting fresh water capacityActual back pressure after engineNoise attenuationAvailable space in stackExhaust diameterElevationShip design layoutLoad profile vs. vessel itinerary• In port• In manoeuvring• At sea, high load / at sea, low load• Other specifics, season loading,lock transits...31© Wärtsilä 10 February 2010 WFI0054_SOx_Reducer.ppt / A. Suopanki, D. Pettersson, DocumentID: DBAB285337Fuel Premium (Rotterdam)04080120160200240280320360400440480520560600640680720760

3 0 . 0 7 . 2 0 0 7 2 9 . 0 8 . 2 0 0 7 2 8 . 0 9 . 2 0 0 7 2 8 . 1 0 . 2 0 0 7 2 7 . 1 1 . 2 0 0 7 2 7 . 1 2 . 2 0 0 7 2 6 . 0 1 . 2 0 0 8 2 5 . 0 2 . 2 0 0 8 2 6 . 0 3 . 2 0 0 8 2 5 . 0 4 . 2 0 0 8 2 5 . 0 5 . 2 0 0 8 2 4 . 0 6 . 2 0 0 8 2 4 . 0 7 . 2 0 0 8 2 3 . 0 8 . 2 0 0 8 2 2 . 0 9 . 2 0 0 8 2 2 . 1 0 . 2 0 0 8 2 1 . 1 1 . 2 0 0 8 2 1 . 1 2 . 2 0 0 8 2 0 . 0 1 . 2 0 0 9 1 9 . 0 2 . 2 0 0 9 2 1 . 0 3 . 2 0 0 9 2 0 . 0 4 . 2 0 0 9 2 0 . 0 5 . 2 0 0 9 1 9 . 0 6 . 2 0 0 9 1 9 . 0 7 . 2 0 0 9 1 8 . 0 8 . 2 0 0 9 1 7 . 0 9 . 2 0 0 9 1 7 . 1 0 . 2 0 0 9 1 6 . 1 1 . 2 0 0 9 1 6 . 1 2 . 2 0 0 9 1 5 . 0 1 . 2 0 1 0 1 4 . 0 2 . 2 0 1 0 1 6 . 0 3 . 2 0 1 0Date

Price difference (USD/t)LS380 - IFO380 diff.LS180 - IFO180 diff.MGO - IFO380 diff.MDO - IFO380 diff.Source: bunkerworld.comMGO fuel to IFO 380Premium Range140 – 700 $ / tonPayback often near 1 year includes OPEX costs fuel, fresh water, NaOH,maintenance, scrubber system power... will reduce as fuel premiumenlarges ( low sulphur fuel faces huge demand at limited availability )72 © Wärtsilä Wärtsilä SOx Scrubber - Leading the way in SOx abatementPayback EconomicsCompelling... payback today often near 1 year ... expected to accelerateAgendaEnvironmental RegulationsScrubber PrinciplesInstallation CaseEconomicsConclusions34© Wärtsilä 10 February 2010 WFI0054_SOx_Reducer.ppt / A. Suopanki, D. Pettersson, DocumentID: DBAB285337FW Scrubber advantagesSmaller size and reagent flowthan sea water scrubberSmaller = power demand, CAPEX, OPEXReduced Corrosion and scalingLower manufacturing costsSmaller fresh water cooling circuitSmall bleed off amountsEasier water treatmentZero effluent discharge possible in portSea water scrubbers release 2 kg CO2 per 1 kg neutralized Sulphur...Fresh water doesn’t = reduced CO2 footprint35© Wärtsilä 10 February 2010 WFI0054_SOx_Reducer.ppt / A. Suopanki, D. Pettersson, DocumentID: DBAB285337SOXScrubber Competitive AdvantagesSOx-scrubbing is the most economical way to comply with IMOregulation regarding SOx (Regulation 14)Immediate OPEX savings for SOx Emission Control AreasPayback period accelerates as premium expands ... refineriesexpect to struggle producing sufficient low-sulphur fuels.Compelling payback below 1 year in coming yearsOutside ECA huge OPEX savings available tovessels trading internationally

C a n y o u c o m p e t i t i v e l y a f f o r d t o N O T e m pl o y s c r u bb e r s ?Appendix26 © Wärtsilä Wärtsilä SOx Scrubber - Leading the way in SOx abatementExample Wärtsilä scrubber set-upScrubber 1 Scrubber 2Process tankScrubbing water coolerEngine27 © Wärtsilä Wärtsilä SOx Scrubber - Leading the way in SOx abatementWärtsilä Integrated ScrubberBenefits•Avoid additional exhaust gas back pressure.•Minimal equipmentMain features•One common unit•Fan redundancy•Constant under-pressure prevents undue flow ofgases•By integrating a wet sump with scrubber avoidsseparate process tank•A wet sump minimises the needed vertical liftingheight and therefore the power demand of theclosed-loop pumps.EnginesOil-fired boilerExhaust gasboilersSilencersIntegratedscrubber39© Wärtsilä 10 February 2010 WFI0054_SOx_Reducer.ppt / A. Suopanki, D. Pettersson, DocumentID: DBAB2853373.00Seawater temperature °C

Consumption, m

3 /h per 10MW power2.01.02.51.50.5251510 20 305390oC220oCExhaust gas temperaturein scrubber inletDepending on theseawater coolingcapacityFresh Water Consumption40© Wärtsilä 10 February 2010 WFI0054_SOx_Reducer.ppt / A. Suopanki, D. Pettersson, DocumentID: DBAB285337Required abatement efficiency versus fuel sulphurSulphur content of fuel

Abatement required to reach IMO limits0%10%20%30%40%50%60%70%80%90%100%0.5% 1% 1.5% 2% 2.5% 3% 3.5% 4% 4.5%IMO 1.50%SIMO 1.00%SIMO 0.50%SIMO 0.10%S41© Wärtsilä 10 February 2010 WFI0054_SOx_Reducer.ppt / A. Suopanki, D. Pettersson, DocumentID: DBAB285337Sulphur reduction versus water pHAlkaline power reduces as neutralizationtakes effect and hence, it is then controlled by:•adjusting flow in sea water scrubbers, or•adjusting caustic quantity in fresh water scrubbers1407Time in scrubber100%0%50%1ststage2ndstagepHEfficiencyIncreases efficiency42© Wärtsilä 10 February 2010 WFI0054_SOx_Reducer.ppt / A. Suopanki, D. Pettersson, DocumentID: DBAB285337Equivalent to0.5% of fuel costNaOH priceEquivalent to4% of fuel costAverage around 150 US$/ton41 © Wärtsilä Wärtsilä SOx Scrubber - Leading the way in SOx abatementCaustic Soda Consumption