PRIME PERFORMANCE 26 NOVEMBER, 2015

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1 PRIME PERFORMANCE 26 NOVEMBER, 2015 FUEL EMULSIFICATION AS A METHOD OF ACHIEVING COMPLIANCE Alisdair Pettigrew, Managing Director Blue Communications on behalf of SulNOx Fuel Fusions 1 SulNOx Fuel Fusions Plc A Public Limited Company incorporated under the laws of England & Wales - Registered Number:

2 Shipping in context PROGRESS BUT SHIPPING STILL HAS A LONG WAY TO GO Shipping has come a long way over the past decade to reduce harmful emissions, including carbon, but can t rest on its laurels Of total global air emissions, shipping accounts for 18 to 30% of the Nitrogen Oxide and an estimated 10% of Particulate Matter * However, while the sulphur limit values apply to the entire fleet, the NOx Tier III emission limits to be currently applied in 2016 only applies to new ships in ECA-NOx According to the EU, if things are left as they are, by 2020 shipping will be the biggest single emitter of air pollution in Europe, surpassing the emissions from all land-based sources Air pollution from international shipping accounts approximately for 50,000 premature deaths per year in Europe, at an annual cost to society of more than 58 billion** 2 Schrooten, L; De Vlieger, Ina; Int Panis, Luc; Chiffi, Cosimo; Pastori, Enrico (2009) **Transport and Environment

3 NOx AND PM: NOT SENSATIONALISM, FACT Nitrogen oxide, NO, is colourless and only moderately toxic. However it is relatively quickly oxidized into nitrogen dioxide, NO 2, which is a much more harmful gas. NOX emissions contributes to acidic rain, eutrophication (excessive nutrients) and the greenhouse effect EU stats show : between 2000 and 2020, NOx emissions on shore will fall by 49 per cent but shipping will increase by 67% Particulate matter (PM) is the term for solid or liquid particles found in the air. Some particles are large or dark enough to be seen as soot or smoke as we can see from ship stacks. Nanoparticles are so small they can be detected only with an electron microscope; typically termed under diameter of 10 micrometers Major concerns for human health from exposure to PM- 10 include: effects on breathing and respiratory systems confirmed at 50% of all nanoparticles in EU coastal areas this week by Lund University. 2

4 $/ton of CO2 tons of CO2e THE GOOD NEWS IS, PROFITABLE SOLUTIONS EXIST TO REDUCE EMISSIONS Source: McKinsey & Co Cost Curve (over-simplified)

5 AND INNOVATIVE TECHNOLOGY IS ABUNDANT Latest hull coatings (FP) 9% CO2 reduction, >1000 vessels Satellite weather routing 8% CO2 reduction, >500 vessels Air Cavity 7-15% CO2 reduction, Trial on 5 vessels Sails / Wind 7-15% CO2 reduction, Trial on 2 vessels Aquatanker uses solar wind sail and solar cell array technology. Waste heat recovery 12% CO2 reduction, 4 APMM+... Veth-Z-Drive rudder propeller technology

6 POLICY HELPS, BUT CAPITAL AND INNOVATIVE FINANCE IS KEY Capital/ Business Policy Technology The Market

7 Three drivers will change shipping in the next 10 years Adapting to Regulatory Environment al pressure Managing Commercial pressure Taking advantage of Technology Public, consumer, shipper perception People Challenge Human Factor

8 Regulatory driver Greener shipping in the future: Other alternative sources of clean energy Low sulphur fuels Distillates and New Hybrid fuels Abatement technology for SOx and Nox LNG and Methanol as fuel Hybrid technology Other alternative fuels being offered + water in fuel emulsions Other viable energy technologi es Which? No one solution fits all requirements Options to - reduce - SOx, PM, NOx Black Carbon, Smoke - - Improve energy efficiency Fuel Consumption, CO Add- in solution for cleaner enhanced combustion of the

9 There is a reason why not everyone is an investor of energy efficient investment - You can t have the return without the risk High return Medium return Low return Low risk Best practice /operational measures Zero/low cost Existing or convention al solutions $ thousands Medium risk Novel and unproven technolog ies $ millions High risk

10 Solutions LR have and are reviewing for performance and suitability Alternative Fuels Technologies Fuel Optimisation Hull Form + Operations Bio diesel (FAME) /Methanol/ Ethanol MSAR HVO Synthetic Fuels Glycerol ( shore) LNG, LPG ++ EGCS Systems Fuel Cells Hybrid Systems Air Lubrication Systems Particle Filters +++ Homogenisation Other Fuel enhancing technology Additives Water in Fuel Emulsion micro and NANO Rudder forms Pre swirl devices Ducts Bulbous bow ++++ Trim optimisation Weather routing +++ See Trials

11 One Example: Emulsification of Emulsified fuels not new Marine Fuels Well proven to reduce NOx, PM s/smoke and SFOC to varying degrees Rising interest in the application of WFE in various forms The Challenges Produce emulsified fuel which is cost effective Control the % of water for optimised operations Ensure long term stability for 100% operations Measurement LR tasked to verify performance of Exhaust Emissions reduction of up to : 60% NOx, 90% PM and Smoke Density Fuel consumption / combustion - significant improvements ~ CO2 Long term fuel stability by NANO droplet-emulsion Cleaner burn post combustion spaces +++

12 INNOVATIVE MARINE CLEAN TECH FINANCE: A SNAPSHOT TECHNOLOGY EST.COST (Mid size vessel) SCRUBBING $3-10M NO YES, OVER 95% LNG $4-10M (RETROFIT), + INFASTRUCT URE) NOx? SOx? PM? CO2? FINANCE MODEL? EST.PAYBACK? (AUG, 2015 PRICES) YES, XX% YES, XX% YES, OVER XX% YES, XX% NO (SLGHT INCREASE) YES, 30%(HOWEV ER MACRO EFFECTOF FRACKING NEEDS ANALYSED) YES, TAKING THE SPREAD BETWEEN HFO AND DISTILLATE CAN CREATE A MEANS OF PAYING BACK FINANCE YES, TAKING THE SPREAD BETWEEN LNG AND DISTILLATE CAN CREATE A MEANS OF PAYING BACK FINANCE MOST WORKABLE CURRENTLY IN NORTH AMERICA 3-6 YEARS 3-6 YEARS (N.AMERICA ECA); 6+ YEARS EUROPEAN ECA EMULSIFIED FUEL (SULNOX DATA) FREE (PAID FOR FUEL SAVINGS), OR MINIMAL COST PER TONNE BASIS BALLAST 4500,000 - $3M UP TO 63% NO YES, UP TO 90% 2 YES, UP TO 8% YES, TAKING THE FUEL EFFICIENCY SAVINGS CAN GENERATE COST SAVINGS EXAMPLE: SULNOX WILL SHARE SAVINGS WITH SHIPOWNER 2-3MONTHS NO NO NO NO NO NO PAYBACK

13 SULNOX MODEL: HIGH ON THE X AND Y AXIS FUEL ECONOMY PAYS FOR ITSELF AND SIMULTANEOULY REDUCES MULTIPLE EMISSIONS UP TOP 8% FUEL ECONOMY NO UP FRONT COSTS PAY AS YOU SAVE MODEL BY PRODUCT TO REDUCTION OF FUEL COSTS = LOWER CARBON, NOx and PM 2

14 INCENTIVES FOR EMUSIFICATION: REGULATION, CSR AND $ ON THE TABLE NOX TIER II compliance soon Tier III? ENVIRONMNTAL SHIP INDEX (ESI) Incentives to shipowners going beyond regulation to reduce emissions; 25 ports, including Rotterdam, LA Clean Shipping Index (CSI) North Sea; ratings of CO2, NOx, SOx, PM; 1500 vessels Port of Antwerp Up to 30% port fee discount through Particulates Action Plan Rightship and Carbon War Room - Greenhouse Gas (GHG) Emissions Rating ; comparing relative efficiency of the world's existing shipping fleet

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