Application for Support to NOx-reducing Measures A Guide

Transcription

1 Application for Support to NOx-reducing Measures A Guide Version 6.6 May 19th

2 Table of Contents 1 Introduction Application and measure plan Who can apply? Support to NOx measures in 2018 and Government Support Schemes and Authority Requirements The support scheme Application processing Prioritisation of applications Support rates Investment support Support to emission measurement on ships and drilling rigs Requirements for SCR measurement of ships Operating support to urea Costs relating to replacement of catalyst elements Information content in applications General information Emission reductions Emission between installations for offshore service vessels and rigs Emissions from LNG ships new-builds Industrial emissions Public tenders Technical feasibility Finance Documentation of costs for LNG measures Progress Plan Confidentiality Payment of support to enterprises Information about the self-declaration form Partial Payment of support for some types of measures Calculation of NOx reduction from ships with SCR system Payment of support to SCR, EGR and water-based systems Payment of support to LNG measures Payment of support to cold ironing Conditions governing the payment of support How to calculate cost efficiency Attachement 1: Support to LNG infrastructure Attachement 2: Support to LNG bunkering ships Attachement 3: Processing several measures on the same unit guidelines

3 1 Introduction On December 14 th 2010, the Norwegian state as represented by the Ministry of the Environment and 15 business organisations signed an Environmental Agreement relating to the Reduction of NOx Emissions. The Agreement applies to undertakings that are subject to pay NOx tax for their emissions of NOx. This Agreement shall be effective until Undertakings that are subject to pay NOx tax that join the Environmental Agreement by signing the Participation Agreement will become exempt from the payment of NOx tax to the State. At the same time, the undertaking will have a payment obligation to the Business Sector s NOx Fund. All enterprises that have joined the Environmental Agreement are eligible to apply for support to measures that reduce the emissions of NOx. Some enterprises that are not subject to pay NOx tax, i.e. process industry emissions, are also eligible to apply. This document provides information about the application procedure, application content requirements and criteria governing the prioritization of applications. Applications must be submitted to the Business Sector s NOx Fund, P.O. Box 5250, Majorstuen, NO-0303 Oslo. The applications may also be submitted as a PDF to: post@noxfondet.no. This document which will be continuously updated may be downloaded from the NOx Fund s website The application form and self-declaration form used to report the effect of NOx-reducing measures following implementation may also be downloaded from our website. Questions to the NOx Fund may be directed to: Mr. Tommy Johnsen Tel: / tommy.johnsen@nox-fondet.no Ms. Anne-Lise Fleddum Tel: / fleddum@nox-fondet If you have any questions to DNV GL, please contact: Mr. Håkon Hustad Tel: hakon.hustad@dnvgl.com Mr. Erik Finborud Tel: erik.finborud@dnvgl.com 3

4 2 Application and measure plan The Business Sector s NOx Fund is a cooperative effort where participant enterprises may apply for financial support to NOx-reducing measures. Applicants may apply for support to one or several measures per unit, i.e. vessel, installation or industrial plant. A separate form has been drawn up which should be used when applying for investment support. For more information on application content requirements, see Chapter 4. According to the Participant Agreement affiliated enterprises shall develop a measure plan identifying possible NOx-reducing measures within two years after affiliation. During the period , this measure plan shall be updated every second year. The purpose of the measure plan is to identify cost-effective NOx-reducing measures whose implementation is dependent on support from the NOx Fund. It is only applications regarding concrete measures that shall be submitted to the NOx Fund. The measure plan is meant to be an internal document and shall be kept at the enterprise. The NOx Fund is well aware that enterprises may not have any profitable or cost-effective measures at present for their enterprise. Nevertheless, the enterprise shall undertake a review to reveal potential relevant NOx-reducing measures. 2.1 Who can apply? The following undertakings are entitled to apply for support from the NOx Fund: All undertakings with emissions subject to NOx tax that plan to implement measures by The NOx Fund may also support measures implemented in 2018 and 2019 under certain conditions, see section Undertakings with industrial process emissions that are not subject to the NOx tax, but that are included in the Environmental Agreement. Undertakings that have implemented measures during the period from January 1 st 2008 until today and whose emission reduction and costs can be documented, may apply for support post-implementation Support to NOx measures in 2018 and 2019 The business organisations are working to continue the Environmental Agreement on NOx , but a prolonging of the Agreement with the authorities, ensuring a continuation of the NOx Fund, are not yet signed. To ensure that new projects with implementation after 2017 are implemented with low and zero emission solutions, the NOx Fund may grant support to measures with implementation in 2018 and 2019, even though these emission reductions may not be accredited the present Agreement. The NOx Fund will have limited means available for support to measures in 2018 and The Fund will carry out a continuing evaluation of the economical frame of these means. If applications for support exceeds the allocated means available, a prioritization between the applications will be carried out and a queuing system will be established. In order for the Fund to grant support to projects with implementation in 2018 and 2019 there must be tender, construction contract or other circumstances which provides great certainty 4

5 for implementation of the measure. The NOx Fund do not wish to set aside means to uncertain project. Ordinary support rates and conditions applies Government Support Schemes and Authority Requirements Support from the NOx Fund is dependent on that the relevant measure has not been granted support from Norwegian government support schemes and that the measure has not been initiated by requirements issued by the Authorities, cf. the Environmental Agreement, point 4. Measures that have been fully or partly financed through Norwegian government grants, such as Enova, do not qualify for support from the Business Sector s NOx Fund. Measures initiated in response to requirements stipulated in public tenders and national and international requirements, including decisions or requirements stipulated pursuant to the Pollution Control Act as well as the IMO requirements relating to emissions of NOx from ships, are not eligible for support. It is only reductions in excess of what is required by the government that qualify for support from the NOx Fund. Allocated support from the NOx Fund shall be repaid, if at a later date, it is discovered that a given measure did not qualify for support. Support from Innovation Norway or the Norwegian Research Council, for example during the early stages of development of a new product with effect on NOx emissions, will not prevent support from the NOx Fund once the final product is ready to enter the market. In cases where measures have been granted support from EU-funding sources, the contribution from the NOx Fund will be reduced correspondingly to the EU support, or with the support level required to prevent conflict with any conditions governing other support. 3 The support scheme 3.1 Application processing DNV GL has been engaged as an independent expert advisor for each individual application. Based on recommendations from DNV GL, the administration will give its recommendation to the Board in regards to the amount of support that the relevant application shall be granted. In cases where the submitted application does not provide sufficient information to form an adequate foundation for processing, the relevant undertaking will be contacted by DNV GL and asked to supply additional information. In cases where wrongful information or mistakes are identified, DNV GL may base their application processing on altered figures. In such cases, the relevant applicant will be informed thereof. It is the duty of applicants to provide information about any circumstances which could affect the basis for application processing and allocated support. In cases where applicants neglect to provide information about such circumstances, either intentionally or unintentionally, the decision relating to allocated support may be revoked and a demand for repayment fully or in part will be issued. An appeals board or similar will not be established to assess applications that have not been approved, but the undertakings concerned may request a re-evaluation of their application, provided that their complaint can be substantiated by new or clarifying information. 5

6 Even if the undertaking has already received financial support to implementation of measures, it may still apply for support to other measures linked to the same source at a later date. In addition the following guidelines shall apply: - Owner of vessels must intend to operate these vessels in traffic that are subject to NOx tax following implementation of the applied-for measure - Reductions resulting from reduced production/transport do not qualify for support - Loss of revenue in connection with implementation of measures off hire - is not covered and shall not be included in the cost relating to implementation of measures - Capacity enhancing measures resulting in reduced NOx emissions per produced/transported unit do not qualify for support 3.2 Prioritisation of applications New applications will be prioritised in accordance with the following criteria: - Measures that are implemented quickly are given high priority - Measures with high probability of implementation are given priority - Measures with large and cost-effective reductions are given priority - Measures where support from the NOx Fund is important for the realisation of projects are given priority - Complete applications are given priority - Measures on emission sources subject to NOx tax are given priority - In cases of otherwise equal applications, early-submitted applications will be prioritised Applications that qualifies for support will be prioritised through swift processing. When the NOx Fund has a scope of applications that exceed the available funds the applications will be prioritised in the categories "processing [date]" or "on hold". 3.3 Support rates Investment support The financial support allocated by the NOx Fund is granted as investment support. The support is being calculated based on the applicant s own investment appraisal, often documented by offers from suppliers. The costs are being calculated based on the applicant s own investment appraisal. It is therefore important that all costs are included in the investment appraisal. This is something for which the applicant is responsible. The following costs qualify for support from the NOx Fund: Planning costs relating to the applied-for measure Purchasing costs Installation and/or rebuilding costs Allocated support will be granted as NOK/kg NOx in realized NOx emission reductions, where actual reduction in emissions subject to NOx tax, as well as reductions achieved through operation between oil rigs on the Norwegian continental shelf that form the basis for 6

7 the allocated support. In cases where the costs are lower than what the investment appraisal estimated, the support will be reduced correspondingly. In cases where the actual costs are higher than stipulated, the applicant will have to bear the additional costs. Support to emission measurements in connection with support to measures may be applied for in separate application forms designed for emission measurements, see section SUPPORT RATES FOR APPLICATIONS The NOx Fund's Board of Directors is free to deviate from the guiding framework conditions for support in particular cases. Note that the NOx Fund s support rates may be altered by the Fund s board. Measures that have already been approved may not be granted less favourable terms than those stated in the letter of commitment, if the measure is implemented in accordance with the letter of commitment. Previously, the NOx Fund had a maximum grant on NOK 100 million per enterprise within a 3 year implementation period. This limitation has now been removed. However, a total maximum grant may be considered in certain cases for measures with very high costs. The NOx Fund may in such cases limit the support to one or more applications from one enterprise (beyond support rate and upper support limit) if the accredited NOx-reduction the support is given on the basis of is not sufficiently secure or if the support constitutes a substantial share of remaining means. NOx-fondet hadde tidligere et støttetak på 100 mill. kr. per virksomhet over en 3- årsperiode. Denne begrensningen er nå fjernet. Støttebegrensninger for prosjekter med svært høye kostnader vil kunne bli vurdert i det enkelte tilfelle. NOx-fondet kan i slike tilfeller begrense støtten til en eller flere søknader for en virksomhet (utover støttesats og støtteandel) dersom den godskrevne NOx-reduksjonen som støtten gis på grunnlag av ikke er tilstrekkelig sikker eller dersom støtten utgjør en vesentlig andel av fondets gjenværende midler. Previously, measures that reduces NOx factor on ships (not energy-efficient measures) have been limited to a keel-laying date of Nevertheless, changes to the IMO rules have led to this date being postponed until IMO decides that Tier III emission levels shall be implemented. The following support rates shall apply for measures with implementation from November 3 rd 2015 to the end of Support is granted as NOK per kg NOx reduced, limited to a maximum of 80 % support of the additional costs pertaining to the NOx measure. Mesures implemented from 2008 to November 3 rd 2015 may grant support in accordance with the rules that applied at the time of implementation. However, information about these rates will not be provided in this document. 7

8 Overview of support rates with different types of measures Support rate, Type of measure NOK per kg NOx reduced All-electric/plug-in hybrid propulsion on ships 500 LNG (and LBG - biogas) on board ships and rigs Battery hybrid on board ships (not plug-in) Energy efficiency measures Engine replacement/engine modifications Exhaust gas cleaning systems and other cleaning systems for NOx (excluding SCR on ships) Cold ironing Measures on land-based industries and power plants (SCR/SNCR, process optimization, el./gas etc.) Measures offshore (process optimization, turbine measures, el./gas etc.) Other measures SCR systems on board ships* 125 LNG infrastructure** ** * For SCR systems on board ships logging equipment for operating hours and the use of urea must be installed. In addition, the NOx Fund has introduced a maximum support limit of NOK 800 per kw installed effect to limit support to SCR systems with a cost level considerable higher than what the NOx Fund experiences as the current market price. Operating support will be granted in relation to urea for more information see section Measurement of NOx emissions is required every fifth year, see section ** In this document's annex, a description of the support scheme for LNG infrastructure is attached. Ships with NOx-reducing measures and with a ship to ship (STS)-bunkering solution for LNG can be favoured with NOK 125 per kg NOx reduced in addition to the ordinary support rate for the NOx-reducing measure. This is also described further in the annex. Combined measures If measures are combined with technologies with different support rates, and one technology has an impact on the other, support rate is determined one level lower than the technology with the highest rate. For instance battery hybrid (NOK 375 per kg) with SCR (NOK 125 per kg), support rate for the combined reduction will be NOK 250 per kg. In cases where two technologies are following each other in regard to support rate, the highest support rate will be chosen. For instance energy effective measure by DC grid (NOK 250 per kg) and SCR (NOK 125 per kg), where DC grid provides increased use and improved cleaning effect on the SCR, the support rate for the combined measure will be NOK 250 per kg. If two measures are implemented on the same unit, but does not have an impact on each other, the measures will be treated separately. New and promising measures A guaranteed minimum payment of 20 % of the stipulated maximum support rate will be granted to new and promising measures implemented post irrespective of achieved NOx reductions. Measures which are considered "new and promising" changes over time and

9 are reviewed for every application. In addition, the following applies: Energy efficiency measures Existing sources Purely operational adjustments and maintenance with fuel saving effect are not eligible for support as an energy efficient measure under the NOx Fund, including measures preventing hull fouling. Only technical installations and modifications improving energy efficiency are eligible for support. Additionally, monitoring equipment for better fuel economy or lower emissions, including econometer and equipment for emission measurements, is not eligible for support. Nevertheless, these types of measures can be granted support in cases where the equipment is an integrated part of other measures that may receive support from the Fund. Measures where the fuel saving effect is less than 2 % and gives less than 1 tonne NOx-reduction are in general not eligible for support, unless the actual reduction may be documented by detailed accounting figures showing energy consumption before and after implementation. An example that would be eligible for support is switching from traditional lightening armatures to more energy efficient LED lighting. For applications comprising advanced propulsion systems, for instance systems with the ability to use both mechanical and electric operation of propellers, a separate template has been made for use during verification of measures. The template can also be used relating to applications if the applicant wish to. New sources Energy efficiency measures in relation to new sources are generally not eligible for support. Measures considered to be particularly innovative and to represent a high degree of improvement compared to what is otherwise considered to be relevant technology for new sources may be eligible for support. The possibility for support to new sources is limited by the Environmental Agreement where it says in pt. 4.3 "For new sources, only the effects of lower emission factors and transitions to natural gas or other energy carriers giving lower NOx emissions will be credited to the Agreement". For clarification of measures that are eligible for support and not eligible for support in new applications, see the table below. Overview of measures on new sources and possibilities for support to new applications as an exception Type of measure* Eligible for support** Diesel electric propulsion Not eligible for support LED lighting Not eligible for support New and more effective hull designs Not eligible for support Change of propeller/nozzle/rudder 000 Not eligible for support Trawl improvement Not eligible for support Frequencial control of machinery Not eligible for support More energy-efficient gear solutions Not eligible for support 9

10 Type of measure* New and more energy-efficient vessels (due to e.g. weight) which replaces existing Measures not eligible for support for existing sources Hybrid systems that combines diesel-electric propulsion with direct mechanical propulsion Waste Heat Recovery-system on ships that converts excess heat to electric power that replaces power from engines. Inserting variable rpm in diesel-electric propulsion systems e.g. DC grid Battery hybrid (not plug-in) Measures on new-builds contributing towards reducing fuel consumption through retrofit of alternative energy sources Eligible for support** Not eligible for support Not eligible for support An exemption regime with the possibility for support to AHTS-ships, OCV-ships and fishing vessels apply when the application is received and the measure is implemented before The remainder is not eligible for support. Eligible for support. No deadline determined. The first 20 applications to the Fund are eligible for support. Eligible for support. Eligible for support. * The overview of types of measures in the above table is not absolute. Measures that are not covered by this overview will be clarified and added to the table when an application with such measure is available to the Fund. ** It could occur that the applicant has taken an investment decision or implemented a measure in a period where the right to support has not been clearly communicated by the NOx Fund and it has previously been practice to grant support to some types of measures and types of vessels. Such cases will be processed specially and it could possibly be granted support as an exception for applications received before and with implementation before Engine replacements In the case of engine replacements a decreasing support rate will be applied based on the age of the relevant engine, as replacement of older engines may be implemented for other purposes than NOx-reductions. Only voluntary engine replacements that are not caused by engine breakdowns, requirements laid down by the Authorities or requirements stipulated in tenders or the like, are eligible for support from the NOx Fund. Engines up to 12 years old may be granted NOK 250/kg NOx reduced, limited to a maximum of 80 % of the investment cost covered by the Fund. Engines older than 12 years will face a linear decreasing support rate, concerning both percentage of support and NOK/kg NOx reduced. When the engine is 40 years or older there will be no support for engine replacements. The following figures show the support rates in % and NOK/kg NOx reduced for engine replacements. 10

11 Age of engine [years] Maximum investment support [%] Maximum support rate [NOK/kg NOx] ,00 250, ,14 241, ,29 232, ,43 223, ,57 214, ,71 205, ,86 196, ,00 187, ,14 178, ,29 169, ,43 160, ,57 151, ,71 142, ,86 133, ,00 125, ,14 116, ,29 107, ,43 98, ,57 89, ,71 80, ,86 71, ,00 62, ,14 53, ,29 44, ,43 35, ,57 26, ,71 17, ,86 8,

12 3.3.2 Support to emission measurement on ships and drilling rigs In order to improve documentation of NOx emissions, the NOx Fund provides support to measurements on drilling rigs and ships in the following cases: Measurements of ships The NOx Fund provides support to NOx measurements carried out in the period from with up to NOK per vessel, maximised to 80 % of the total costs for vessels affiliated to the Fund. Measurements of rigs The NOx Fund provides support to NOx measurements carried out in the period on all mobile offshore rigs also rigs that are not affiliated with the Fund with up to NOK per vessel, maximised to 80 % of the total costs. Measurements in connection with support to measures The NOx Fund can provide support to measurements per vessel/rig, one before and one after implementation of measure. The costs relating to these measurements must be applied for in separate applications. Each of the two measurements will receive the same support as other measurements on ships or rigs, see above. All measurements must be carried out by an accredited firm or a competent party approved by the Norwegian Maritime Directorate. The support will be paid once a measurement report can be presented. Please use the separate application form designed for emission measurements Requirements for SCR measurement of ships For SCR systems on ships, the NOx Fund has imposed requirements for independent measurement of NOx emissions every fifth year. The measurement must be conducted by enterprises approved as competent parties, and are financially supported in the same way as other emission measurements of ships, see section It is sufficient to measure on one engine for ships with several similar engines, given that other documentation (service report) indicates that the condition on the engine that is measured is representative for the other engines Operating support to urea Urea on board ships Support will be granted to the consumption of urea used in SCR systems on ships and mobile offshore rigs that have been granted investment support from the NOx Fund. The support will be paid in arrears following the documentation of the urea purchase. The support is limited to maximum two years' operation for mobile offshore rigs. In order to qualify for support to urea consumption, it is required that the undertaking does not get their cost covered by customers or elsewhere. The support only applies to urea consumed with emissions in Norwegian waters subject to NOx tax. Offshore service vessels may also be granted urea support for traffic between installations in cases where this is not covered by the contracting company used by the shipping company. See section 5.3 for a more detailed description of traffic between installations that may be granted support. Oil companies that 12

13 cover costs for urea to ships and rigs may be granted support from the NOx Fund in accordance with the rate listed below. Urea purchased from is given a support of NOK 2.50 per kilo The support rates are per kilo urea - 40 % solution - maximised to 90 % of the urea costs. The NOx Fund may also grant support to urea purchased before However, information about these rates will not be provided in this document. The support rate for urea may be adjusted every six months. Information about this can be found on the Fund s website. Please use a separate application form for support to urea. The NOx Fund will require that independent measurement not older than five years can be documented when granting support to operational urea costs, see section Land-based industry Operating support will not be granted to ammonium solution, ammonia or urea in the wasteincineration industry. Additionally, operating support in relation to the use of ammonium solution/ammonia in the district heating facilities will not be granted when the operational costs can be included in the customer price Costs relating to replacement of catalyst elements Support may be granted to replacement of catalyst elements used in SCR systems on ships and mobile offshore rigs that have been granted investment support from the NOx Fund. Replacement of catalyst elements implemented from and before the end of 2017 may be granted NOK per cubic metre catalyst material, limitied to a maximum of 80 % of the costs, where the following costs may be included in the application: new catalyst elements, the work involved in the actual replacement process and any costs relating to waste management of the old elements. Support relating to replacement of catalyst elements will only be granted in cases where the reason for the replacement is wear and tear after prolonged use. The need and reasons for the upcoming replacement must be documented. Replacements caused by dimensioning mistakes discovered at the time when operation of the relevant plant is initiated, breakdowns or the like, will not be granted support. Replacement of catalyst elements implemented from until may be granted up to 60 % of the costs, where the same expenses as above may be included. Accredited emission measurements implemented in connection with replacement of catalyst elements may be granted support with the same rate as overall emission measurements, see section Information content in applications On our website you will find forms which have to be used when applying for investment support. The information supplied in the form together with attachments from the company carrying out the measure with specifications of the project is necessary in order to process the application. 13

14 4.1 General information About the applicant Company name and organisation number Contact person and contact details About plant/installation/vessel Identification number organisation number/imo number, callsign (if any) Description of plant/installation/vessel Whether the plant/installation/vessel has previously implemented measures with support from the NOx Fund About the measure Description of measure: o Type o Estimated date for completion o Amount of traffic subject to NOx tax in Norwegian waters o Estimated fuel consumption and potential fuel reduction after the implementation of the measure o NOx reductions o Costs The application shall be signed by the corporate decision makers responsible for the decision to apply for support. Normally, this will be the management, or the board depending on the size of the applied-for amount, i.e. the same procedure as for other investment decisions. 4.2 Emission reductions Applicants shall calculate emission reductions of the measure as the difference between the actual emission before and after implementation of the measure. For measures resulting in reduced NOx factor (i.e. emission per unit of the fuel used) measurement of emissions shall be carried out before and after implementation. For measures resulting in reduced fuel consumption, other types of documentation that serves to verify and make the result probable may be acceptable. Emission reductions from vessels travelling outside waters that are subjected to the NOx tax, shall not be accredited to the obligations stipulated in the Environmental Agreement. Accordingly, support will only be granted to the actual reduction of in emissions subject to NOx tax. The exception here is offshore service vessels and rigs that may be granted support for traffic between installations on the Norwegian continental shelf, as these emission reductions may be accredited to the obligations stipulated in the Environmental Agreement. For existing vessels, rigs, offshore installations and industrial plants, the previous three years shall make the basis for calculation of traffic in waters subject to NOx tax and for traffic between rigs on the Norwegian continental shelf. In cases where permanent future changes in activity level are known at the time when the application is submitted, these changes may be taken into consideration. New vessels and plants shall base their calculation of emission reduction on the following years' activity in the form of fuel reporting for up to 12 months and for a minimum of 3 months, depending on the type of NOx reducing measure and the type of vessel concerned. 14

15 For vessels whose future travel time through waters that are subject to the NOx tax is not yet known, and for traffic between rigs on the Norwegian continental shelf, information relating thereto shall also be submitted. In cases where the applicant wish to implement several measures on the same unit, see appendix 2 for guidelines on how the emission reductions are calculated for each measure Emission between installations for offshore service vessels and rigs The Environmental Agreement has clarified that emission reductions from traffic between installations in the Norwegian sector of the North Sea may also be accredited to the Environmental Agreement on NOx. Consequently, the NOx Fund may also support such emission reductions. Therefore, offshore service vessels and rigs shall provide data for traffic that is subject to NOx tax as well as for traffic between installations on the Norwegian continental shelf when applying for support to NOx-reducing measures. Corresponding information shall be provided on the self-declaration form following implementation of measures Emissions from LNG ships new-builds In lack of actual NOx factor prior to measures for new ships using LNG as fuel, the factor will be stipulated based on the current limits for NOx emissions in accordance with IMO MARPOL Annex VI. The relevant test cycle results for specific NOx-emission factor (g NOx/kWh) and specific fuel consumption (g fuel/kwh) for a corresponding diesel engine from the same engine supplier is used as a basis Industrial emissions Industrial emissions are calculated in accordance with regulatory provisions stipulated by the Pollution Control Authority or the county governor in connection with the permit or in the requirements governing self-reporting by enterprises, Report TA In cases where the pre-measure condition cannot be satisfactorily documented otherwise, the calculation of the difference between pre-measure and post measure emissions shall be based on the licencing limit for the relevant plant Public tenders The application shall provide information relating to whether or not the applied-for measure is linked to a public request for tenders. The NOx Fund may grant support in cases where the tenders do not specify emission requirements or technology requirements that serve to affect NOx emissions from vessels. In cases where a vessel has been contracted to perform an activity that is subject to specific performance requirements in relation to NOx by a public authority, the NOx Fund may only grant support to measures that over-fulfils the stipulated requirements. 15

16 The most typical example of this is ferries and High Speed Light Crafts (HSLC) whose contract involves routes with specified NOx emission level requirements (for instance IMO Tier II or requirements relating to LNG propulsion) stipulated in tenders. In such cases, support will only be granted for the difference between the stipulated required level and an even lower actual emission level for NOx. From ferries and HSLC that are running or entering into a public contract do not get support for Tier II measures. Support to new ferries and HSLC where the standard difference between Tier II and the actual emission level for ordinary Tier II solutions (without measure) is also discontinued. Implemented measures to achieve an emission level better than Tier II is still eligible for support. Measures pertaining to existing vessels or new-builds may be granted support as long as both the pre-conditions listed below have been fulfilled: The decision relating to implementation of the relevant measure has been made before the allocation of a new contract The measure is verified within a reasonable period of time (normally within 12 months) before the new contract with NOx requirements enters into force. 4.3 Technical feasibility Potential assessments relating to the technical feasibility of the measure shall be enclosed, for instance: Restrictions with regard to space for equipment and possible storage for input factors (such as water, urea etc.) Operational profiles and exhaust gas temperature profiles and their impact on the operation of exhaust treatment systems Limitations with regard to fuel system, fuel type and capacity Access to service and maintenance services for equipment and consumption flows linked to the measure Technology maturity/robustness 4.4 Finance The following financial figures shall be included: Total investment costs and total amount of applied-for support Annual additional operating costs or other costs resulting directly from the measure Fuel consumption separated into operation with or without NOx-tax In cases relating to measures whose emission reduction and the additional costs are difficult to predict, the following principles shall be used: For measures with another primary utility function than reducing NOx the investment costs shall be estimated as the cost difference between the applied-for solution and a conventional solution. For example, the investment cost for a gas-propulsion vessel shall be the added costs of investing in a gas-propulsion engine compared to a traditionally operated vessel of the same type. The reasons for the added costs must be provided in the form 16

17 In cases where the additional costs pertaining to the NOx measure cannot be singled out for documentation, for example in the case of new-builds, the value of the measure in question shall be based on a best judgement assessment, and the grounds upon which this is founded shall be made clear in the documentation For construction of new ships with SCR-systems the added costs will equal the cost of the system Documentation of costs for LNG measures For applications relating to support to LNG as fuel for propulsion of ships, more extensive cost documentation is required, both with regard to application processing and verification of measures. A separate Excel-based form which may be downloaded from the NOx Fund s website shall be used to conduct a breakdown of costs into the stipulated format. The reason behind this requirement is that the NOx Fund would like to ensure equal treatment of applicants, while stimulating to increased competition and reduced measure costs by making the individual cost components more visible. 4.5 Progress Plan The planned date for implementation of the relevant measure shall be submitted. In cases where the applicant enterprise has specific conditions which must be met in order for the relevant measure to be implemented, for instance a specific approval date in order to implement the measure as planned, this must be specified in the application. 4.6 Confidentiality In cases where the application contains competition-sensitive information, this must be clearly marked. Confidential handling by the NOx Fund means that relevant measures will not be mentioned on our website or in other fora until its completion date. However, in the unlikely event that this information should be published, the NOx Fund will not be held financially liable. 5 Payment of support to enterprises Approved financial support is being paid to enterprises in Norwegian kroner per kilo NOx reduced. It is therefore important that the estimated emission reduction in the application is realistic. In cases where the reduction turns out to be less than projected in the application, the allocated support will be reduced accordingly. Note that the method for determining the support rate and upper support limit was revised as of 14 th April The support to measures is calculated based on the total investment amount, maximum support limit, the presumed emission reduction and the support rate. An example can demonstrate this; A measure with an estimated cost of NOK 3.5 million, maximum support limit of 80 %, an emission reduction of 50 tonnes and a support rate of NOK 250 per kg NOx reduced can thus be granted NOK 2.8 million in support. The approved support will then be as follows: - NOK 250 per kg NOx reduced (support rate) - But limited upwards to NOK 2.8 million (support limit) 17

18 If the verification shows that the actual reduction turns out to be 10 tonnes, the undertaking will be granted = NOK 250 * 10 tonnes which equals NOK 2.5 million, i.e. NOK less than the upper limit. This approach applies as long as support limit * NOx reduction support limit. If the verification gives the same emission reduction as in the application (50 tonnes), the support rate will be adjusted to a level where support rate * NOx reduction = support limit. This approach applies as long as support rate * NOx reduction > support limit. For this specific example this means support = NOK 56 per kg NOx * kg = NOK If the verification shows that the actual reduction is larger than estimated in the application, for instance 70 tonnes, the total support will be limited by the support limit in the same way as the example above. Effective support rate will thus be even lower. In other words support = NOK 40 per kg NOx * kg = NOK To ensure that the NOx Fund allocates the correct amount of means it is important that the estimate over total costs and NOx reduction is realistic; including cleaning efficiency, level of activity, fuel consumption, and that all relevant costs are included in the application. In cases where the actual total costs relating to measure implementation prove to be lower than estimated in the application, the support paid will be reduced correspondingly (in cases where the support percentage determines the support paid by the Fund). In cases where the actual total costs prove to be higher relative to the NOx reduction the support will not reach the maximum support limit of the investment costs. In such cases, the support limit is determined as support limit = estimated emission reductions * support rate. In cases where a measure achieves a higher reduction in the verification than estimated in the application, the support limit may be increased by a revised application letter. 5.1 Information about the self-declaration form Following installation, all measures must be verified, and the allocated support will not be paid until the measure has been sufficiently documented, and the self-declaration form with information about implemented emission reduction along with documentation about total costs has been submitted. The self-declaration form, available from the NOx Fund's website, along with copies of invoices and measurement results shall be submitted. Payment of support will take place once DNV GL has quality-assured this documentation from the undertaking. For land-based industries, the effect of the measure shall also be approved by the Norwegian Environment Agency in cases where the reductions concerned, pertains to licensed emissions. Undertakings have an obligation to immediately verify measure implementation and the NOxreducing effect achieved by the measure in question by submitting the self-declaration form with all relevant documentation. In cases where the self-declaration form has been submitted to the NOx Fund later than 3 months following measure implantation, the support rate will be reduced by 10 % compared to what has been stated in the decision relating to allocation of support. Thereafter, a further 10 % will be deducted for each consecutive 3-month period. 18

19 For measures that have been granted support on the condition that a test period is implemented, the measure shall be regarded as implemented one month following the expiration of the test period. Any decisions relating to the allocation of support in their entirety will no longer be valid, in cases where undertakings show significant failure to comply with the obligation to submit the self-declaration form. Significant failure to apply shall enter into force in cases where the self-declaration form has not been received by the NOx Fund within 12 months after the installation has been completed and put into operation at the latest. 5.2 Partial Payment of support for some types of measures For some types of measures, including SCR, SNCR, EGR, HAM or measures involving new technology, the documentation requirements have been extended. The Authorities have laid down requirements stating that the reported emission reduction to the greatest extent possible shall reflect the actual reduction in the emission of NOx and that this reduction can be maintained over a prolonged period of time. By measuring the reduction over a prolonged period of time, it will be easier to ensure that this requirement is being met Calculation of NOx reduction from ships with SCR system The NOx reduction from SCR systems on board ships that underlies payment of support are calculated in two different ways, given below. The calculation that gives the lowest emission reduction will be used when determining the support. Theoretical calculation of the NOx reduction using measured NOx factor with and without the SCR system in use: o NOx reduction = Consumption fuel * (NOx factor without SCR NOx factor with SCR) NOx reduction (kg/year) Consumption fuel (tonn/year) NOx factor (kg/tonn) o A theoretical calculation like this will give a NOx reduction with optimal use of the system. Optimal operation conditions with a SCR system is, however, dependent on optimal operation pattern and exhaust gas temperature. It is very rare that SCR systems are operated under optimal conditions. Calculated actual NOx reduction based on the consumption of urea: o NOx reduction = Consumption urea / Urea factor NOx reduction (kg/year) Consumption urea (liter urea/year) Urea factor = 1.5 (liter urea/kg NOx) o If the calculated NOx reduction using this method turns out larger than the theoretical calculation above, too much urea are probably dosed into the SCR system Historical figures shows average yearly reductions in NOx emissions with SCR systems (for all SCR systems on all ship designs) as given below. Actual reduction is used as default 19

20 cleaning efficiency by approval of support, unless good documentation require for a different level. Theoretical reduction: 87 % Actual reduction: 64 % Payment of support to SCR, EGR and water-based systems Payment of support to SCR, EGR and water-based systems (e.g. HAM-systems) requires somewhat more documentation. Therefore, the systems should be in operation for a longer period of time to ensure that the emission reduction obtained is representative. Support to installations of the systems will therefore be divided into two separate payments: Up to 50 % of the support will be paid after the implementation of SCR, EGR and water-based systems has been documented. The scale and the stability of the operation will determine the amount of support paid The remaining support, will be paid once the actual emission reduction has been documented after a minimum of three months continuous regular operation or after twelve months for vessels not operating regular routes. The remaining support will then be dependent on the obtained reduction. If the documented emission reduction turns out to be lower than that stated in the application, the support granted will be reduced accordingly. The applicant shall also document fuel and urea consumption for the same three-twelve month period Payment of support to LNG measures Support to gas-powered (LNG) ships and industrial plants is based on reported consumption of LNG and diesel over a period of 3-12 months depending on operational stability, when this is considered to be representative for the ship s expected operations and achieved NOx reduction in Norwegian territorial waters. Payment will be carried out in stages, so that achieved NOx reduction after for instance 1 month will open up for the possibility of a partial payment. The support payment will then be adjusted in accordance with each reporting towards full payment in relation to achieved NOx reduction following 3-12 months of operations, depending on operational pattern and predictability in relation to activity when operating on gas. An important aim of the support from the NOx fund is to ensure that measures have an effect on emission in Norwegian waters that are subject to NOx tax. In cases where ships leave Norwegian territorial waters for contractual reasons for more than 12 consecutive months, prior to a year following implementation of the relevant measure, all support shall be repaid. In cases where this occurs between 1-2 years following measure implementation, the reduction in support will be gradually curtailed from full reduction after 1 year to no reduction after 2 years. Through an agreement with the NOx Fund, the shipping company shall provide sufficient guarantee /security to satisfactorily cover any possible claims by the NOx Fund. Up to 80 % of the costs relating to this type of guarantee/security may be covered depending on achieved NOx reduction. The allocated support per kg NOx will be clarified once the terms relating to the guarantee become known. 20

21 5.2.4 Payment of support to cold ironing Payment of support may commence after the first self-declaration form has been returned by the enterprise and has been fully verified by DNV GL. The first payment of support may take place after 3 months operation of the relevant plant with the possibility of forthcoming partial payments each quarter throughout the first year of operations. Documentation must provide information about: accumulated costs in cases where an onshore installation has been granted support, the actual amount of power supplied in kwh in total for the period, the number of recipient vessels listed by name and IMO number in cases where it is an installation on board a vessel that has been granted support, the total amount of power received in kwh for the period, the number of onshore power plants listed by name and other relevant documentation other relevant information The possibility of granting support to users of land-based power (support to installation on ships) in cases where the onshore installation has already been granted support by the NOx Fund is however somewhat limited, and will be subject to an individual assessment in each case. For vessels operating regular routes with arrival in a Norwegian port, the measure on board the vessel and the measure implemented in port can be regarded as one measure. Applicants are obligated to provide third-party access in return for a reasonable fee, unless this would have a (significant) negative effect on their own activities. This may serve to increase the emission reduction and improve the utilisation of the plant. 5.3 Conditions governing the payment of support Only emission reductions occurring in Norwegian territorial waters subject to NOx tax will be accredited to the emission obligations laid down in the Environmental Agreement. The amount of support paid will therefore be dependent on the reduction achieved in emissions subject to NOx tax in Norwegian waters. The exception here is offshore service vessels and rigs that may be granted support for traffic between permanent installations within Norway's economic zone, as these emission reductions are included in the Norwegian emission inventory. Only operations that are part of voyages that are in their entirety conducted between Norwegian ports, without docking at a foreign harbour or at permanent installations at sea outside of Norway s economic zone, shall be included. The measure is implemented at the applicant s own expense and risk. The applicant bears the risk of ensuring that the applied-for measure has the NOx-reducing effect stipulated in the application, and that it can be implemented within the stipulated time and budget. Recipients of support from the NOx Fund have an obligation to notify the Fund in cases where circumstances should occur that are significant to the implementation of the applied-for 21