Tue 31 Jan 2012, 13:54 GMT

Regulating ships in Hong Kong - progress and incentives


Think tank calls on Hong Kong to 'seize the opportunity' and regulate quickly.



Regulating ships in Hong Kong - progress and incentives
By Veronica Booth [pictured], Civic Exchange

The Hong Kong Environmental Protection Department (EPD) recently presented proposals to reduce emissions from vessels to improve air quality in Hong Kong at an Environmental Affairs Panel meeting in Hong Kong’s Legislative Council in December 2011. This is a positive step towards regulation in Hong Kong and the Pearl River Delta (PRD) region more generally.

These proposals include regulation for ocean-going vessels (OGVs, like container ships and cruise ships) while they are at berth in Hong Kong; regional regulation across the PRD through exploring an "Emission Control Area"; and using cleaner fuel for smaller vessels such as barges, tug boats and ferries.

Improving Hong Kong's air quality is a pressing issue, and on the Hong Kong public's mind, given recent news that Hong Kong's nitrogen dioxide levels are the worst they have ever been. Air quality improvements need to start happening now, and quickly.

Timing is a particular concern for leading shipping lines in Hong Kong participating in the Fair Winds Charter, the world’s first and only shipping industry-led, voluntary, at-berth, unsubsidized fuel switch, which is halfway through its 2 year run. An industry association estimated that, to switch the most container vessels to a cleaner fuel would cost USD50 million annually to switch most container vessels calling at Hong Kong.

The EPD has indicated that since the Charter began in January 2011, emissions have dropped from OGVs. EPD is clearly moving towards proposing regulation. But regulation takes time to come into effect. So the question becomes, how do we maintain the gains made from this ambitious initiative between the Charter’s end, and when regulation comes into force?

One way may be to incentivize shipping lines to continue to switch until that time. This could have the added bonus of attracting shipping lines that haven’t joined the Charter to operate at a higher standard more quickly.

The World Port Climate Initiative administers the Environmental Ship Index, (ESI), which covers NOx, SOx and CO2 and is designed to improve the environmental performance of ships. It gives points for ships performing beyond current regulation. The ESI scale runs from 0 to 100, with 0 being ships that comply with current regulation, and ships that perform better than current regulation score points.

The ESI gives emissions at port a heavier weighting to reflect the public health impact they have while close to people. Several ports have been using the ESI to offer subsidies to shipping lines that exceed regulation. The Port of Antwerp is using the ESI to identify ships eligible for a 10 percent discount on tonnage dues with an ESI rating of over 31. Similarly, Hamburg and Rotterdam give a discount of up to 10 percent for ships with an ESI rating over 20.

Other ports have adopted other criteria to incentives ships to be cleaner. Port Metro Vancouver’s EcoAction Program is a three-tiered award and subsidy scheme to encourage ships to switch to cleaner fuel. The ports of Los Angeles and Long Beach similarly had recognition and incentives to switch to cleaner fuel, before the current tighter regulation came into place. This program required vessels to slow down to 12 knots while approaching the ports, and switch their auxiliary engines to a distillate fuel while at berth. The financial incentive covered the cost difference between the bunker fuel and distillate fuel used.

Singapore is the only port in Asia incentivizing vessels to exceed regulations by reducing emissions. Until 2015, ships are eligible for a 15 percent reduction in port dues if they reduce emissions by using a fuel with a sulphur content of 1 percent or less (the global standard is 3.5 percent), or an abatement technology such as a scrubber, which would reduce SO2 emissions by an equivalent amount.

So options abound for the Hong Kong government to maintain the good work started by the shipping industry. The task is now to seize the opportunity during this time of transition, and to regulate quickly.

Image: Veronica Booth - Senior Project Manager at Hong Kong-based public policy think tank Civic Exchange. She has been the principal investigator and stakeholder convenor for the "Green Harbours Community" since it was formed in 2008.


Maersk Labrea render. Maersk and Anemoi to fit rotor sail on container vessel in industry first  

35-metre rotor sail is due to be installed on an 8,700-TEU ship in mid-2027.

Verde Marine Energy (VME) logo. Verde Marine Energy expands into marine lubricants with veteran trader hire  

Dutch firm offers clients the option to manage fuel and lubricant sourcing through one point of contact.

Avenir Ascension vessel. NYK and Stolt-Nielsen complete Avenir LNG joint venture  

NYK acquires a 50% stake in Avenir LNG from Stolt-Nielsen, creating a joint ownership and operating structure for LNG bunkering.

Yuan Hai Si Lu vessel. Cosco Shipping names green methanol-capable ore carrier Yuan Hai Si Lu in Yangzhou  

325,000-DWT vessel features dual-fuel capability and what is claimed to be a world-first digital delivery system.

Onboard carbon capture and storage (oCCS) system illustration Onboard carbon capture a viable emissions pathway for shipping fleet, Lloyd’s Register report finds  

New LR report backs onboard carbon capture but flags infrastructure gaps as the key barrier.

Odfjell and bound4blue eSAIL order signing. Odfjell places repeat eSAIL order with bound4blue for second chemical tanker  

Early fuel savings reported on Bow Olympus drive second suction sail installation for Odfjell.

Titan and Sogestran long-term agreement signing. Titan and Sogestran agree long-term deal for new 6,000-cbm LNG bunker vessel in western Mediterranean  

Tie-up aims to bring LNG and LBM ship-to-ship bunkering services to Mediterranean ports.

Everllence 175DF-M engine. Everllence completes full-scale testing of dual-fuel methanol engine in Denmark  

First deliveries to superyacht customers slated for mid-2027.

Steel-cutting ceremony of vessel with builder's hull no. CHB3019. Changhong International starts construction on 11th LR2 tanker for Navios  

Chinese shipbuilder cuts steel on latest vessel in series designed with future fuel flexibility.

DP World London vessel. DP World names first methanol dual-fuel vessel at ceremony in Aarhus  

Marine services business, Shipping Solutions, names 1,250-TEU boxship with five-cylinder main engine.