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.


Windward Hamburg vessel. VARD delivers final CSOV to Windward Offshore, completing series  

Methanol-ready Windward Hamburg joins the fleet as VARD completes delivery of four purpose-built CSOVs.

RSP and Dynamic People partnership signing. Rotterdam Shore Power partners with Dynamic People to digitalise operations  

The shore power developer is building a Microsoft-based digital platform to support its growth.

Dorian LPG logo. Dorian LPG orders three dual-fuel VLGCs from Hanwha Ocean in $345m deal, secures $368.4m credit facility  

US-listed VLGC operator has also fixed 99% of its fleet days at above $88,000 per day.

Seto Azure vessel. Osaka Gas completes first ship-to-ship LNG bunkering in Osaka Bay  

Bunkering vessel Seto Azure is used to supply an LNG-fuelled car carrier at Kobe.

EPS vessels naming ceremony. Eastern Pacific Shipping takes delivery of three LNG dual-fuel Newcastlemaxes five months ahead of schedule  

EPS receives Mount Victoria, Mount Yulong and Mount Wuyi from Qingdao Beihai Shipbuilding.

EmissionLink logo. EmissionLink urges demand aggregation to unlock zero-emission fuel investment  

MD calls for pooled demand to unlock investment and accelerate alternative fuel availability for shipping.

Hydrogen-fuelled vessel render. GMI awards eCap Marine contract for two additional hydrogen-powered bulk carriers  

3,000-DWT newbuilds to be built in India and enter service in Norwegian waters in 2029.

Navios Turquoise vessel. Navios Partners takes delivery of second LNG- and methanol-ready boxship in newbuilding series  

Handover of 7,900-TEU Navios Turquoise follows delivery of sister ship Navios Cyan in May.

Yang Ming and Hanwha Ocean contract signing ceremony. Yang Ming orders six 13,000-TEU LNG dual-fuel vessels from Hanwha Ocean  

Taiwanese carrier expands green fleet with ammonia-ready newbuilds due for delivery by 2029.

AiP award ceremony for 12,500-cbm LNG bunker vessel design. LR awards approval in principle to Chinese yard for 12,500-cbm LNG bunker vessel design  

Lloyd’s Register validates new LNG bunkering vessel concept by CSSC Huangpu Wenchong at SMM 2026.