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.


Monjasa logo. Monjasa shuffles leadership across Asia and West Africa trading desks  

Morten Jacobsen steps down as managing director for Asia, with Simone Piredda relocating from Dubai to take the helm in Singapore

Tue Jensen, Burando Energies. Burando Energies appoints Tue Jensen as head of market risk  

Dutch marine fuels specialist bolsters its risk function amid international growth plans.

Anna Nash, Explora Journeys. Fincantieri floats out Explora V and marks coin ceremony for Explora VI  

Two ceremonies at Sestri Ponente shipyard advance construction of MSC's six-ship Explora Journeys fleet.

BP logo. BP advertises for senior physical bunker trader to oversee Europe and Africa marine business  

London-based trader is required to manage pricing, accounts and strategy across its marine fuels operation.

Ammonia fuel supply chain project signing. Seven Japanese firms join forces on ammonia-fuelled car carrier project  

NYK, K Line and five other companies plan to build four ammonia-fuelled car carriers alongside a dedicated bunkering vessel and supply chain.

EmissionLink logo. EmissionLink urges EU to channel ETS revenues into shipping carbon capture trials  

Maritime emissions specialist says regulation alone will not make onboard carbon capture commercially viable for shipowners.

Benny Hilstrom, WinGD. WinGD signs long-term service deals covering 14 LNG carriers with three shipowners  

Engine designer secures lifecycle support contracts with COSCO, NYK and TMS Cardiff Gas for dual-fuel LNG vessels.

KEYS Azalea vessel. KEYS Azalea completes 100th LNG bunkering operation in western Japan  

LNG bunkering vessel reaches landmark delivery in two and a half years.

STS bunkering operation at Port of Santos. Port of Santos moves to regular ethanol bunkering for ships  

CMA CGM, Copersucar and Bunker One expand July pilot into a commercial supply chain for ethanol as a marine fuel in Brazil.

Balearia's electric fast ferry. Baleària floats first fully electric fast ferry for Tarifa–Tangier route  

Spanish operator's new catamaran, built at Armón's Gijón yard, will enter service in summer 2027.