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.


Capital's LNG-powered vessel. Chinese shipbuilder delivers 155,500-dwt LNG dual-fuel crude oil tanker  

Vessel handed over to Capital Ship Management Corp in China.

Glovis Lighthouse vessel. Seaspan takes delivery of first 10,800-ceu dual-fuel LNG car carrier  

Glovis Lighthouse enters service as one of a handful of vessels globally to exceed 10,000 CEU capacity.

Port of Rotterdam, Maersk, Core Power and Lloyd's Register logos. Rotterdam study maps pathway for nuclear-powered commercial ship port calls  

A joint study by Lloyd's Register, the Port of Rotterdam, Core Power and Maersk examines the feasibility of nuclear vessel port calls.

Hakata waterfront. Kinkai Yusen conducts first biofuel demonstration on domestic ro-ro vessel at Hakata Port  

Japanese shipping company to trial B24 biofuel blend aboard the vessel Nanotsu on 16 June.

Norwegian Energy Trading (NET) AS logo. Norwegian Energy Trading renews ISCC certification for biofuel trading  

Norwegian bunker trader says renewal reflects growing biofuel volumes and commitment to verifiable sustainability standards.

Ivy Cove vessel. Jiangnan delivers VLAC with LPG dual-fuel main engine  

Vessel is claimed to be the world’s first 93,000 cbm very large ammonia carrier.

BIMCO logo. BIMCO adopts biofuel clause for time charter parties  

Shipping body has introduced a new contractual clause to govern the use of biofuels under time charter agreements.

Prince Madog hydrogen fuel cell retrofit receives LR certification. UK research vessel Prince Madog wins LR certification for hydrogen fuel cell retrofit  

Lloyd’s Register certifies what is claimed to be the first sea-going, manned hydrogen retrofit of its kind.

World Fuel logo. World Fuel seeks marine lube operations and sales executive in Greece  

US firm is recruiting for a commercial role focused on marine lubricants, based out of its Glyfada office.

ECSA Parliamentary Breakfast event. European Shipowners calls for fuel supplier mandates and ETS revenue investment ahead of policy revision  

Industry body urges EU policymakers to redirect carbon revenues into clean marine fuel production.