Regulating ships in Hong Kong - progress and incentives

Wednesday, January 25th, 2012
Kwai Chung Container Terminal

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 USD50million 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.

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