Voluntary ship emissions cutting gets HK Govt cash

Wednesday, February 22nd, 2012
HK Financial Secretary cash for shipping emissions reduction

More where that came from no doubt

On 1 February John Tsang, Hong Kong’s Financial Secretary, announced in his Budget a HKD260 million (USD33.3 million) subsidy in the form of reduced harbor and light fees over three years for ships that switch to 0.5 percent sulfur fuel or cleaner. This proposal will be debated by the Hong Kong Legislative Council in March and is expected to pass.

It follows on from the Hong Kong Chief Executive’s October 2011 Policy Address, in which it was announced that the government would explore with their counterparts in Guangdong, Shenzhen and Macau the requirement for “ocean-going vessels to switch to low-sulfur diesel while berthing in Pearl River Delta (PRD) waters, and setting up an Emission Control Area in PRD waters.”

These are positive outcomes after the shipping industry created the two-year long Fair Winds Charter starting on 1 January 2011. So far, 18 container, passenger and specialist shipping companies, representing some 80 percent of all ocean-going ships calling at Hong Kong have signed up. Signatories could use fuel up to 0.5 percent sulfur although some ships are using the even cleaner 0.1 percent fuel. The industry did this to be good corporate citizens so that they can reduce emissions from their ships, thereby lowering the risk to public health

This is the first voluntary initiative of its kind in the world, where industry players take up the cost of environmental clean-up. The HK Government is right to provide a modest subsidy as a sign of support and encouragement. Hopefully, this will enable the HK Ship Liners Association and HK Shipowners Association to approach more members to sign up this year.

What is also unusual about the charter is that business is calling for regulation. Usually business people prefer less regulation. The shipping industry leaders already operate at higher environmental standards when their ships sail into European and North American ports, so they accept they can do the same in Hong Kong. The point is, they are doing it voluntary and not through regulation (as is the case in Europe and North America).

The Charter, while a representing a landmark in air pollution control reduction in Hong Kong, has a number of limitations:

a.       Companies that have not joined the Charter enjoy a competitive advantage through continued use of cheaper, lower quality bunker fuel at berth;

b.      The Charter does not require signatories to disclose either the type of low sulfur fuel their ships are burning, or how many of their ships are participating. As a result it is not possible to directly assess the actual reduction in emissions as a result of the introduction of the Charter; and

c.      Some shipping lines are reluctant to publicly disclose their level of participation, arguing that this is an additional administrative burden, which carries additional cost.

Despite the above, the Charter has the potential to cut at-berth emissions from participating vessels by 80 percent or more, as even at 0.5 percent sulfur content, this represents a major reduction from the normal fuel used of between 2.7-3.5 percent sulfur content.

Some of the signatories have been willing to provide data to the Hong Kong Environmental Protection Department and researchers. Since at-berth emissions account for some 40 percent of total emissions from ocean-going vessels in Hong Kong, and considering the close proximity of population centers, a health dividend is expected, particularly for people living close to the terminals and sailing paths.

While data is not currently available on the extent to which this has caused an actual reduction in emissions around the port, the fact that a highly competitive industry has come together to reduce its emissions is directly attributable to the effectiveness of multi-stakeholder engagement, that was facilitated by the non-profit think tank, Civic Exchange.

In addition, the willingness of industry leaders to voluntarily reduce their emissions has encouraged the Hong Kong Government to consider how to regulate and co-operate with its counterpart in the PRD. Thus, the subsidy offered in this year’s Budget is another step of positive public-private-community collaboration. It is particularly timely as the shipping market has softened significantly and many shipping companies are reporting losses.


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