18 May 2012

Shore-side power is the ‘most cost effective way’ of reducing emissions at Canadian port

A consultant’s report has backed the use ‘cold ironing’ at the Canadian West Coast port of Victoria.

The Greater Victoria Harbour Authority (GVHA) last year asked the consulting company AECOM (link)

to look at the practicality of supplying shore-side power to cruise ships docking at the Ogden Point deep water terminal.

A draft executive summary of the study was released this week ahead of a GVHA board meeting.

The study’s findings are that installing shoreside power for cruise ships would be the most cost-effective way of reducing emissions.

The option recommended by AECOM is a system allowing one vessel at a time plug into the regional power grid.

Estimated infrastructure costs would be around $8.8 million, including $6.8 million for an on-site shore power system and $2 million for upgrades to the grid.

Some 230 cruise ship visits are expected at Ogden Point this year and AECOM said 75 visits would be from ships equipped to use shore power.

The nearby port of Vancouver already uses cold ironing and the port authority, Port Metro Vancouver, has estimated that each cruise ship that plugs into the shore power brings emissions reductions equivalent to taking 80 cars off the road.

Other North American West Coast ports offering shore-side power to cruise ships include Seattle and Juneau.

The cruise industry in western Canada has been facing opposition from residents worried about its impact on the environment. A study published last year suggested that the social and environmental costs of the cruise industry, in terms of emissions and traffic congestion,had been largely ignored.

Nick Jameson, London News Desk, 18th May 2012 14:49 GMT

Comments? Email editor@bunkerworld.com.

18 May 2012

Vessels are given a financial incentive for reducing their speeds during routine calls made to the port

The Port of Los Angeles has announced it has recognised the top performing shipping and cruise lines for helping to reduce air pollution by lowering their vessel speeds during routine calls made to the port.

According to a press release, the recognition is part of the port’s Vessel Speed Reduction Program (VSRP), an initiative that sets a standard for ocean-going vessels to decrease their speeds as they approach the port.

Customer’s that were recognised in this year’s VSRP included Yang Ming Marine Transport, Disney Cruise Line and Evergreen Marine.

Orient Overseas Container Line, Norwegian Cruise Line and Hapag-Lloyd were also recognised.

“Year after year, the Vessel Speed Reduction Program has proven to be a successful component to improving air quality,” said GeraldineKnatz, Ph.D., executive director at the Port of LA.

“The Port of Los Angeles is fortunate to have forward-thinking customers who support these environmental programmes, while raising the bar higher and setting a global standard.”

The VSRP is a voluntary programme which started in 2001 with aims to reduce nitrogen oxides (NOx) emissions from ocean-going vessels by slowing their speeds as they approach or depart the port, generally at 20 nautical miles from Point Fermin.

In recent years, the programme has been extended and now includes incentives for reducing speeds at 20 nautical miles as well as 40 nautical miles, stated the press release.

The port added that last year, 332 vessels were 100% compliant in the programme, which aided in the reduction of 84 tonnes of diesel particulate matter (DPM) emissions, 808 tonnes of sulphur oxides (SOx) emissions, and 1,158 tonnes of NOx emissions.

Vessels that achieve a 90% or higher participation rate to the VSRP receive financial incentives from the port.

Samantha Cacnio, Vancouver News Desk, 18th May 2012 18:42 GMT

SCMP – 10 April 2012

With Hong Kong’s air quality so bad and the ships using our port significant emitter of a key pollutant, sulphur dioxide, our government should be leading the push for clean fuel. Hong Kong is late to the party, though lawmakers have recently approved a rebate to shipping companies operating vessels that are already voluntarily burning low-sulphur fuel. The amount is substantial, but firms that are not participating will not be covered, and high oil prices do not guarantee continuing compliance.The voluntary approach is no way to go about making our air safe. Only laws will assure that. Our worsening roadside air pollution plainly shows the failings of a strategy that mixes incentives with voluntary action for the companies responsible for the biggest polluters – power stations and old diesel buses and trucks. Requiring that electricity producers no longer burn coal and that new vehicles be purchased would, at a stroke, make levels acceptable. As studies have shown, our health is suffering.

Most container ships do not burn high-quality marine diesel and are instead powered by staggeringly polluting bunker fuel. With a sulphur content of between 2.8 and 4.5 per cent, a single vessel using it can in an hour produce as much pollution as 350,000 cars. Research by the think tank Civic Exchange estimates that 3.8 million people are at risk of exposure to excessive levels of emissions of pollutants from shipping and the port at Kwai Chung. Mindful of an international push and laws elsewhere, 17 shipping companies launched the two-year Fair Winds Charter at the start of last year to voluntarily switch to fuel with a sulphur content of 0.5 per cent or less while berthed here.

Authorities have to put the rebate in place promptly, but that has to be only the start. Pressing all vessels in our waters to use clean fuel is just as important. Ultimately, though, as with increasing numbers of ports elsewhere, they will have to turn to laws.

By Ben Richardson – Apr 5, 2012 12:00 AM GMT+0800Wed Apr 04 16:00:03 GMT 2012  http://www.bloomberg.com/news/2012-04-04/ship-smog-seen-as-next-target-to-clear-hong-kong-skies.html

As OOCL London entered the English Channel in early February, the 323-meter vessel owned by Hong Kong’s biggest container line was forced to switch from burning the black sludge known as bunker oil to less polluting fuel. That wasn’t the case in the ship’s home harbor last week.

Vessels calling at North Sea and Baltic ports must use fuel containing no more than 1 percent sulfur to cut emissions estimated to cause at least 60,000 deaths a year worldwide. Ships steaming into Hong Kong are free to burn less costly 3.5 percent sulfur oil, which means they account for a growing share of the city’s air pollution and threaten the health of more than 25 million people in China’s Pearl River Delta.

Enlarge image

Ship Smog Seen as Next Target to Clear Hong Kong Skies

Scott Eells/Bloomberg

A China Shipping Container Lines Co. Ltd. ship travels down a sea lane near a port in Hong Kong, China.

A China Shipping Container Lines Co. Ltd. ship travels down a sea lane near a port in Hong Kong, China. Photographer: Scott Eells/Bloomberg

Play Video

April 5 (Bloomberg) — Ships burning black sludge known as bunker oil are under rising scrutiny in Hong Kong as the city seeks to fix a mounting smog problem at home and meet the demands of leaders in Beijing to deliver cleaner air. Vessels calling at North Sea and Baltic ports must use fuel containing no more than 1 percent sulfur to cut emissions estimated to cause at least 60,000 deaths a year worldwide. Ships steaming into Hong Kong are free to burn less costly 3.5 percent sulfur oil. Bloomberg’s Paul Allen reports. (Source: Bloomberg)

Enlarge image

Ship Smog Seen as Next Target to Clear Hong Kong Skies

Jerome Favre/Bloomberg

Ship pollution in Hong Kong made up 23 percent of sulfur dioxide and 27 percent of nitrogen oxides, gases whose health impact is greater than earlier thought.

Ship pollution in Hong Kong made up 23 percent of sulfur dioxide and 27 percent of nitrogen oxides, gases whose health impact is greater than earlier thought. Photographer: Jerome Favre/Bloomberg

Emissions from Orient Overseas International Ltd. (316), A.P. Moeller-Maersk A/S (MAERSKB) and their rivals are under rising scrutiny as Hong Kong seeks to fix a mounting smog problem at home and meet the demands of leaders in Beijing to deliver cleaner air. Tightening marine fuel standards in the delta will add to costs for shipping lines, already squeezed by record energy prices and too many vessels competing for cargos.

“The central government has realized the export processing of shower flip-flops is not necessarily the way to conquer the world, but it is a good way to trash your environment,” said Mike Kilburn, head of environmental strategy at Civic Exchange, a Hong Kong-based research body advising on policy. China “wants to move away from a purely economic-driven model to recognize quality of life as well.”

More ‘Livable’

The government in Beijing in 2008 set a target to create more “livable” cities in the Pearl River Delta, a region encompassing Hong Kong, Shenzhen and Guangzhou. Those three cities together processed the equivalent of about 60 million standard 20-foot cargo boxes in 2010, double the volume ofShanghai, the world’s biggest container port, according to a November report by CLSA Asia-Pacific Markets. Asia has the highest concentration of people at risk from ship pollution because of the combination of big ports, trade-centered economies and urban concentration, it said.

So-called Emission Control Areas are either in place or will be for almost the entire U.S. coast by August, as well as ports in the English Channel, North and Baltic Seas. Ships entering those zones must use 1 percent sulfur fuel now and will have to switch to 0.1 percent by 2015. Under International Maritime Organization rules, all ocean-going vessels will have to burn 0.5 sulfur at sea by 2020.

One-Time Switch

Hong Kong is “fully determined” to tighten standards “as soon as possible,” said Pearl Ng, a spokeswoman for the Environmental Protection Department. Bringing all of the Pearl River Delta under an ECA is a longer term aim that requires a submission to the IMO by the central government, she said.

The government is now working out how to mitigate costs from fuel switching, she said. Moving to a mandatory 0.1 percent cap for vessels at berth as well as all local craft would maximize the benefits for clean air while creating a big enough market for the cleaner fuel that costs would be reduced.

The total operating loss of 22 container liners surveyed by Alphaliner, a shipping data provider, reached $5.6 billion last year, from operating earnings of $12.1 billion in 2010.

“This year’s performance depends on bunker prices,” Li Shaode, chairman of China Shipping Container Lines Co. (2866), the country’s second-biggest cargo-box carrier, said last week when announcing a 2.7 billion yuan ($429 million) loss for last year.

Bunker fuel in Singapore, the largest refueling port, has averaged $732.88 a metric ton since Jan. 1, its highest start for a year since Bloomberg began tracking prices in 2002. The price of 0.5 percent gasoil in Singapore averaged $863.72 a ton this year, also a record. A 10-year-old, 5,000-unit container ship sailing at 22 knots consumes 24 tons of fuel a day, according to Morgan Stanley.

Blending Costs

Blending higher quality fuels with bunker to meet the current 3.5 percent IMO sulfur limit adds about $4 to $5 a ton, Basheer Ahmed Sayeed, chief executive officer of fuel trader Chemoil Adani (Singapore) Pte., said in an interview last month. Bunker fuel prices will continue to rise as sulfur specifications tighten in coming years, he said.

With a cargo capacity of 99,636 deadweight tons and about the length of three football fields, OOCL Londonholds as many as 8,063 cargo boxes, data compiled by Bloomberg show. There were 63 container ships able to carry more than 5,000 units, in Pearl River waters on April 3, the data show.

At those kinds of concentrations, the ships’ enginesconsume energy at rates similar to the biggest power stations, said Simon Ng, a researcher into marine pollution at Hong Kong University of Science and Technology. Unlike power stations, their emissions aren’t regulated beyond the IMO’s sulfur-content cap of 3.5 percent — 3,500 times higher than the auto diesel sold in Hong Kong.

Mark Wong, a Hong Kong-based spokesman for Orient Overseas, declined to comment for this article.

Still Polluting

When docked, vessels need to keep their power systems running. Under a voluntary charter that expires at the end of this year, shipping lines representing more than 80 percent of container trade in Hong Kong agreed to burn fuel with a 0.5 percent sulfur content or less when their ships were at berth or anchored. That’s still 500 times higher than auto diesel.

Hong Kong has set aside $33 million over three years to give ships burning 0.5 percent fuel a 50 percent discount on port charges.

Even at lower levels of sulfur, vessels moored at the Kwai Chung container port or Tsim Sha Tsui cruise operators’ terminal are belching pollution in congested residential and tourist areas, as well as at Morgan Stanley (MS) and Credit Suisse Group AG (CSGN)bankers working in the 118-story International Commerce Centrein Kowloon.

Partial Approach

While such voluntary efforts help cut emissions at berth, they don’t address pollution caused by ships on their approach or departure from Hong Kong. As regulation of power stations and vehicle emissions takes effect, ships’ contribution to the total is growing along with global trade volumes, according to Civic Exchange.

Soot from burning marine fuel accounted for 31 percent of respirable particles in Hong Kong’s air in 2008, according to the city’s government. The World Health Organization estimates 9 percent of lung cancers worldwide are linked to the tiny particles that can penetrate deep into the airways.

Ship pollution in Hong Kong made up 23 percent of sulfur dioxide and 27 percent of nitrogen oxides, gases whose health impact is greater than earlier thought, based on new data, said Hak-kan Lai, assistant professor in the school of public health at Hong Kong University.

‘Delay, Denial’

Worldwide, premature deaths linked to marine emissions may have risen from 60,000 five years ago to about 84,000 today, according to a 2007 study led by James Corbett, a professor at the School of Marine Science and Policy in Delaware University.

Policy changes have been hindered by a “lack of political will” together with “delay tactics and denial,” Lai said.

The only question for shipping companies now is when tighter fuel standards are introduced.

“Everyone wants to be cleaner, but they want regulation,” said Veronica Booth, who has been leading Civic Exchange’s harbor policy work since 2008. “The second there’s regulation, they can pass on the cost to their customers.”

To contact the reporter on this story: Ben Richardson in Hong Kong at brichardson8@bloomberg.net

To contact the editor responsible for this story: Neil Denslow at ndenslow@bloomberg.net

Anger Over Hong Kong Shipping Pollution http://www.bloomberg.com/video/89948497/

April 5 (Bloomberg) — As OOCL London entered the English Channel in early February, the 323-meter vessel owned by Hong Kong’s biggest container line was forced to switch from burning the black sludge known as bunker oil to less polluting fuel. That wasn’t the case in the ship’s home harbor last week. Vessels calling at North Sea and Baltic ports must use fuel containing no more than 1 percent sulfur to cut emissions estimated to cause at least 60,000 deaths a year worldwide. Ships steaming into Hong Kong are free to burn less costly 3.5 percent sulfur oil, which means they account for a growing share of the city’s air pollution and threaten the health of more than 25 million people in China’s Pearl River Delta. (Source: Bloomberg)

A China Shipping Container Lines Co. Ltd. ship travels down a sea lane near a port in Hong Kong, China. Photographer: Scott Eells/Bloomberg

Bloomberg News

Ship Smog Seen as Next Target to Clear Hong Kong Skies

By Ben Richardson on April 04, 2012

• Video

Ship Smog Seen as Next Target to Clear Hong Kong Skies

As OOCL London entered the English Channel in early February, the 323-meter vessel owned by Hong Kong’s biggest container line was forced to switch from burning the black sludge known as bunker oil to less polluting fuel. That wasn’t the case in the ship’s home harbor last week.

Vessels calling at North Sea and Baltic ports must use fuel containing no more than 1 percent sulfur to cut emissions estimated to cause at least 60,000 deaths a year worldwide. Ships steaming into Hong Kong are free to burn less costly 3.5 percent sulfur oil, which means they account for a growing share of the city’s air pollution and threaten the health of more than 25 million people in China’s Pearl River Delta.

Emissions from Orient Overseas International Ltd. (316), A.P. Moeller-Maersk A/S (MAERSKB) and their rivals are under rising scrutiny as Hong Kong seeks to fix a mounting smog problem at home and meet the demands of leaders in Beijing to deliver cleaner air. Tightening marine fuel standards in the delta will add to costs for shipping lines, already squeezed by record energy prices and too many vessels competing for cargos.

“The central government has realized the export processing of shower flip-flops is not necessarily the way to conquer the world, but it is a good way to trash your environment,” said Mike Kilburn, head of environmental strategy at Civic Exchange, a Hong Kong-based research body advising on policy. China “wants to move away from a purely economic-driven model to recognize quality of life as well.”

More ‘Livable’

The government in Beijing in 2008 set a target to create more “livable” cities in the Pearl River Delta, a region encompassing Hong Kong, Shenzhen and Guangzhou. Those three cities together processed the equivalent of about 60 million standard 20-foot cargo boxes in 2010, double the volume of Shanghai, the world’s biggest container port, according to a November report by CLSA Asia-Pacific Markets. Asia has the highest concentration of people at risk from ship pollution because of the combination of big ports, trade-centered economies and urban concentration, it said.

So-called Emission Control Areas are either in place or will be for almost the entire U.S. coast by August, as well as ports in the English Channel, North and Baltic Seas. Ships entering those zones must use 1 percent sulfur fuel now and will have to switch to 0.1 percent by 2015. Under International Maritime Organization rules, all ocean-going vessels will have to burn 0.5 sulfur at sea by 2020.

One-Time Switch

Hong Kong is “fully determined” to tighten standards “as soon as possible,” said Pearl Ng, a spokeswoman for the Environmental Protection Department. Bringing all of the Pearl River Delta under an ECA is a longer term aim that requires a submission to the IMO by the central government, she said.

The government is now working out how to mitigate costs from fuel switching, she said. Moving to a mandatory 0.1 percent cap for vessels at berth as well as all local craft would maximize the benefits for clean air while creating a big enough market for the cleaner fuel that costs would be reduced.

The total operating loss of 22 container liners surveyed by Alphaliner, a shipping data provider, reached $5.6 billion last year, from operating earnings of $12.1 billion in 2010.

“This year’s performance depends on bunker prices,” Li Shaode, chairman of China Shipping Container Lines Co. (2866), the country’s second-biggest cargo-box carrier, said last week when announcing a 2.7 billion yuan ($429 million) loss for last year.

Bunker fuel in Singapore, the largest refueling port, has averaged $732.88 a metric ton since Jan. 1, its highest start for a year since Bloomberg began tracking prices in 2002. The price of 0.5 percent gasoil in Singapore averaged $863.72 a ton this year, also a record. A 10-year-old, 5,000-unit container ship sailing at 22 knots consumes 24 tons of fuel a day, according to Morgan Stanley.

Blending Costs

Blending higher quality fuels with bunker to meet the current 3.5 percent IMO sulfur limit adds about $4 to $5 a ton, Basheer Ahmed Sayeed, chief executive officer of fuel trader Chemoil Adani (Singapore) Pte., said in an interview last month. Bunker fuel prices will continue to rise as sulfur specifications tighten in coming years, he said.

With a cargo capacity of 99,636 deadweight tons and about the length of three football fields, OOCL London holds as many as 8,063 cargo boxes, data compiled by Bloomberg show. There were 63 container ships able to carry more than 5,000 units, in Pearl River waters on April 3, the data show. http://www.businessweek.com/news/2012-04-04/ship-smog-seen-as-next-target-to-clear-hong-kong-skies

50 000 deaths a year in Europe alone

There is a fervent on-going debate between shipowners and relevant stakeholders about the upcoming low sulphur standards coming in effect January 1^st, 2015 in ECAs. Many shipowners feel the new sulphur standards will cause a financial loss on their businesses as they will have to invest in new technologies or turn to more expensive fuels with lower sulphur. They also feel that although they are presented with several alternate solutions (LNG as fuel, scrubbers, biofuels…), this is only a façade and their only true option today is MGO.

One feels, however, that in the midst of this debate centering on money, the real reason IMO implemented this regulation is being forgotten: health risks. There is a very interesting article onacidnews dated from June 2011 about actual figures of the consequences of pollutants from ships’ air emissions. Citing a research conducted by the Danish Centre of Energy, Environment and Health (CEEH), the article claims that air pollutant emissions in the year 2000 caused 49 500 premature deaths in Europe, and was responsible for health damages of around € 22 billion.

These numbers are not stated often enough, and really need to be pushed forward so that everyone understands the reasons behind the MARPOL Annex VI regulations.

However, these numbers must not obscure the difficulties shipowners will face in complying with the sulphur standards. Shipping companies facing financial difficulties in results of the regulations will most likely have to compensate elsewhere (i.e reducing trade routes, layoffs…).

Therefore, a neutral platform uniting all relevant stakeholders is now a necessity. Taking place October 18^th 2012 in Riga, this is exactly what MARPOL Annex VI Summit is promising to be.

Looking forward to seeing you in Riga!

Sincerely,

Thomas Igou, Project Manager, MARPOL Annex VI Summit 2012

Link to article: http://www.airclim.org/acidnews/2011/an2-11.php#twelve

Bridging the gap of knowledge among ECA shipowners

According to a poll we conducted with shipowners in Northern Europe, almost half of respondents feel there are discrepancies between EU Directives and IMO regulations on sulphur standards in Emission Control Areas for 2015. At the same time, a large majority of these same respondents feel they fully understand the EU Directives.

This shows a clear gap of knowledge among shipowners in regards to sulphur standards set by the EU. Recent communication from the European Union has been pretty clear that standards from the two institutions will be harmonized:

“In October 2008, MARPOL Annex VI was amended, introducing requirements for lower sulphur fuels globally, but also more stringent limits in the Emission Control Areas (ECAs). In order to ensure regulatory consistency, the relevant EU legislation will be aligned with the latest IMO requirements.”

This confusion, complemented with a lack of knowledge on scrubber technologies, LNG infrastructure, and available financial channels, is one of the center points of the upcoming MARPOL Annex VI Summit. Our aim is to provide a neutral platform for shipowners and all stakeholdersinvolved with Sulphur standards in ECA to help the shipping industry face a tough transitional period.

Link to European Commission Staff Working Paper:http://ec.europa.eu/environment/air/transport/pdf/ships/sec_2011_1052.pdf

Sincerely,

Thomas Igou, Project Manager, MARPOL Annex VI Summit

Welcome to MARPOL Annex VI Summit 2012

The shipping industry transports 90% of all goods in the world. No global company, regardless of sector, would be successful without the use of ships. Consequently, any major transformation of the maritime sector would cause a ripple effect, from the shipowners all the way down to the companies that manufacture those goods, and the customers who buy them.

In that regard, IMO regulations in Annex VI of MARPOL are increasingly important, if not crucial, to many key stakeholders. Taking effect January 1st, 2015, sulphur emission content will be restricted to 0.1% in ECA. This is an effort from IMO to make the maritime transport sector catch up with air and land sectors when it comes to lowering air emission’s negative impact on the environment.

Because of the vital importance of the maritime industry, we are proud to present the MARPOL Annex VI Summit, taking place May 9-11 2012 in Copenhagen. This first of its kind platform will bring together C-level executives from shipowner companies as well as all the major stakeholders to share their experience, knowledge and challenges in complying with IMO regulations in ECA. You will participate in an exciting program, complete with fascinating case studies, roundtable sessions designed around the most current developments, and interactive panel debates.

Key topics addressed on this year’s agenda:

• ·        • Scrubbers – Is there an infrastructure in place to handle the wastes produced? Will ports be regulated to handle the sludge or will it be an extra charged-for service?
• ·        • How will the increase in demand affect the price of Marine Gas Oil? Are European productions able to supply enough by 2015, or will they be forced to import at extra costs?
• ·        • LNG – Where are infrastructures developed and how will that affect trade routes? How will the industry assess the real costs once demand rises?
• ·        • How are current sulphur disputes resolved, and what parties are involved? What are the consequences if discrepancies rise with 0.1% standards?

At MARPOL Annex VI Summit, you will gain critical insight into all the possibilities for shipowners to meet IMO sulphur requirements in 2015. Our agenda is designed by our ECA Shipowners Committee, and complete with: experience of shipowners who have already turned to LNG as fuel or exhaust gas cleaning systems and their impending results; updates about LNG infrastructure development outside of Norway.

Most importantly, experts from gas producers, academic gurus and researchers, and bunker suppliers will analyze the future outlook of the heavy fuel oil, marine gas oil, and liquefied natural gas market. They will scrutinize the demand and supply reactions to the regulations, and the consequently affected prices these will bear on shipowners’ finances and their freight rates.

Do not miss this extraordinary opportunity to gain critical insights on regulations and the consequential impact it will have on the maritime sector in ECA. I look forward to welcoming you in Copenhagen, May 9-11!

Sincerely,

Thomas Igou, Project Manager, MARPOL Annex VI Summit

http://www.marpolsummit.org/

http://blogs.wsj.com/chinarealtime/2012/03/26/clean-up-effort-for-hong-kong-port-hits-rocks/tab/print/

26 March 2012

In 2010, Hong Kong’s government—long criticized by activists for failing to clean up the city’s iconic Victoria Harbor—was handed an extraordinary corporate gift. A group of 17 cruise and shipping lines volunteered to begin burning more environmentally friendly fuel when berthed in Hong Kong’s waterways, at no small expense to their shareholders.

Now, though, as the shipping industry reels from billion-dollar losses, the future of that agreement is on the rocks. The so-called “Fair Winds Charter” is slated to expire in December, and without more government support, say companies, prospects for its revival look murky.

This month, Hong Kong’s largest container ship operator, Orient Overseas International Limited, announced that its profits slid by 90% in 2011. Likewise, Maersk Line—the world’s biggest container shipping company—has announced that its profits have taken a hit, dropping by a third last year as well. Both companies are signatories to the Fair Winds Charter. The container shipping industry has been badly battered by high spikes in fuel prices and slowing trade volumes and is still struggling to recover from a $19 billion industry-wide loss in 2009.

Last month, in a bid to support the Fair Winds Charter, Hong Kong’s government announced that it would begin reducing port dues for shipping companies who make the switch to low-sulfur fuel at berth. Shipping companies, though, say that this subsidy would only offset about 40% of the costs involved in using the cleaner fuel.

Teddy Fung, managing director of Orient Overseas Container Line’s Hong Kong branch, said that the company will “certainly” continue its practice of burning cleaner fuel at berth after December. However, no other companies have publicly committed to doing the same.

When asked about whether Maersk would continue burning low-sulfur fuel after the Fair Winds Charter expires, Tim Smith, chief executive for North Asia at Maersk, said the company had not yet decided. He noted that last year alone, participation in the Fair Winds Charter cost Maersk over $1.7 million.

Similarly, Mr. Fung said that burning cleaner fuel cost OOCL about $1.5 million per year, or about $1,800 for every port call.

So far, what the Hong Kong government has offered isn’t enough to assure Mr. Smith that industry will stay on board when the charter runs out at the end of December.

“We’re worried that some carriers currently signed up [with the Fair Winds Charter] may say, well, ‘That’s not good enough,’” he said. “And they’ll pull out.”

Traditionally, ships at berth in Hong Kong have burned bunker fuel: the inky, viscous sludge left over from the crude oil refining process, which produces far more pollution when burned than fuels such as diesel. Though burning cleaner fuel may be more expensive, environmentalists say such costs are a bargain compared to the environmental toll of burning bunker fuel in proximity to Hong Kong’s densely populated shores. According to a 2007 study by University of Delaware professor James Corbett, pollution caused by the shipping industry kills an estimated 60,000 people a year globally. In the Pearl River Delta, home to the busy shipping lanes of Hong Kong, Shenzhen and Guangzhou, such figures are especially worrisome.

After all, Hong Kong is the third-busiest port in the world, with some 425,000 vessels streaming into the city’s waterways in 2010 alone. “There are no other areas that have this density of traffic, population, and weak regulation,” says Veronica Booth, senior project manager at local think tank Civic Exchange.

A University of Hong Kong study released in January (pdf) estimated that every year, some 3,200 people are killed by Hong Kong’s air pollution. When it comes to nitrogen dioxide pollution levels, among China’s 32 largest cities, Hong Kong’s are the country’s second-highest. Even limited exposure to heavy air pollution can trigger strokes, arrhythmia and heart failure.

Given the impact of shipping pollution, in recent years, governments in Europe and North America have begun requiring ships to burn cleaner fuels when entering their waters. Asia, though, remains a regulatory no-man’s land.

Though it might not be customary for industry to lead the fight for more government regulation, Mr. Smith says that in this case, it’s natural. “In the long run, industry knows that we have to switch to cleaner fuels,” he says. However, if the entire shipping industry was to stop using bunker fuels overnight, he says, the costs would run into the “billions” of dollars. “That’s why we’ve been asking the Hong Kong government for help. We’re looking for a road map,” he says. Specifically, Mr. Smith says he would like to see Hong Kong’s government introduce regulations that would require all industry players to switch to cleaner fuels – not just those currently signed onto the charter. “It’s not a level playing field at the moment,” he says.

Currently, even with the Fair Winds Charter in place, Hong Kong University of Science and Technology’s Dr. Simon Ng — who closely monitors shipping pollution — notes that only 10% of ships making port calls in Hong Kong are currently switching to cleaner fuels while at berth. Larger entities that aren’t presently participating in the Fair Winds Charter include companies such as the Mediterranean Shipping Company, “K” Line Logistics and China Shipping.

“It’s going to take one step at a time,” says Dr. Ng. “The shipping industry’s been badly hit by the economy. And for them to switch [fuels] is going to cost a lot.”

– Te-Ping Chen. Follow her on Twitter @tepingchen

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