[Stakeholder Workshop Summary Report] Greening the Global Supply Chain:Exploring partnerships to reduce marine emissions in the PRD

Building on stakeholder communities created in previous Green Harbours work,1 Civic Exchange has continued to engage the government as well as the ship, cargo and port sectors to discuss ways to reduce emissions from ships in Hong Kong and the Pearl River Delta region.

On 17 June 2010, 35 participants from these sectors came together to discuss voluntary measures to do this. The workshop’s major outcome is that major shipping lines verbally committed to draft a voluntary agreement that ships use distillate fuel while at berth in Hong Kong waters (distillate fuel is substantially less polluting than typical marine bunker fuels). The shipping lines are willing to do this with the expectation that the Hong Kong SAR Government introduce legislation making this switch mandatory within two years. One shipping line has agreed to lead this initiative with the target of announcing it, with other participating shipping lines, later this year. Other stakeholders, such as shippers and ports, can support this initiative by offering preferential treatment to those companies participating in the fuel switch.

This initiative is an important first step in reducing the marine sector’s contribution to Hong Kong’s air pollution. However, the gains made from this initiative must be extended throughout the Pearl River Delta region through continued cooperation amongst the government and private sector stakeholders. The relevant Hong Kong government departments must continue to communicate effectively with their counterparts in Guangdong to pave the way for coordinated policy addressing emissions from these sources.

Any regulation, as well as the voluntary fuel switch, must be in line with international regulation (in this case following the EU model) to ease operations for compliant shipping lines.

The discussions also covered diverse topics including:
Regulation: Regulation remains the most effective way to reduce emissions from these sources. The private sector prefers regulation, as it ensures that all competitors face the same costs. All ports in the PRD must have the same regulation to ensure equal competition.

Competition & Cost: In such a competitive industry with tight margins, any increase in cost is examined closely. However, cargo shippers are willing to accept some increase in cost, as this cost is ultimately passed on to the end consumer. Larger shipping companies may have less difficulty in absorbing these costs than smaller shipping lines.

Fuel Supply: With an adequate supply, as demand for cleaner fuel increases, its price will decrease. Currently, there is an inadequate supply of cleaner fuel in the PRD. Fuel suppliers would need notification of any increase in demand in order to produce sufficient distillate fuel. Switching to cleaner fuels is the most effective way of reducing emissions from ships. 

Recognition: Recognition programmes are powerful drivers for improvement. A green labeling programme through which ships are publicly recognized for participating in greener practices is motivation for ships to comply with such programmes.