Shippers Cite Barriers to Low-Sulfur Fuel Use in Hong Kong

Tuesday January 15, 2013

The cost of shifting to low-sulfur fuel is a factor in the low participation of Hong Kong's government initiative to promote fuel-switching at its port, South China Morning Post reports.

As part of efforts to reduce air pollution, since September 2012 the city-state's government has offerd rebates for ships that use low-sulfur fuel during their port calls there, but the payments are said not to be enough to compensate for using the more expensive fuel.

The report said only 13 percent of the ocean going vessels calling in Hong Kong have registered for the Environmental Protection Department (EPD) scheme.

"There is a significant financial commitment to switching fuel," said Roberto Giannetta of the Hong Kong Liner Shipping Association.

A spokeswoman for Evergreen Marine said just one of its container ships was registered because of "cost saving considerations."

Fair Winds Charter

More than 560 ships participate in the low-sulfur program launched in September, and about 18 shipping lines are part of the Fair Winds Charter, which requires them to use low-sulfur fuel "to the maximum extent possible" over a two-year period starting at the beginning of 2011.

Some shippers, including APL and Hanjin Shipping, have signed the Fair Winds Charter but have not yet registered any ships with the EPD incentive scheme.

Giannetta said some carriers also have non-financial reasons for not taking part in the program.

"I know one prominent carrier who is switching fuel in Hong Kong, but does so quietly without joining the charter or the government scheme because if they do so here in Hong Kong, they would face tremendous pressure in their home country to do the same," he said.

"Yet there are specific reasons why they don't want to do that at home."

Shipping lines that participate in the low-sulfur programs have called for the Hong Kong and Guangdong, China governments to make use of low-sulfur fuel mandatory.

Maersk Line recently said it would stop using low-sulfur bunkers in Hong Kong unless the government regulates its use to stop shippers who don't switch getting a cost advantage.