Reducing Vessel Emissions:Science, Policy and Engagement in the Hong Kong-Pearl River Delta RegionApril 2012

Veronica BoothChistine Loh

About Civic Exchange Civic Exchange is a Hong Kong-based non-profit public policy think tank that was established in October 2000. It is an independent organisation that has access to policy-makers, officials, businesses, media and NGOs - reaching across sectors and borders. Civic Exchange has solid research experience in areas such as air quality, energy, urban planning, climate change, conservation, water, governance, political development, equal opportunities, poverty and gender. For more information about Civic Exchange, visit: www.civic-exchange.org.

About the Authors Veronica Booth is senior project manager at Civic Exchange. Since joining in 2003, she has directed high-profile multi-stakeholder projects and worked on a host of issues ranging from sustainable urban development, air pollution its public health effects, and political reform and development in Hong Kong. From 2007, Booth has been the principal investigator of Civic Exchange’s Green Harbours project. Through this she convened the shipping industry to draft the Fair Winds Charter. She holds a BA in psychology from Huron University College at the University of Western Ontario, and an MA in political science from Wilfrid Laurier University. Dr Christine Loh, JP, OBE, is the cofounder and CEO of the independent, nonprofit public policy think tank, Civic Exchange. Loh is a lawyer by training, a former commodities trader, and ex-legislator before founding Civic Exchange in 2000. She has a long track record working on and writing about environmental, energy, climate change issues, and is a published author on other subjects. Having held senior positions in international business, with a decade-long career in front-line politics, and having been involved in non-government organisations from a young age, Loh is able to weave her multifaceted experience into her policy work to great effect. She is a board member of the Hong Kong Mercantile Exchange, First Pacific Company, and Thomson Reuters Founders Share Company.

Preface & Acknowledgements Research shows that emissions from ships and port activity are a significant source of pollution in Hong Kong that directly affects some 3.8 million people. In 2007, Civic Exchange invited stakeholders in this sector to come together to discuss what they could do to reduce emissions and what challenges they face. Since then, we have worked with many parties, including government officials, to explore ways to reduce emissions. In 2010, the shipping sector agreed to voluntary fuel switching while their ships were at berth in Hong Kong. This gave birth to the Fair Winds Charter, a two-year commitment starting on 1 January 2011. Meanwhile, the HKSAR Government is considering regulation, which will create a new level playing field for shipping, and which the sector welcomes. Civic Exchange believes the Fair Winds Charter represents an excellent example of public-private partnership, which we hope can be sustained in the long-term. This report describes the journey from research to stakeholder engagement to collaborative action and new policy-making that led to the creation of the Fair Winds Charter. I am grateful to the team at Civic Exchange who has worked so hard on research and rallying stakeholders together. In particular, I want to thank Veronica Booth, Simon Ng, Mike Kilburn and Lynne Curry. I also want to thank the wider Civic Exchange team who had made significant contributions over the past years – Marcos Van Rafelghem, Caitlin Gall and Rob Modini for their research. Thank you too to Matthew Booth for giving the Charter its poetic name. Our work would not have been possible without the support of many others – we relied on the scientific research of good partners at the Hong Kong University of Science and Technology – in particular Professor Alexis Lau and his team – and the public health research experts at the University of Hong Kong – Professors CM Wong and Hak-kan Lai, and the Chinese University of Hong Kong – Professor TW Wong and his team. We also worked closely with officers at the Hong Kong Environmental Protection Department and the Marine Department, whose involvement was critical to a successful outcome. We would like to extend our thanks to the many stakeholders from industry who stuck with us over the years, gave their time, and shared their knowledge. In particular, a big thank you to Arthur Bowring of the Hong Kong Shipowners’ Association, Roberto Gianetta of the Hong Kong Liner Shipping Association and the great teams at OOCL and at Maersk. We are also grateful to the US Consulates General in Hong Kong and Guangzhou for the interest they took, and for helping us to learn from US experience. Finally, Civic Exchange could not have done this work without generous support from our funders. Special thanks to the Millepede Foundation for their vision in funding this work for the first three years, and Frederick and Marcy Long for dedicating funds to support the latter stages of this process. Critical contributions in cash and in-kind to cover research and seminar expenses also came from the Environment and Conservation Fund, Rockefeller Brothers Fund, ADM Capital Foundation, Fu Tak Iam Foundation, Royal Hong Kong Yacht Club, Maersk Line, TCC Group, Morgan Stanley, PricewaterhouseCoopers, US Consulate General in Hong Kong, European Chamber of Commerce in Hong Kong, and the European Union Business Information Programme Hong Kong and Macau. Christine Loh Chief Executive Officer April 2012

Table of Contents

Summary ............................................................................................ 1 1. Introduction ................................................................................. 2

1.1 Public health-led drive for pollution reduction

1.2 International experience & trends

1.3 Marine and port emissions in Hong Kong and the Pearl River Delta

1.4 Public-private sector collaboration

2. Science, Engagement and Policy: Making change happen ........... 5

2.1 Science: Research to increase insight

2.2 Stakeholder Engagement: Enabling relationship-building

2.2.1 Reframing the discussion 2.2.2 The Fair Winds Charter

2.3 Policy: Outcome of science and engagement

2.3.1 A policy journey from 2008-2011 3. Conclusion .................................................................................... 14 Endnotes ........................................................................................... 15

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Summary It is internationally accepted that shipping emissions need to be tightly regulated to protect public health. Various types of port-related equipment and activities, such as cargo handling machinery and trucking goods to and from ports, also generate pollution. In Asia, the shipping and port management stakeholders in Hong Kong have been most active in working with local authorities to define a path towards tighter regulation. This report details Hong Kong’s progress in reducing emissions from ocean-going vessels. This has come about as a result of several years of combined research into the health and environmental impacts from shipping and port-related activities and public-private-NGO sector collaboration to identify and implement appropriate control strategies. It provides an example of using atmospheric and public health research as a tool to engage stakeholders throughout the Pearl River Delta, a region with a common airshed, but different legal and administrative practices. This report explains the importance of stakeholder engagement in increasing policy understanding and acceptance, the value of data and cross-disciplinary research in air quality and public health for developing a compelling case for policy change; and how the science and stakeholder engagement stimulated regulatory change.

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1 Introduction 1.1 Public health-led drive for pollution

reduction Ship and port activities are a major source of local air pollution…

Ships and port activities generate substantial air pollution. For more than 70% of voyage time, vessels are within 400 km from the shore, which is close enough to affect the air quality of coastal and river communities, as ships’ emissions disperse widely. While the time spent at port is only a small proportion of the whole voyage, this is where emissions from ships are most concentrated - and most harmful to human health.

…and leading ports are cleaning up to protect public health.

It is internationally accepted that shipping emissions need to be tightly regulated to protect public health. Various types of port-related activities, such as cargo handling machinery and transporting goods, both within and to and from ports, also generate pollution. There is a clear trend starting in Europe and North America for shipping and port activities to reduce emissions. In Asia, the shipping and port management stakeholders in Hong Kong have been most active in working with local authorities to define a path towards tighter regulation. Hong Kong and the authorities of neighboring Guangdong Province have also begun to exchange views on regulating shipping emissions throughout the waters of the Pearl River Delta, which holds three of the world’s ten busiest container ports.

Policy change through research and multi-stakeholder dialogue

Hong Kong’s leadership came about as a result of several years of public-private-NGO sector collaboration - using scientific and public health research and continuous engagement of key stakeholders as a tool to seek solutions to reverse the health and environmental impacts from shipping and port-related activities. These have resulted in measurable policy change.

1.2 International experience & trends

Large ocean going vessels (OGVs) are major contributors to air pollution in port cities worldwide. Pollution arises from burning fuel in ships’ main and auxiliary engines, as well as in boilers that generate heat and steam. Emissions from ships and various port operations are harmful to the health of those who work and live within the reach of those emissions.1

International regulation is tightening through the IMO

The International Maritime Organization (IMO) regulates international shipping. Annex VI to the International Convention for the Prevention of Pollution from Ships (MARPOL VI) caps shipping emissions. The current sulphur content cap on bunker fuel is 3.5%. This will be tightened to 0.5% by January 2020, pending a study in 2018 on fuel availability. The nitrogen oxides (NOx) limit is based on engine speed and when a ship was built. For ships built between 2011 and 2015, the cap is 15% to 21% lower than ships built earlier, and from 2016, the reduction will be 80% less for ships sailing in special IMO-designed emissions control areas (ECAs). Furthermore, ships entering ECAs must use fuel with maximum 1% sulphur, and this limit will be further tightened to 0.1% from January 2015.

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ECAs restrict air emissions further

The currently functioning ECAs cover the Baltic Sea, North Sea and English Channel in Europe. The North American ECA coming into force in August 2012 will cover 200 nautical miles from American and Canadian shores and will be extended to the waters around Puerto Rico and US Virgin Islands in 2014.

Public health savings & premature deaths avoided from reduced vessel emissions significant

Experts estimate that annual environmental and public health savings that could be gained from tighter regulation of vessel emissions in the North Sea-Baltic Sea-English Channel area are €8-16 billion in 2015 and €10-23 billion in 2020 at a cost of €0.6 to €3.7 billion and €0.9 to 4.6 billion in 2015 and 2020 respectively.2 The US Environmental Protection Agency estimated the creation of the North American ECA would prevent an estimated 12,000 to 31,000 premature deaths and 1.4 million lost workdays, and as a result would generate annual health benefits in 2030 of US$110 to 270 billion, nearly 90 times the project cost of US$ 3.1 billion to achieve those results.3

€

Regional regulations further tighten regulation

Regional governments have gone further than ECA limits. Ships calling at EU ports must already use 0.1% sulphur fuel (or use equivalent technology to meet this standard). In California, similar regulation exists. Port authorities, notably Long Beach and Los Angeles, have also promoted a variety of environmental practices since 2005 for the San Pedro Bay area, the comprehensiveness of which was particularly noteworthy for other ports.

Emission mitigation measures for shipping emissions include switching to cleaner fuel at sea before entering the port area, reducing speed while approaching the port, switching fuel at berth, plugging into electric power when at berth, and adding scrubbers on ship funnels to reduce emissions.

1.3 Marine and port emissions in Hong Kong and the Pearl River Delta (PRD)

Dirty fuel, dense population, proximity of people to the emission source and high vessel traffic add up to a big public health risk

While the Hong Kong and PRD region covers only 40,000km2, it has a population of 48 million people and is one of the world’s most active economic hubs for manufacturing, logistics, commerce and finance. Worldwide, the ports of Hong Kong, Shenzhen and Guangzhou are among the busiest. They rank within the top ten container ports in the world in terms of throughput, handling over 10% of global container traffic amounting to 50 million TEUs* annually.4

These ports are situated near dense population centers.

* A unit to measure containers: twenty-foot container equivalent unit

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Unregulated shipping industry has seen increase in emissions while other sources have decreased through regulation

Hong Kong illustrates well the public health risks. Approximately 23,000 container vessels call each year in addition to 13,000 other types of OGVs, such as tankers, cruise ships and bulk carriers.5 Emissions from vessels have not been regulated with the same rigor as power plants and land-based vehicles, but as land-based emissions have dropped, those from marine sources have steadily increased along with vessel traffic and port activity.6 Hong Kong’s container terminals are in densely populated areas. Proximity to the source is an important factor as the emissions do not disperse before they are breathed in, which further magnifies their health impact. Research also shows that using fuels with lower sulphur content would lessen the detrimental public health impact.7

Potential for public health gains are large

Thus, with the population density, size of the fleet calling at the PRD ports, source proximity to the public and lower grades of fuel used, a substantial public health benefit could be achieved if vessels reduced their emissions in this region.

1.4 Public-private sector collaboration Looking at international best practice helped shape “green harbours” vision for PRD ports

Hong Kong’s journey in driving policy change begun with research showing residual oil combustion from marine vessels around the container terminals at Kwai Chung was very significant, possibly putting a very large number of residents at risk.8 The science stimulated research on how other ports around the world were regulating shipping emissions that Hong Kong could learn from. This led to the development of a “Green Harbours” vision for not only Hong Kong but also neighbouring Shenzhen. This provided opportunities to engage the ship owners, ship liners and terminal operators to join the discussion.9

From 2008, Civic Exchange designed and led many rounds of stakeholder engagements in order to sustain dialogue.

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Science, Engagement and Policy: Making change happen

Three major areas of work came together to push forward the “Green

Harbors” vision of regulating emissions from vessels: science, stakeholder engagement, and policy development. This section highlights, firstly, the research conducted in Hong Kong related to shipping emissions; secondly, the importance of stakeholder engagement in creating a framework for scientists and experts from other disciplines to work together so that cross-disciplinary understanding is increased; and lastly, how the research and stakeholder engagement stimulated regulatory change.

2.1 Science: Research to increase insight Scientists know that Hong Kong people are affected by ship emissions

A study on toxic air pollutants in Hong Kong using 2000 to 2002 data, commissioned by the Hong Kong Environmental Protection Department, estimated that over 3.8 million residents were directly affected by emissions from the container port.10

The study also noted the levels of sulphur dioxide (SO2) were strongly associated with hospital admissions and deaths. The research used chemical speciated data to identify sources of SO2 in Hong Kong so as to better understand the role of marine SO2 sources, and the spatial and temporal extent of these emissions. In addition to using the Hong Kong government’s real time hourly SO2 data and its 24-hour high volume-filter-based sampling of particulate matter once every six days for the years 2000 to 2002, hourly wind speed and direction measurements and census data were also used to gain a comprehensive assessment of the dispersion effect of marine emissions in order to arrive at the likely number of affected residents.

The number of people affected by marine emissions is very much higher than assumed. A less technical summary of the 2004 report was prepared by the scientific research team together with Civic Exchange so that the public interest implications could be more widely shared and discussed.11 As the number of vessels using the Hong Kong port was increasing, there was obviously a need to address marine emissions since even moderate reductions in ambient SO2 levels could lead to reductions in negative health impacts.12

Locally-produced emissions are a real problem in Hong Kong, and reducing ship emissions would ease this

Using data in 2006, researchers considered what policy-relevant insights could be learned from using the total emissions method, source apportionment method and time-based apportionment method to measure air emissions affecting Hong Kong, which included pollution sources located in the PRD. The finding showed that Hong Kong’s own sources were dominant 53% of the time (on 192 days) while regional sources were dominant 36% of the time (132 days), with 41 low pollution days. The research also showed that 33% of the time, vehicular sources and marine sources were dominant with much of those from locally-based sources.13 In light of the fact that the average concentrations for most pollutants in Hong Kong are higher during winter than summer,14 as a consequence of seasonable wind flow patterns, the 2007 findings indicate that by controlling locally-based sources, including marine

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emissions, there would be significant benefits for Hong Kong, and the benefits would be especially significant in spring and summer.

HKEPD commissioned ground-breaking vessel emissions inventory to understand scope of these pollutants

The latest research, commissioned by HKEPD in 2008, created a marine emissions inventory to assess with greater certainty the extent of emissions from ships. Researchers devised an innovative methodology to measure SO2, NOx, PM10, VOC and CO emissions from vessels.15

Traditional marine source inventories use a fuel-based approach, which uses fuel grade and consumption to calculate vessel emissions. Researchers used an activity-based approach, which gathers data from the main engine, auxiliary engine, and auxiliary boiler, speed and other relevant operational data, as well as fuel data to gain a more nuanced picture to better reflects actual emissions output. Operation modes include fairway cruise, slow cruise, manoeuvring, and hotelling (stopped at berth).

These findings give a clear idea where emission mitigation policies should be focused

Previous studies noted above already pointed to shipping emissions affecting 3.8 million people in Hong Kong alone. This latest research, to establish an inventory for shipping emissions showed that container vessels emitted about 80% of all vessel emissions measured. Cruise ships were responsible for about 10% of all types of pollutants from OGVs (Figure 1).

Figure 1: Total emissions from ocean-going vessels, river vessels and local vessels (Ng et al. 2011)

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The main engine and auxiliary engines accounted for about 40% and 38% of SO2 emissions, 55% and 42% of NOx, and 40% of PM10. The auxiliary boiler emitted 22% of SO2 and 9% of PM10 emissions. Operation mode is important as well, where manoeuvring accounted for very few emissions, reflecting the limited operations time in this mode, while emissions at berth are significant (Figure 2).16

Figure 2: OGV emission by equipment (Ng et al 2011)

The inventory further demonstrates where and when OGVs emit the heaviest emissions while ships are in Hong Kong waters, either to berth and/or sail into PRD waters. The spatial maps show the large amounts of emissions at the container terminals and in “emissions corridors” (Figure 3). The proximity between the emissions and where people live and work is obvious, and this clarity will enable the HKEPD to chart evidence-based policies to protect public health.

Figure 3: SO2 Emission from Marine Sources (Ng et al. 2011)

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2.2 Stakeholder Engagement: Enabling relationship-building

Stakeholder engagement is an organized process designed to engage affected

parties. A key principle of stakeholder engagement is that stakeholders have an opportunity to influence the outcome of decision-making. Engagement that points towards regulatory change usually needs to be broad and inclusive, as many parties are involved. Stitching many parties together in continuing dialogue requires relationship-building over time because the dialogue often involves financial consequences and substantial change to operations. Resolving these complex issues often requires parties to take a long-term view.

Industry engaged to discuss cleaning up operations through voluntary means & regulation

Relationships of trust had already existed between Hong Kong’s air quality scientists, environmental officials, public health researchers and public policy experts through years of conducting various research projects, some of which were funded by HKEPD and some by non-profit foundations. The body of work that emerged pointed to the need to engage the commercial stakeholders since emissions reduction can only be achieved when emitters taking action through voluntary efforts in the short-term and government regulation in the longer-term, and also to engage stakeholders in the PRD.

In 2008, Civic Exchange brought together for the first time stakeholder representatives from ship owners, ship liners, container terminal operators in Hong Kong and the PRD, operators of cross-boundary barges, tugs and hydrofoils, local ferries operators, fuel suppliers, cross-border trucking operators and cargo owners to exchange views with government officials and scientists on the health impacts of shipping emissions and opportunities to reduce emissions first on a voluntary basis and eventually through regulation.17 Since then, Civic Exchange has held one major conference, three cross-sector workshops, and arranged over 80 smaller events (meetings, consultations and presentations) to promote reducing emissions from ship and port activities in Hong Kong and the PRD.18

2.2.1 Reframing the discussion

Understanding of public health risks & tighter international regulatory trends are key drivers for industry

It became clear through several rounds of deliberation and dialogue that there was no in-principle resistance to cleaning-up not only shipping emissions but also land-based port-related emissions, especially after the public health risks were better understood. Many of the larger stakeholder companies operated global businesses and were aware of trends and regulatory change in Europe and North America. Some of the container terminals operators had already started to make small changes for environmental reasons, such as using cleaner fuels or switching to electrification to drive land-based equipment. Moreover, cargo owners were keen to see emissions reductions, especially if CO2 could be included, as lowering their environmental footprint, would help to improve their corporate social responsibility.

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Ships calling at ports with tighter regulations already have the fuel, and the know-how, on-board when calling at HK-PRD ports

Since OGVs contributed the largest portion of port and shipping-related emissions, it made sense to focus first on persuading ship owners, ship liners and cruise ships to consider voluntary action. Their key desire was the establishment of a regulated “level playing field” so that all ships would have to follow the same rules and bear the same costs. Since many of the ship owners and ship liners were international operators they were already switching fuel in European and Californian ports. They could do the same if required in Hong Kong. Shipping companies sailing within Asia had less experience, however, since Asian ports have yet to tighten regulations.

Dedication from industry leaders was a watershed moment to push voluntary action ahead

Hong Kong officials were in favor of voluntary action since regulatory change takes time. Internal debate within the administration considered whether regulation (and the attendant costs) in Hong Kong alone would disadvantage Hong Kong vis-à-vis the competing PRD ports. The breakthrough came in May 2010 when the largest ship liner, Maersk Line, was willing to champion the idea that ship liners and owners could create a “virtual level playing field” if enough of them could agree to switch voluntarily to a cleaner fuel at berth. From their experience in Europe and North America, Maersk Line was able to calculate the additional cost of using a cleaner fuel, and justified its decision to switch on the basis of good corporate citizenship.

At a June 2010 stakeholder engagement workshop, the idea was floated and met with a generally positive reception, but the industry remained eager for the Hong Kong government to introduce a mandatory switch at berth as soon as practical so that a true new “level playing field” could be created. A HKEPD official expressed cautious optimism that if the shipping lines would voluntarily switch to using cleaner fuel, the Hong Kong government could aim to introduce legislation that would make such a switch mandatory. In addition, in a meeting with shipping industry representatives, researchers presented the preliminary findings of the inventory to industry, which gave them a clearer picture of the extent of emissions from shipping in Hong Kong. These two elements allowed discussion to proceed.

2.2.2 The Fair Winds Charter The Fair Winds Charter is the first agreement of its kind

Over the next few weeks, a number of complicating issues emerged. These included the difficulties of obtaining 0.1% sulphur fuel in Asia, and the unwillingness of the Hong Kong government to offer incentives to help shipping companies offset the higher cost of using cleaner fuel. In October 2010, 18 container, passenger and specialist shipping companies, representing some 80% of all OGVs calling at Hong Kong, signed the two-year long Fair Winds Charter (the Charter) (Figure 4). Beginning on 1 January 2011 signatories could use fuel up to 0.5% sulphur as this was more widely available in Asia.

The Charter calls on regional governments to regulate the shipping sector quickly

At a special ceremony organised during Maritime Awareness Week, the Director of Marine presented commemorative awards to the signatories for creating the world’s first such agreement, where the costs are born entirely by the industry. Significantly, the Charter also calls upon the Hong Kong government to work with the Guangdong authorities to introduce legislation requiring all vessels to use low sulphur fuels throughout the Pearl River Delta region by the time the Charter expires.

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Figure 4: Fair Winds Charter

Charter participation rates are unknown…

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 sulphur 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.

…but improvements in port-area air quality have been measured

Regular bunker fuel has a sulphur content of 2.7% to 3.5%. By requiring fuel of 0.5% sulphur contet or better The Charter has the potential to cut at-berth emissions from participating vessels by 80% or more. Some of the signatories have been willing to provide data to HKEPD for the creation of a revised shipping emissions inventory. Since at-berth emissions account for some 40% of total emissions from OGVs in Hong Kong, and considering the close proximity of the communities of Tsuen Wan, Tsing Yi, Kwai Chung, Kwai Fong and Cheung Sha Wan to the port, a significant health dividend is expected, especially in these communities.

While data is not currently available on the extent to which this has caused an actual reduction in emissions and concentrations of SO2 around the port, the fact that a highly competitive industry has come together to reduce their emissions is directly attributable to the effectiveness of multi-stakeholder engagement. In addition, the willingness of industry leaders to voluntarily reduce their emissions has encouraged the Hong Kong government to consider how to regulate and cooperate with its counterparts in other jurisdictions in the PRD.

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2.3 Policy: Outcome of science and engagement

International best practice provided a direction for HK-PRD

In parallel with the scientific research and stakeholder engagement, policy research was also conducted on how shipping emissions were regulated internationally and what marine emissions reduction initiatives were being undertaken around the world relevant to Hong Kong.19 The comprehensiveness of the San Pedro Bay Ports Clean Air Action Plan provided a useful guide for the science, health and policy researchers in Hong Kong to exchange views.20

Overseas the perspectives and actions were fed into the engagement process to enrich deliberation on the types of voluntary action the commercial stakeholders could take and also how the authorities may regulate in the future.

Coordinated regulation a must to maintain level playing field across HK-PRD

Despite being ‘one country’, Hong Kong and the PRD operate under ‘two systems’ in terms of air quality objectives, law and administrative practice. There was also a sense among some Hong Kong officials that tighter emissions regulations and greater costs, might cause shipping companies to shift more of their business to the PRD thus compromising Hong Kong’s competitiveness. It would make more sense if Hong Kong waters, as well as waters of the PRD would adopt the same shipping emissions rules but this was initially thought to be too hard to achieve. Moreover, for an ECA to be declared for the whole of Hong Kong-PRD waters, the Central People’s Government would need both to consent to the change and to make the application for an ECA to the IMO.

Over the course of a few years, the combination of evidence-based science and successful stakeholder dialogue helped to open and sustain policy exploration on regulating shipping emissions for the waters and the PRD.

2.3.1 A policy journey from 2008-2011

The scientific results of various research projects noted above, the advocacy by interested parties that policy focus was needed on reducing shipping and ports-related emissions, and the on-going stakeholder engagement has been taken into account at China’s national policy-making level.

Guangdong-Hong Kong-Macau move to more coordinated policy goals…

In December 2008, the Central People’s Government’s National Reform & Development Commission (NDRC) announced the Outline of the Plan for the Reform and Development of the Pearl River Delta (2008-2020). This document sets a broad strategic direction for the development of the PRD. It includes extensive discussion on environmental protection, including improving air quality management with respect to ships and ports. It predicts an increase in the need for cargo handling capacity for PRD ports, raises the importance of modernizing the PRD’s waterway network, and also the need for developing the PRD and Hong Kong ports in a complementary way.21

…which includes tighter standards for vessel emissions…

This provided a positive opening for region-wide consultation. In September 2009, a consultant appointed by the Guangdong, Hong Kong and Macao governments raised the idea that Hong Kong, Macau and the coastal counties of the PRD should be developed as a “Green and Quality Living Environment”, with greater emphasis placed on quality of life in planning future development. In 2010, The Framework Agreement on Hong Kong-Guangdong

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Co-operation was published,22

which included a specific reference to tightening fuel and emissions standards:

“Guangdong and Hong Kong will progressively adopt…fuel and emission standards for…vessels that are higher than other places in the Mainland”.

….including the possibility of an ECA…

In January 2011, the Hong Kong, Macau and Guangdong authorities had made the Bay Area the subject for a specific consultation: Study on the Action Plan for the Bay Area of the Pearl River Estuary Public Consultation Digest.23

This consultation took the issue of controlling air pollution from marine sources a step further:

“Action 8: To cooperate in cross-boundary environmental protection Undertake joint management of the regional atmospheric environment … Consideration should also be given to jointly applying for the establishment of “emission control areas” in the marine part of the Bay Area in order to set out the objectives, restrictions and standards regarding emissions from marine vessels.”

All these occasions provided consultative opportunities for interested parties

to show support. Civic Exchange responded positively to each of them, and also took on the role of informing the stakeholders, as well as rallying them and others to show support. The January 2011 Action Plan was the most important because it was the first time that the authorities had jointly, and formally, acknowledged the possibility of introducing an ECA to the PRD. Civic Exchange also secured a commitment from the Planning Department to involve the business and shipping communities in any further consultations. As a result the British, American, Swedish and Norwegian Chambers of Commerce and the Hong Kong Shipowners Association made submissions.

…and specific declarations of policy intent for ships and port activity…

On 1 September 2011, the Environment Bureau, together with the Guangdong Province Housing and Urban-Rural Development Department and the Secretariat for Transport and Public Works, Macao SAR Government, launched a new consultation study, the Regional Cooperation Plan on Building a Quality Living Area.24

This is the first document that lists out possible regulation in specific terms:

“(d) Exploring opportunities in controlling air pollutant emissions from vessels in the Greater PRD waters

(i) conducting a joint basic study on controlling air pollution from vessels in the Greater PRD waters by the three sides, including compilation of an emissions inventory on vessels in the Greater PRD waters; and

(ii) formulating cooperation plans on controlling air pollutant emissions from vessels.

Initial cooperation proposals include:

jointly formulating emissions reduction targets for vessels and their fuel standards with a view to further strengthening control of vessel emissions;

restricting emissions from vessels, including NOx emissions from new vessels which should be in line with the latest development of the engine manufacturing and ship building industries as well as the shipping sector;

examining measures to encourage vehicles entering the port areas to use cleaner fuels with a view to reducing air pollutant emissions in their vicinity;

exploring the possibility of using cleaner energy by providing onshore power supply to cruise vessels and ocean-going vessels berthing at the Greater PRD ports;

considering requiring ocean-going vessels at berth and at anchorage at the Greater PRD ports to use low sulphur fuel or onshore power; and

studying and exploring the establishment of an “Emission Control Area” in Greater PRD waters.”

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…culminating with an announcement in the Hong Kong Policy Address to tackle vessel emissions…

Building on this, in the 12 October 2012 Policy Address,25

“We will explore with the governments of Guangdong, Shenzhen and Macao proposals for requiring ocean-going vessels to switch to low-sulphur diesel while berthing in Pearl River Delta (PRD) waters, and setting up an Emission Control Area in PRD waters. We will also study, in collaboration with the relevant trades, ways to improve the quality of vessel fuels sold locally to reduce vessel emissions.”

Hong Kong’s Chief Executive made the following statement:

…which are moving towards regulation, and being supported by a subsidy for cleaner vessels at berth.

Following this, the HKEPD submitted a series of proposals on reducing emissions from vessels to the Panel on Environmental Affairs in Hong Kong’s Legislative Council.26 No objections to exploring these proposals were raised during the meeting. This sets the EPD on the path to proposing regulation in the foreseeable future. In addition, the Financial Secretary announced a subsidy of $260 million in the form of reduced harbor and light fees over three years for ships that switch to 0.5% sulphur fuel or cleaner.27

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3 Conclusion Protecting public health is the primary reason to reduce emissions from ships. Data is critical to understanding this & forming good policy

Public health protection is the principal driver for change in reducing port and shipping emissions. Research is critical to identifying where and how policy should be implemented to reduce vessel emissions with maximum public health benefits. Collection of data should be an on-going activity to enable policymakers to track results of various initiatives. The data also provide the backdrop against which stakeholders can continue discussion about further efforts to reduce emissions. The Fair Winds Charter is a good example of public-private-NGO sector collaboration that can create the framework for future legislation covering emissions throughout the PRD. Upcoming scientific research attributing specific health impacts to portside communities will provide officials with the data to support the development of regulation. These might include measures to reduce steaming speeds close to the port, wider use of at-berth fuel switching, and perhaps most effectively a PRD-wide low emissions zone or ECA. This process is being watched worldwide since a number of the world’s major ports are located in the PRD and the outcomes affect not only the residents of the region but also the shipping and port management industries (many of which are global businesses) and cargo owners who have an interest in reducing the environmental footprint of their goods.

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Endnotes 1. Corbett, J.J., Winebrake, J.J., Green, E.H., Kasibhatla, P.,

Eyring, V., Lauer, A., 2007. Mortality from ship emissions: A global assessment. Environmental Science & Technology 41, 8512-8518.

2. Bosch, P., Coenen, P., Fridell, E., Åström, S., Palmer, T., Holland. M., 2009. Cost Benefit Analysis to Support the Impact Assessment accompanying the revision of Directive 1999/32/EC on the Sulphur Content of certain Liquid Fuels, http://ec.europa.eu/environment/air/transport/pdf/CBA_of_S.pdf.

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7. Hedley, A.J., Wong, C.M., Thach, T.Q., Ma, S.L.S., Lam, T.H., Anderson, H.R., 2002. Cardiorespiratory and all-cause mortality after restrictions on sulphur content of fuel in Hong Kong: An intervention study. Lancet, 360, 1646-1652.

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9. Galbraith, V., Curry, L., Loh, C. 2008. Green harbours: Hong Kong & Shenzhen – reducing marine and port-related emissions. Civic Exchange, Hong Kong, http://www.civic-exchange.org/eng/upload/files/200806_Gports.pdf.

10. Lau et al., 2004. 11. Lau, K.H., Wu, W.M., Fung, J.C.H., Henry, R.C., Barron, B.,

2005. Significant marine source of SO2 levels in Hong Kong. Civic Exchange, Hong Kong, http://www.civic-exchange.org/eng/upload/files/200506_MarineSourceSO2.pdf.

12. Hedley et al. 2002 13. Lau, A., Lo, A., Gray, J., Yuan, Z., Loh, C., 2007 Relative

significance of local vs. regional sources: Hong Kong’s air pollution. Civic Exchange, Hong Kong, http://www.civic-exchange.org/wp/wp-content/uploads/2011/01/200703_HKAirPollution.pdf.

14. Yuan, Z.B., Lau, A.K.H., Zhang, H.Y., Yu,J.Z., Louie, P.K.K., and Fung, J.C.H., 2006. Identification and spatiotemporal variations of dominant PM10 sources over Hong Kong. Atmospheric Environment 40, 1803-1815.

15. Ng, K.W.S., Lin, C., Chan, J.W.M., Yip, A.C.K., Li, Y. and Lau, A.K.H. Hong Kong study on marine vessel emission inventory. Presentation given on 11 November 2011. http://www.civic-exchange.org/wp/wp-content/uploads/2011/07/111111SimonNg.pdf.

16. Ng et al, 2011. 17. Galbraith et al, 2008 18. Civic Exchange, 2008. Green Harbours workshops 2008.

Civic Exchange, Hong Kong, http://www.civic-exchange.org/eng/upload/files/200806_gportsws.pdf; Civic Exchange, 2009. Green Harbours II: Reducing Marine and port-related emissions in the Pearl River Delta Region. Civic Exchange, Hong Kong, http://www.civic-exchange.org/eng/upload/files/090929GHreport.pdf;Civic Exchange 2010, Green Harbours II: Greening the global supply chain: Exploring partnerships to reduce marine emissions in the PRD. Civic Exchange, Hong Kong, http://www.civic-exchange.org/wp/wp-content/uploads/2010/06/201006GreenHarbour.pdf.

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20. Van Rafelghem, M., Modini, R., 2007. Lessons for Hong Kong: Air Quality Management in London and Los Angeles. Civic Exchange, Hong Kong, http://www.civic-exchange.org/eng/upload/files/200709_AirQualityLondonLA.pdf.

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27. Hong Kong Special Administrative Region Government, 2012. The 2012-13 Budget (See, Trading and Logistics). http://www.budget.gov.hk/2012/eng/budget16.html

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© Civic Exchange, April 2012The views expressed in this report are those of the author, and do not necessarily represent the opinions of Civic Exchange.