Marine

AFP – Sep 4, 2008

Hong Kong is considering banning fishing trawlers in its waters to save fish stocks, a report said Thursday. The drastic proposal comes as annual catches were estimated to be 30 percent above sustainable levels, the South China Morning Post said, citing a consultation paper from the Food and Health bureau.

“Most Hong Kong waters are fish spawning and nursery grounds,” said the consultation document, which will be released by the bureau’s committee on sustainable fisheries next week.

“The indiscriminate trawling activity will lead to catches of infant fish that lack… economic value and seriously disrupt reproduction capacity.”

Under the proposals, the government could buy out some of the 550 fishing trawlers operating in Hong Kong waters.

Environmental groups have long said that of all methods used, trawling has the most damaging effect on the seabed and fish stocks.

The document said annual production of fish in local waters has reached 26,700 tonnes, 30 percent above the maximum sustainable yield set by a recent study on sustainable fishing, the Post said.

The proposal is likely to draw opposition from the beleaguered fishing industry, which provides 12,000 jobs in Hong Kong.

Fishermen have been plagued by a string of problems including marine pollution from China, soaring oil prices, ageing operators, and mounting calls to protect international fish stocks.

Financial help and retraining could be offered to the affected fishermen, with the hope that they could turn to the leisure fishing business or fish farming, the report said.

Other suggestions in the paper included limiting new entrants and capping the number of fishing vessels, the English-language newspaper reported.

A spokesman for the department said the report was not yet available to the public.

Tuesday, August 19, 2008 – Houston Business Journal – by Greg Barr

Dirty smoke from ships cruising at sea and while running engines in port in order to generate electricity affects the air quality of coastal cities like Houston, according to California researchers.

Scientists from the University of California at San Diego report in the online edition of the Proceedings of the National Academy of Sciences that the impact of dirty smoke from ships burning high-sulfur fuel can be substantial, on some days accounting for nearly one-half of the fine, sulfur-rich particulate matter in the air known to be hazardous to human health.

Until now, air quality experts have been unable to quantify the specific contribution of ship smoke to the air pollution of coastal cities.

“Ships are really unregulated when it comes to air pollution standards. What we found was a surprise, because no one expected that the contribution from ships of solid sulfur-rich particles called primary sulfate would be so high,” said Mark Thiemens, dean of the division of physical sciences and a professor of chemistry and biochemistry at UCSD.

Primary sulfate, or SO4, is produced when ships burn a cheap, sulfur-rich fuel called “bunker oil.” Although more sulphur is typically found in other particles produced by ships, SO4 particulates are particularly harmful to humans because they are especially fine microscopic particles that can remain in the lungs. The tiny particles can also travel long distances.

The scientists developed a chemical fingerprinting technique that distinguished ship smoke primary sulfate from the tailpipe emissions of trucks, cars and other sources. These techniques should help regulators in other states and countries monitor the impact of ships off their coasts as new restrictions on bunker oil burning by ships are implemented, the researchers said. International rules requiring clean-burning ship fuels are set to take effect in 2015.

“Because a large part of the world’s population live in major cities with shipping ports — such as Houston, New York City, San Francisco, Hong Kong and Singapore — and global shipping is expected to increase in the decades to come, this should help policy makers around the world make more informed decisions about improving the health of their citizens,” Thiemens said.

Charlotte So – Updated on Aug 11, 2008 – SCMP

Specialist dry cargo shipping company Pacific Basin Shipping believes the four roll-on/roll-off vessels it has ordered will help address challenging environmental issues in Asia.

“We have a strong view that environmental issues are going to become more important to the world,” said chief executive Richard Hext.

Governments in Europe were eager to take long-haul trucks off the road and replace them with roll-on/roll-off vessels plying the continent’s ports because carbon emissions from the vessels per unit of cargo per mile, were lower than those of trucks, said Mr Hext.

And the environmental awareness in Beijing as a result of its campaign to clean the air for the Olympic Games would reshape attitudes towards pollution in both China and Asia, he said.

“As a result, we expect demand for roll-on/roll-off vessels will grow in Asia,” said Mr Hext.

Pacific Basin ordered four roll-on/roll-off vessels in December for delivery between next year and 2010. The deal carries options for two additional vessels in June. The orders, worth US$577 million, amounted to 80 per cent of Pacific Basin’s total new vessels commitments.

Although management was confident of new business it could do with its roll-on/roll-off vessels, analysts said the outlook for the service was still unclear.

“We consider that forecasting rates for the sector is difficult at this stage as the large-sized [roll-on/roll-off ships] are new to Asia,” according to a Cazenove report.

The company will now be relying on its track record of being able to discover new markets and position itself in a market sector with less competition.

By focusing on handysize vessels of between 25,000 and 34,999 deadweight tonnes, it enjoyed 4-1/2 years of profit growth in the past 5-1/2 years, said analysts.

The new vessels ordered could operate at 21.5 knots (40km per hour) and were more fuel-efficient than the firm’s existing ships, said Mr Hext.

In addition, the company has invested US$40 million in a mainland gas supply company, Green Dragon Gas, to prepare for tougher environmental requirements on shipping.

“It is possible that shipping companies will be required to be carbon-neutral,” said Mr Hext.

Green Dragon Gas produces natural gas from coal-bed methane in a process that reduces the amount of methane released into the atmosphere during coal mining.

Since methane oxidises in the atmosphere to form carbon dioxide, Pacific Basin anticipates it will qualify for carbon credits that could be used to offset the greenhouse gas produced by its ships in the future.

More on scmpir.com For IPO news, listed company reports, announcements and press releases, go to our new investor relations website. For Pacific Basin, go to pacbasin.scmpir.com

Smoke on the water

Hong Kong’s port is an economic lifeline – and one of its worst sources of pollution

Christine Loh – Updated on Jun 19, 2008 – SCMP

Low-hanging fruit is ripe for picking. But it can only be harvested at the optimal time. And, so, the government must move ahead to deal with marine and port-related emissions now because emission levels are rising, yet many stakeholders are ready to perform at a higher environmental level. By taking decisive action in the near future, the government will win political kudos.

The authorities have a duty to act if they are serious about protecting public health. Hong Kong and the Pearl River Delta have some of the busiest ports in the world. Between 2001 and 2006, Hong Kong’s container throughput increased by about 32 per cent, from 17.8 million to 23.5 million 20-foot equivalent units (teus), a measurement for containerised tonnage. Our neighbour, Shenzhen, has also seen massive increases, from about 5 million teus in 2001 to nearly 18.5 million teus in 2006.

Millions of people in the region live and work close to ports and are directly exposed to very harmful levels of shipping and port-related emissions. After all, ship emissions come from the burning of bunker fuel, which is highly toxic. While in total tonnage terms, marine emissions are much less than from power plants, bunker fuel is nevertheless very dirty and its emissions affect more than 3 million people in Hong Kong, according to a government-commissioned study. Despite the lower quantity, ship emissions have a large negative impact on people’s health.

Moreover, port activities include the operation of many types of equipment, such as cranes, as well as tens of thousands of barges and trucks moving goods round the clock. They all burn lower-quality diesel and thus contribute to Hong Kong’s and the delta’s poor air quality. There is no doubt that old, polluting lorries are a major contributor to this city’s roadside pollution, which is desperately high.

While long-term predictions are less precise, current government-sponsored estimates show that our city may handle a staggering 40 million teus by 2030. With Shenzhen’s ports also growing quickly – some believe they will grow even faster – there is, in fact, an urgent need to clean up, otherwise the rising tonnage of cargo will become an even bigger public health threat.

Our ship owners know Hong Kong can do better. This is because their ships sail around the world and, in European and North American ports, there have been much greater efforts in recent years to promote green port policies to reduce the public health impact on port cities. Their ships have to improve their environmental performance when they dock at those ports, for example, by using cleaner fuels and reducing speed.

So, ship owners know they can do the same when their ships sail into Hong Kong and Shenzhen, and it would mean lower emissions for the residents of this region.

There is an additional cost component to using cleaner fuel. But if all ships entering a port have to meet the same tighter emissions levels, it is a new, level playing field. The ship owners insist that voluntary measures don’t work because there will always be the temptation for some to save costs by continuing to use dirtier fuel, for example.

Cargo terminal operators in Hong Kong have also started to use cleaner fuels for their equipment as part of their corporate social responsibility programmes. Since they are in fact global port operators, these companies are also affected by international trends. Some of the larger companies that operate various types of harbour craft – tugs and ferries – are also looking at what emissions improvements they can make and are providing key staff with environmental management training. The most difficult stakeholder group is the lorry operators, many of whom feel they are in a sunset industry. But, even here, better driving skills can help with fuel efficiency, leading to lower costs at a time when energy prices are very high.

The government needs to be willing to convene ongoing dialogue with the stakeholders to press home green port policies and work with the marine and port operation sector to explore a range of clean-up options.

Christine Loh is chief executive of the non-profit think-tank Civic Exchange, which published the report Green Harbours: Hong Kong & Shenzhen this week

Change of tack

Hong Kong shipowners are at forefront of a battle for tighter emissions curbs

Sarah Monks – Updated on Jun 19, 2008 – SCMP

In an unusual reversal of roles, a global industry – shipping – is pressing international regulators for tighter controls over its toxic emissions. And Hong Kong owners have been in the vanguard, campaigning for earlier use of cleaner fuels by the world’s 60,000 ocean-going merchant ships.

The International Maritime Organisation (IMO) stunned itself and the world in April when its normally fractious members agreed to tighten emission caps by 2020 for sulfur oxides (SOx), nitrogen oxides (NOx) and other pollutants. The revised caps, which the IMO is expected formally to adopt in October, would end shipping’s dependence on the dirtiest, cheapest fuel – residual oil, a tar-like refinery waste product.

“We are embarked on a very positive journey in the next 10 years that will see a massive decrease in toxic air emissions from ships,” said Arthur Bowring, managing director of the Hong Kong Shipowners Association (HKSOA), which has 160 members. “We have set ourselves an obligation. We now have to live up to that and meet that as an industry. If it hadn’t been for Hong Kong and Intertanko [the London- and Oslo-based International Association of Independent Tanker Owners] the IMO’s revisions would have been minor changes.”

The IMO’s intended new cap for sulfur content in fuel is 3.5 per cent (from the present 4.5 per cent) after January 1, 2012, falling steeply to 0.5 per cent from 2020. The limits in specified emission control areas would be 1 per cent in less than two years (from 1.5 per cent now) and fall to 0.1 per cent from 2015.

Thus, in a little over a decade, the world’s merchant ships are expected to have switched from the residual oil they have burned for nearly a century to a cleaner distillate, which is closer to truck diesel and jet fuel than it is to refinery waste.

“We dream of clean engine rooms and engineers in clean boiler suits,” said Mr Bowring. “We can’t wait to get to global distillate fuel grade so we can fill up our ships with a consistent quality fuel just like we fill up our cars.” He pointed to present difficulties for ships carrying multiple grades of fuel and aiming to meet different emissions regimes. Switching fuels at sea is a potentially dangerous procedure, with a risk of engines stalling in busy shipping lanes. Failure to use the right fuel could lead to costly sanctions such as ship detention.

Mr Bowring said the maritime industry, which accounts for about 90 per cent of world trade, realised some years ago that it must shift to a proactive mode in tackling public concerns about marine emissions.

Emissions have risen as seaborne trade has more than doubled in less than 20 years. Emissions have also been linked to deaths and heart diseases in places close to heavy marine traffic.

“You’ve got to be proactive. You can’t hide behind the regulations and the legislation and wait until you are forced,” said Mr Bowring. “And it’s very clear to us that our industry has to contribute to the reduction of pollution in the Pearl River Delta.”

According to the Environmental Protection Department’s air pollutant inventory, marine emissions are the second-largest source (5 per cent) of sulfur dioxide in Hong Kong, after electricity generation (89 per cent). They are the third-largest source (18 per cent) of NOx, after electricity generation (44 per cent) and road transport (23 per cent).

Mr Bowring said self-interest had been a powerful reason for the industry’s change of tack as it was better for the industry to develop its own regulations via the IMO, a UN agency, than be vulnerable to a patchwork of conflicting local regulations that would make sea transport less efficient.

In 2005, the HKSOA stepped on to the international stage with aggressive proposals to switch to cleaner fuel. Mr Bowring said it was a natural role for Hong Kong, as the city was the world’s fourth-largest centre for owning, operating and managing ships.

“Asia is not known for being outspoken. Hong Kong is willing to be outspoken. That’s the nature of Hong Kong,” said Mr Bowring. “It gives us great leverage and we’ve used it for a number of maritime issues in addition to marine emissions, such as bulk carrier safety standards and fatigue at sea. We’re willing to go out on a limb over issues and go on the world stage and be seen as a voice for Asia.”

The HKSOA lobbied unsuccessfully at the IMO for even tighter caps and a faster switch to global distillate that would eliminate the need for special emissions control areas but the world’s maritime administrators, including Hong Kong’s Marine Department, preferred “a compromise solution”, said its deputy director, Patrick Chun Ping-fai.

“Although I think people might appreciate their [HKSOA’s] argument … it appeared to us that their proposal would not be feasible or viable after taking into account various considerations, in particular the impact on the shipping community and also the ability of the oil refineries industry to provide a very-low-sulfur-content fuel to ships all over the world,” Mr Chun said.

The eventual April amendment to the IMO convention, known as MARPOL Annex VI, has a compromise clause to review the fuel supply situation in 2018, with an option to postpone the adoption of global distillate until 2025.

“We’ve dug a hole for ourselves here,” said Mr Bowring. “The burden is on us to find a solution with the refineries. They will have to switch from supplying about 380 million tonnes of residual oil to supplying the same amount of distillate. They will probably need new refineries and to upgrade existing refineries to create the capacity.”

He predicted that distillate would be twice as expensive as residual oil, though the impact on transport costs would be marginal as fuel was a relatively small factor in the end consumer price.

The IMO’s intended final sulfur-content levels were “a leap rather than a step”, said Douglas Rait of specialist maritime firm Lloyd’s Register. “It remains to be seen exactly how the fuel oil supply industry will react, what type and composition of fuel oils will be produced to meet the requirement, and what means will be necessary to assess their key characteristics on delivery,” added Mr Rait, global manager of the firm’s fuel-oil-bunker analysis and advisory service.

A spokeswoman for ExxonMobil Hong Kong, a major fuel supplier, said the company would be ready for the global changeover to 0.5 per cent distillate by 2020 and supplies would be ensured. A Shell Hong Kong spokeswoman said the IMO proposals provided flexibility for reaching the revised emission reduction levels.

Demand for cleaner marine fuel needs to rise sharply by 2020 to spur refineries to invest in its production, said Mr Bowring. A key HKSOA strategy was to press for an emissions control area for Hong Kong and Pearl River Delta waters, with cleaner fuel a requirement for entry.

“If we have a PRD emissions control area at 0.1 per cent it will instantly reduce the SOx and particulate matter from all ships going into one of the world’s largest shipping areas. It will also guarantee refineries a distillate market by ramping up demand,” he said.

Various port authorities would need to work together to create a regional emissions control area. But the Environmental Protection Department says they “have different priorities and considerations in terms of the implications that such a move may have on their port activities and businesses”.

Another hurdle to justifying an IMO-approved emissions control area is the prior need to show that equivalent efforts are being made to reduce pollution from factories and other land-based sources.

“The Guangdong authorities have already put a lot of effort into reducing air pollution,” said the Marine Department’s Mr Chun. “It will be very difficult to convince industry in the area to put in even more efforts to reduce air pollution if they want to make this a sulfur emissions control area.”

He noted, too, the challenges in convincing local fishermen, barge operators and related interest groups about the need for measures that imply higher fuel costs or require them to upgrade their engines. They had already been given an extended grace period to comply with IMO emissions caps that took effect in Hong Kong this month.

The Environmental Protection Department believes there are options other than an emissions control area for reducing pollution from ships. “For instance, we have set up an interdepartmental working group to examine the feasibility of local ferries using ultra-low-sulfur diesel, including conducting a trial,” it said in a statement. It was also in talks with its Guangdong counterparts.

For the co-founder and chief executive officer of policy think-tank Civic Exchange, Christine Loh Kung-wai, reducing marine and port emissions is “low hanging fruit” for the government. “You have the shipping companies and even the terminal operators ready to change, and some of the local craft operators also want to do something.

“The shipowners operate global businesses and are keenly aware of reforms taking place at other ports. They know their ships have to operate at higher environmental levels at ports in Europe and North America, and they can do the same in Hong Kong. They want to do it, which is driving them to ask for a level playing field so laggards do not benefit.”

Civic Exchange this week released a report, titled Green Harbours, which recommends reducing emissions from the marine and port sectors in Hong Kong and Shenzhen. It notes that governments and industry players in Hong Kong and the Pearl River Delta have taken steps such as encouraging the use of low-sulfur fuels, using electricity to power port machinery and reducing fuel consumption.

Ms Loh said the government had to play a “convening role” for the industry as a whole. “Something like requiring ships to slow down within Hong Kong waters is doable tomorrow – it will save fuel and reduce emissions,” she said.