Hong Kong voluntary fuel switch scheme becomes law

The “Air Pollution Control (Ocean Going Vessels) (Fuel at Berth) Regulations” (the Regulations) will take effect on 1 July 2015.

The Regulations prohibit Ocean Going Vessels (OGV) from using any fuels other than compliant fuel while at berth in Hong Kong, except during the first hour after arrival and the last hour before departure (i.e. while switching fuel).

Compliant fuels required by the Regulations are:

  • Low-sulphur marine fuel which contains no more than 0.5% sulphur.
  • LNG.
  • Other fuels which may be approved by the Hong Kong Environmental Protection Department.

Under the Regulations, the Master and Owners are required to record the date and time of fuel switching and keep the relevant records for three years.

The Environmental Protection Department has stated that “If an OGV uses technology that can achieve the same or less emission of sulphur dioxide (SO2) when compared with using low-sulphur marine fuel, the OGV may be exempted from switching to compliant fuel.”

Once the Regulations come into effect, a Master and Owner who is found to use non-compliant fuel will be liable to a maximum fine of HK$200,000 (approx US$26,000) and imprisonment for six months. Masters and Owners who fail to comply with the recording requirements will also be liable to a maximum fine of HK$50,000 (approx US$6,500) and imprisonment for three months.

These long awaited Regulations replace the voluntary Fair Winds Charter which was adopted by some 17 shipping companies in January 2011. Hong Kong is the first city port in Asia to introduce compulsory low-sulphur fuel legislation.

The requirement of low-sulphur fuel containing not more than 0.5% sulphur is still much higher than the 0.1% m/m requirement in the Emission Control Areas under MARPOL Annex VI which came into force on 1 January 20151.

Operating alongside these new Regulations is the Hong Kong Environmental Protection Department’s “Port Facilities and Light Dues Incentive Scheme for Ocean Going Vessels using Cleaner Fuel” (the Scheme). Under the Scheme, Owners and Operators burning low-sulphur fuel receive a 50% discount on the port facilities and light dues of HK$43 per 100 tonnes, based on the vessel’s tonnage. It covers about half of the additional costs of switching to low sulphur fuel in berth.

The Scheme is due to expire on 25 September 2015, but is expected to be extended to 2018 with more stringent requirements, although the Hong Kong Marine Department and the Environmental Protection Department have not confirmed this.

Shenzhen clean-fuel incentives

Further north of Hong Kong up the Pearl River, the Port of Shenzhen has recently expanded its own voluntary incentive scheme, which is substantially more generous than that offered in Hong Kong. Under Shenzhen’s incentive scheme, Owners and Operators will recover 75% of the cost of switching to fuel with not more than 0.5% sulphur and will cover 100% of the cost of switching to fuel with not more than 0.1% sulphur.

In addition, under the “Shenzhen Air Quality Enhancement Plan” new facilities are being built to provide OGVs with shore power facilities. The aim is that no fewer than 15 berths in Shenzhen will be equipped with short power facilities by the end of 2015. The Shenzhen Government is reported to be covering 30% of the cost installing the short power facilities at Yantian International Container Terminals and at Mawan Power Co Ltd Terminal.

However, Shenzhen’s incentive schemes remain voluntary unlike the new Hong Kong Regulations. There remains a long way to go for the PRD to become the Emissions Control Area in Asia. Whether the law makers in the various city ports around the Delta can work in concert to create a cohesive plan on marine fuel emissions, remains to be seen.