Climate change: Hong Kong shipping sector ‘slow to act’ on environmental protection efforts, says industry body

Hong Kong’s shipping sector has “a lot of catching up to do” in terms of environmental protection efforts, especially given rapidly changing regulations and technological advances, according to an industry body.

However, the sector is performing well in providing higher value services even though its global ranking for container traffic at ports has declined, said the head of the Hong Kong Shipowners Association.

“Hong Kong is on track to provide higher value maritime services as the number of companies in the sector has increased to 1,200 from about 850 before the Covid-19 pandemic, and the number of shipowners in the city has also increased,” Chairman Angad Banga said.

“On the positive side, we are coming into the game slower and have a lot of catching up to do to get back on track. The government’s action plan for the development of maritime areas and ports, announced at the end of last year, will help us achieve this.

He was speaking in an interview on the sidelines of an international conference organized by the Asian Shipowners Association on Tuesday.

Despite falling container port capacity, Hong Kong has huge opportunities to shift from its historical roots and strengths in the maritime industry to more value-added services such as ship management, brokerage, insurance, in addition to legal and arbitration services, he said.

Its advantages in these areas stem from its role as a gateway to China, which has the world’s largest shipbuilding industry and the largest fleet of ships.

Hong Kong, which was the world’s top container port for most of the period from 1987 to 2004, was last year outside the top 10 for the first time, pushed to 11th place by Dubai’s Jebel Ali port, according to a data provider shipping, Alphaliner.

In December, the government unveiled a maritime and port development roadmap to enhance industrial competitiveness and high-value services capacity through decarbonization initiatives, process digitalization, tax breaks and cooperation with foreign partners and neighboring cities in Guangdong Province.

Banga said the government’s strategy to source greener marine fuel by opening up to a variety of lower carbon fuels – using liquefied natural gas as a transition fuel while exploring the possibility of using green methanol to power ships – is the right move.

He noted that flexibility is needed, given the possibility that in the future different types of ships serving different routes may use different transition fuels for cost and availability reasons.

This is despite the fact that such a strategy may require the creation of two sets of bunkering infrastructure, increasing costs.

“At this point, it is too early to determine which alternative fuel will win the race,” he said. “No shipowner or government anywhere in the world puts all its eggs in one basket.”

Hong Kong, a free port, has the advantage of being close to mainland China’s growing supplies of green methanol while also having access to other potential sources of environmentally friendly fuels abroad if they can be imported and used economically and safely, he said.

However, he added that to realize the government’s goal of turning Hong Kong into a high-quality green fuel bunkering center, it will be crucial to find suitable land in the city or neighboring cities in Guangdong to store the fuels.

He said that to accelerate the decarbonization of the industry, all stakeholders, including various government departments, shipowners, fuel suppliers, bunkering infrastructure providers and port operators, must be brought together to work together and one government body must take responsibility for delivering results.

Meanwhile, the International Maritime Organization (IMO), a United Nations agency, and the International Chamber of Shipping are considering several proposed global mechanisms for putting a price on industry greenhouse gas emissions, said IMO Secretary-General Arsenio Dominguez.

“We are now focusing on what the impact of these measures will be on costs… we are working on 20 scenarios,” he said, adding that the results of the study will be presented to the IMO Marine Environment Protection Committee at the end of September.

Last summer, the IMO committed its 175 member countries to net zero greenhouse gas emissions by 2050, with the goal of reducing emissions per unit of transport work by at least 40% by 2030 compared to 2008 levels. It also aims to increase industry use of near-zero emission fuels to at least 5 percent by the end of the decade.

The IMO was also tasked with developing common technical standards for green bunker fuel and a harmonized mechanism for imposing costs on emissions to create a level playing field around the world.