News Risk Management25 Apr 2018

Ports can help cut CO2 in shipping

25 Apr 2018

Ports play an important role in reducing the global carbon footprint of maritime shipping, says a new report by the International Transport Forum (ITF) at the OECD.

Greenhouse gas emissions from shipping currently represent around 2.6% of total global emissions. Without reduction measures, this share could more than triple by 2050. While the focus of reduction measures is naturally on the ships themselves, like ship design and operations, ports also have a crucial role to play in facilitating the reduction of shipping emissions, noted the ITF report, Reducing Shipping Greenhouse Gas Emissions.

The report comes hot on the heels of an announcement by the International Maritime Organisation (IMO) last week that it would set a target of reducing shipping CO2 emissions by at least 50% by 2050 compared to 2008 levels, with a view to phasing them out entirely by the end of this century. This was the first time such targets had been set for the shipping industry.

Ports offer green incentives

Today, 28 of the 100 world’s largest ports (in terms of total cargo volume handled) offer incentives for environmentally-friendly ships. They apply ‘green port fees’, or environmentally differentiated port fees - and charge lower fees to ships that are less polluting. Green port fees are in practice linked to green ship indexes, use of alternative fuels and energy and vessel speed.

In Asia, ports in the global top 100 category implementing such fees are Singapore, Shenzhen (China), Hong Kong (China), Busan (South Korea), Ulsan (South Korea), Tokyo (Japan), Yokohama (Japan), Nagoya (Japan) and Kitakyushu (Japan). Shanghai has an emission-trading scheme that includes ports and domestic shipping.

However, green incentives typically apply to less than 5% of the ships calling at a port with an incentive scheme. Only five ports use CO2 emissions a substantial criterion for incentives. Overall, the impact of port-based incentives on global shipping emissions is marginal, said the ITF report. Any incentives that ship-owners currently have to order more efficient ships with lower emissions can only to a very small extent be a result of port-based incentives.

Effect of green incentives now small, but more can be done

As such, the potential of ports to play a important role in helping the shipping sector to manage the transition to clean shipping is still large.

“The first lesson learned therefore is that ports are players in this context, and that they are taking actions - to both incentivise cleaner ships and to increase the efficiency of their operations, which can also have an effect on shipping emissions. Furthermore, the existing port-based measures establish that market interventions are needed to reward clean performance,” said the report.

“The fact that financial incentives have been chosen implies there is support for flexible measures to drive behavioural change. However, more emphasis is needed on monitoring, reporting and verification of the impacts of these measures. More could also be done to enshrine the “polluter pays” principle. Higher rates of differentiation between vessels based on their environmental performance could drive more and faster change. It is possible within the policies to differentiate fees according to type of vessel enabling the economic activities that can afford to pay to take more of the responsibility for acting.”

Recommendations

The report thus recommends to:

• acknowledge the important role of ports in mitigating shipping emissions
• expand port-based incentives for low-emission ships;
• Link port-based incentives to actual greenhouse gas emissions; and
• move to a more harmonised application of green port fees.

The work for the report was carried out with support from the Environmental Defense Fund Europe.

The ITF at the OECD is an intergovernmental organisation with 59 member countries. It acts as a think tank for transport policy and organises the Annual Summit of transport ministers. ITF is the only global body that covers all transport modes. It is administratively integrated with the OECD, yet politically autonomous.

The Reducing Shipping Greenhouse Gas Emissions: Lessons from Port-based Incentives report can be found here.

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