CLEANING UP THE SHIPPING SECTOR — from Hong

CLEANING UP THE SHIPPING SECTOR - from Hong Kong to mainland China

Main points § China has 7 of the world’s top 10 container ports o These port cities are densely populated and highly polluted § Hong Kong spearheaded addressing ship emissions in 2011 because of health concerns § Mainland China followed in 2015 o Uniform regulations minimizes cargo diversion to the least regulated ports § Challenges remain, but international experiences offer valuable lessons that can help China

China’s ports have grown rapidly and competition is severe World’s top 10 container ports (2000 -2014) 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 1 2 3 Hong Kong Hong Kong Singapore Singapore Shanghai Shanghai Singapore Singapore Busan Hong Kong Shanghai Shanghai Singapore Singapore Hong Kong Hong Kong Shenzhen 4 Kaohsiun Shanghai Shenzhen Shenzhen Shenzhen g g Hong Kong 5 Rotterda Kaohsiun Shanghai m g Busan Ningbo. Zhoushan 6 Shanghai 7 8 9 10 Busan Rotterda Kaohsiun Rotterda Shenzhen m g g m Los Rotterda Rotterda Angeles m m m Long Los Shenzhen Beach Angeles Los Hamburg Angeles Hamburg Hamburg Antwerp Busan Long Beach Antwerp Dubai Dubai Ningbo Busan Guangzho Ningbo u Ningbo Dubai Kaohsiun Guangzho Ningbo g u Hamburg Los Angeles Busan Ningbo- Ningbo. Zhoushan Busan Guangzho Qingdao u u Qingdao Guangzhou Qingdao Rotterda Qingdao m Dubai Dubai Hamburg Tianjin Tianjin 3

Air pollution in China is BAD – NOx, 2014 NASA, http: //svs. gsfc. nasa. gov/12094

Air pollution is China is BAD – PM 2. 5 (2000 -2010) Sources: Aaron van Donkelaar et al, “Use of satellite observations for long-term exposure assessment of global concentrations of fine particulate matter , ” http: //dx. doi. org/10. 1289/ehp. 1408646 5

Ships are a major source of air pollution in port cities Pollution from ships SOx NOx PM 2. 5 Hong Kong+ 44% 33% 42% Shenzhen§ 59% 16% 5% Shanghai++ 22% 17% 4% +: 2014 data, Includes emissions from all vessels §: 2014 data, Includes emissions from oceangoing vessels; account for share of SO , not SOx 2 ++: 2013 data, Includes emissions from all vessels 6

China’s ports sit at the intersection of high population, choking pollution, and rapid growth 7

Over 0. 5 million people live next to the port, 3. 8 million are directly affected by port pollution 8 Photo credit: Christine Loh, BAQ 2012

Controlling shipping pollution is late-coming in Hong Kong 1997 2014 PM 2. 5 SO 2 9

Hong Kong -- 1 st in Asia to combat shipping emissions Fair Winds Charter (0. 5% sulfur fuel at berth) 2011 Align with DECA (0. 5% s fuel in 12 nm) Marine light diesel sulfur rule 2012 2013 Voluntary Incentives 2014 2015 2016 … 2019 Fuel switch at berth rule 10

Earlier concerns and challenges in China (2012 - 2014) 1. Lack of shipping pollution data 2. Which agency should lead? 3. Which agency should enforce the regulations? 4. Forms of solution: technology mandate, regulations (e. g. , ECA), etc. § If ECA is adopted, would fuel be available? 5. Impacts of regulations on the shipping industry 11

Publicizing the problems and providing solutions 12

Sharing US and EU experiences 13

DOMESTIC EMISSION CONTROL AREA (DECA) TIMELINE § DECA (0. 5% s fuel at berth) adopted in Dec 2015 § Yangtze River Delta ECA: implemented on Apr 1, 2016 § Pearl River Delta & Bohai Sea ECAs: Jan 1, 2017 § DECA review in 2019: § 0. 1% s fuel? § Extending coverage? 14

China pioneering DECA regulation in Asia (Dec 2015) IMO North America ECAs California OGV Fuel Rule IMO North Sea & Baltic Sea SECAs China Domestic Emission Control Areas (DECAs) Hong Kong OGV Fuel Switch At Berth Regulation 15

Shanghai, Zhejiang and Jiangsu enforcing the DECA regulation April and May 2016 Vessels inspected Samples taken on board Noncompliant vessels found Shanghai 915 108 10 Zhejiang 631 79 9 Jiangsu 312 179 39 Total 1, 858 366 58 16

Robust enforcement leads to significant air quality improvements in EU and Hong Kong Anholt Island, Denmark: 60% drop in SO 2 levels since Jan 2015 Rotterdam: 20% drop in SO 2 levels since Jan 2015 Hong Kong: 50 -60% drop in SO 2 levels near the port since Jul 2015

Beyond DECA: Clean port initiatives Shore power Electricor LNG- LNG or electric equipment drayage trucks LNG vessels At dock rail/ ship-ship transshipment Shanghai ✔ ✔ ✔ Shenzhen ✔ ✔ ✔ Jiangsu ✔ ✔ Guangdong ✔ ✔ Qingdao ✔ ✔ ✔ 18

Main concerns and challenges § Impacts of regulations on the shipping industry o Incentivizing green shipping practices § Possible solutions: o DECA: Enforcement capacity, remote measurement o Technologies: LNG vessels, shore power, after-treatment (scrubbers and SCR) • Cost effectiveness • Overcoming barriers to deployment o Cleaning up legacy fleet of inland vessels: o Repowering vs. replacement o Greening the truck fleet inside and outside the ports 19

Final thoughts Cleaning up China’s ports is tackling a major piece of global air pollution problems China has started with cleaner fuels, and the government is determined to do more China is eager to learn from international experiences

Thank you! Photo source: http: //www. scmp. com/comment/insight-opinion/article/1774626/pollution-panorama-hongs-shrinking-views-and-shrinking