Government should rethink blanket incentives for shippers with new regulation due soon

In last week's budget speech, Financial Secretary John Tsang Chun-wah proposed to extend a government incentive scheme to March 2018 that halves the port facilities and light dues charged on ocean-going vessels that switch to low-sulphur fuel while at berth in Hong Kong. The extension is, the government explained, a means to help the shipping industry's transition to more stringent fuel regulation that is expected to come into effect later this year.

Vessels will be required by law to burn marine fuel with a sulphur content of 0.5 per cent or less, slashing at-berth sulphur dioxide and particulate emissions by up to 80 per cent.

Given the maritime industry's contribution to Hong Kong's economy, the proposal is a calculated attempt to prevent cost-conscious ship operators from going to Shenzhen and other neighbouring ports where regulation on marine fuel quality is lacking. Despite assurances from major shipping lines that they have no plans to bypass Hong Kong, the government is taking no chances.

It is debatable whether tighter environmental regulations will drive ships away. The government's concerns could be fuelled by Hong Kong's diminishing competitive advantage over neighbouring ports. That said, to think that introducing higher environmental standards will inevitably make Hong Kong's port less competitive is missing the bigger picture.

There is growing evidence that the maritime sector has become more responsive in recent years to the call for better environmental performance. For example, Koji Sekimizu, secretary general of the International Maritime Organisation, put forward in 2012 the concept of a sustainable maritime transport system. This was a wake-up call at the highest level that, despite its significant contribution to trade and economic growth, the sector has a major responsibility to reduce its environmental footprint.