A Review of Incentive Schemes for Promoting Green Shipping


Recognizing ships are one of the largest sources of air pollution, major Chinese ports such as Shenzhen and Hong Kong have introduced incentive programs to encourage ships calling at their ports to use low-sulfur marine fuels and / or shore power. With the introduction of the Domestic Emission Control Area (DECA) regulations, ships now calling at core ports in the three DECA regions in China (including Yangtze River Delta, Pearl River Delta, and Bohai Bay) must use low-sulfur fuel with no more than 0.5% sulfur content, or equivalent measures, while at berth. The regulations will be further expanded to other ports and coastal waters; by 2019, ships are required to use 0.5% sulfur fuel anywhere inside the DECA regions. While Shenzhen and Hong Kong maintain their incentives for using low-sulfur fuels and Shenzhen continues to offer incentives for shore power, there are discussions in these two and other Chinese port cities on how to better incent shipowners / operators go beyond what DECA regulations require. 

An incentive program initiated by only one port city, however, offers limited financial benefits for shipowners and ship operators, as eligibility criteria and reporting processes are likely to vary between programs offered at the different main ports these ships call at. Applying for port-specific incentives at each individual port with such a scheme therewith involves extra administrative costs and efforts for the applicants. A harmonized incentive program, in which multiple ports along major shipping routes or in the same country collaborate, allows participating ports to develop a consistent approach to rewarding ships’ environmental performance, and gives them the opportunity to exchange insights and experiences to jointly improve the schemes. For ship owners and ship operators, these harmonized schemes could be more attractive as they are likely to be adopted by a larger number of participating ports. This allows eligible ships to obtain incentives at multiple ports on their shipping routes, while reducing their administrative burden as ships obtain a rating for the scheme, which can be accessed by participating ports through a central database. This harmonized process makes it easier for ships to demonstrate their environmental performance towards multiple ports and apply for subsequent incentives. 

This paper therefore provides an overview of major global and country-wide incentive and rating programs for encouraging ship owners / ship operators to reduce air and/or climate pollution from their ships. It aims to offer background information as reference for relevant government agencies, ports and shipping industry as they consider whether to join these international incentive programs or develop their own programs. The four industry-initiated programs, including the Environmental Ship Index (ESI), Clean Shipping Index (CSI), GHG Emissions Rating, and Green Award, allow qualified ships to receive incentives from multiple participating ports and other incentive providers, hence offering the potential of much higher and continued rewards for ships adopting green practices and technologies. The three country-wide incentive programs, adopted by Norway, Sweden and Singapore, offer examples of programs that are designed for promoting research, development and adoption of green shipping technologies that help these countries meet their own environmental and green shipping goals.