SUSTAINABILITY AND PORT DUES

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1 SUSTAINABILITY AND PORT DUES Mr. Wolf von der Mosel, Hamburg Port Authority AöR at the Workshop Measurement of regional economic effects caused by cruise tourism, Riga Riga / Latvia, April 25 th -26 th 2018

2 HPA-Bildarchiv, Martin Elsen GREEN CRUISE PORT Sustainability and Port Dues Sustainable Development of Cruise Port Locations SUSTAINABILITY AND PORT DUES

3 Agenda Why port dues and why sustainability; what is the link between them? How much leeway is left for port dues people? What is Hamburg doing currently? What else can be done at commercial levels? Wrap up 2

4 Why port dues and why sustainability; what is the link between them? 3

5 1 Why port dues and why sustainability, what is the link 1.1 Definitions Sustainability various definitions & dimensions economic ecological social - politics - culture Adams, W.M. (2006). "The Future of Sustainability: Re-thinking Environment and Development in the Twenty-first Century." wikipedia website social sustainability Sustainable actions require a simultaneous view on what is bearable, viable and equitable 4

6 1 Why port dues and why sustainability, what is the link 1.1 Definitions Port Dues Why running a port? Levy on ships which call my port Different services covered; - mainly use of (dredged) basins, quay walls etc. - sometimes more: VTS-system, pilot-transfer etc. Money needed for investing, building, operating, maintaining and disposal of infrastructure Origin and regular focus is economical dimension Today: more light on other dimensions as well 5

7 1 Why port dues and why sustainability, what is the link 1.2 The outer logic of port dues Wide range who set s PD and how: - Few influence from supranational, but EU-COM - National influence - Regional / local influence Responsibilities / competencies in the EU Wide range how sustainability (currently: focus on environmental dimensions) aspects are set in shipping - IMO - Other supranational bodies (e.g. EU) - National / regional / local EU only mixed Are common economical, ecological and societal standards no EU really wanted or do we prefer a bottom-up principle (subsidiarity) The mainly local people/bodies who set PD usually have few influence on changing environmental and/or societal legal conditions/framework, thus limited overall influence 6

8 1 Why port dues and why sustainability, what is the link 1.3 The inner logic of port dues (PD) Financial aspects within a PA - Necessary to finance ports - predictable, scalable, stable cash flows, etc. Direct stakeholder aspects (e.g. port managers, customers) - Not distorting competition, few and easy calculation parameters - Not too expensive, being accepted OK needed Indirect stakeholder aspects (e.g. political, societal and environmental) - Relatively new dimension - Political will to use it as tool for Green shipping - Regulative law not in hands of local politicians Can greened port dues really make a difference? 7

9 1 Why port dues and why sustainability, what is the link 1.4 The link Best tools for greening shipping are 1. international binding law (no distortion of competition, common standards etc.) 2. creating the right commercial rationale (self-sustaining, create market forces; but also (external) funds / incentives as support for shipowners / operators) 3. create awareness (education, societal / cultural / political progress etc.) But: - law: e.g. IMO is slow (objections from stakeholders who profit from keeping status quo) - commercial: rarely available (e.g. ETS currently not worldwide) * HFO tax free and abundant supply, * cleaner energies often more expensive / not sufficiently available etc. * OPS (electricity) sometimes heavily taxed - awareness: slow Different necessities on different emissions: GHG is global, SOx / NOx / PM are more local Only few tools left for local political executives to make shipping greener How much leeway is left for port dues people? 8

10 How much leeway is left for port dues people? 9

11 How much leeway is left for port dues people? What are ports already doing What could be done Promotion by whatever means of legal measures operational measures technical measures alternative fuels or power sources example awareness / knowledge ; source: from April 10th 2018 Ports can go ahead in chicken and egg question (demand/supply) and provide environmentally friendly power 10

12 How much leeway is left for port dues people? What are ports already doing Studies / Awareness Extract of Studies: Recently mainly on Carbon. Recent IMO meeting (MEPC 72): Zero carbon by when? OECD-ITF Decarbonising Maritime Transport : The Case of Sweden, March 9 th 2018 EU-COM: Action Plan: Financing Sustainable Growth, March 8th Economic Impacts of Carbon Pricing in International Maritime Transport: ITF/OECD and CPLC Expert Workshop, January 8 th and 9 th 2018 OECD Submission to the IMO Intersessional Meeting of the Working Group on Reduction of GHG Emissions from Ships Sept 22th 2017 Basic material on emissions overall Study on differentiated port infrastructure charges to promote environmentally friendly maritime transport activities and sustainable transportation, final report June 2017, published by EU-COM Shipping Emissions in Ports, OECD ITF Discussion paper Abundant information available on goals, action plans and who is doing what 11

13 How much leeway is left for port dues people? What is available (extract) Extract: Examples of existing incentive systems for greener shipping "positive" incentives only (discounts, rebates etc.) ISSUE refers to: GHG NOx SOx PM other CSI Clean Ship index ESI Environmental ship index Green Award "Costs" for ship: subscribing to the scheme Yes No Yes additional data provision Yes Yes Yes CSI Clean Shiping Index ESI Environmental Ship Index Green Award Other: eg: water ballast, waste management, anti-fouling, quality in certifications, ship breaking, educational qualifications, noise source: Wolf von der Mosel, April 2018 The above rewarding only schemes which ports use generate awareness and knowhow for the future 12

14 What is Hamburg doing currently 13

15 What is Hamburg doing currently Ship traffic causes challenges in/for the Port of Hamburg Many terminals; > 130 mn tons of cargo 3 inner-city cruise terminals 2018: ~220 calls expected (~880,000 PAX) too many NOx-emissions versus 4 mn inhabitants in metropolitan region huge demand for cleaner air, less noise etc. legal pressure pressure from inhabitants and politicians don t wait for international law or shipowners becoming goody two-shoes Source: Port of Hamburg Marketing PD as a tool to help out!? 14

16 What is Hamburg doing currently Environmental-friendly power supply (I) 1. Examples at cruise centers 1 Onshore Power Supply (Altona) LNG direct truck-to-ship supply (Steinwerder, direct fueling) LNG-Hybrid Barge HUMMEL (HafenCity) 2 2. Examples work in progress: as of April/May 2018 LNG PowerPac at Container Terminal 4 3 Stakeholders take action for improvement EMSA Guidance on LNG bunkering 1/2018 p. website Becker Marine BMS Max Kommorowski, folder of company

17 What is Hamburg doing currently Environmental-friendly power supply (II) Example: handling of PowerPac Example: Clean Air Action Plan 2017: Installation of external energy supply source: C.Becker Hybrid Port energy com. HPA April 12th

18 What is Hamburg doing currently Some environmental PD-discounts in Hamburg (extract) existing before 2017 Hamburg Government set up Elbe Habitat Foundation, mainly financed by Port Dues Further: source: Wolf von der Mosel, April 2018 What HPA is doing on: GHG NOx SOx PM other Subscribing "Costs" for ship (view of ship) additional data Bonus provision received Malus to be paid "Cost for PA" (view of PA) ESI Yes Yes Yes no Yes Green Aw ard Yes Yes Yes no Yes since few years: discounts for: Blue Angel Yes Yes Yes no Yes LNG-propulsion No Yes Yes no Yes use of Port Power No Yes Yes no Yes Upside for PA: Downside for PA: helps the environment and society discounts and financing foundation are expensive; no payback or external funds which offset 17

19 What is Hamburg doing currently What changed the mind and proceedings in Hamburg in Conflicts within challenges of sustainability Sustainability of ports / port dues No additional funds for PD discounts good living conditions / legal req. less emissions; mainly NOx EU-law German Law Hamburg law: Free and Hanseatic State of Hamburg implemented Clean Air Plan 2017 for whole State and including Port Social Dimension Ecological Dimension Economical Dimension Hamburg Parliament decided to introduce a separate environmental component in Port Dues Tariff, based on NOx emissions provided by tier level data. Hamburg Port uses tier level of ships to comply with environmental and legal requirements. SUSTAINABILITY AND PORT DUES

20 What is Hamburg doing currently What is new in Port Dues since Jan 1 st, 2018 Focus on NOx which causes relatively strong health problems Creation of separate Environmental Component: Bonus / Malus system Use of IAPP s (International Air Pollution Prevention certificates) to show categories of NOx emissions Wolf von der M osel, April 2018 GHG NOx SOx PM other Subscribing "Costs" for ship (view of ship) additional data Bonus provision received Malus to be paid "Cost for PA" (view of PA) ESI Yes Yes Yes no Yes Green Aw ard Yes Yes Yes no Yes Blue Angel Yes Yes Yes no Yes since few years: LNG-discount No No Yes no Yes Port Pow er discount - strengthened No Yes Yes no Yes new: environmental component No IAPP once aim is: No! Also economical interests of a PA are served by the bonus/malus system 19

21 What is Hamburg doing currently Objective for Environmental Component and PD environmental discounts Evaluate ships according to their actual eco-friendliness Give an incentive (bonus/malus) for ships with less/more air pollution Reward the use of environmentally friendly energy sources 20

22 What is Hamburg doing currently Encourage Port Users who do better Example different IAPP s & base price Example "IAPP": a) Base price Environmental Component 1000 Ship A (no IAPP) Ship B (IAPP-level 1) Ship C (IAPP-level 2) Ship D (IAPP-level 3) no port power no port power no port power no port power port power 100% renewable port power 100% renewable Base case port power 100% renewable port power 100% renewable (incentive scheme tier level) * therof maneuvering 30% ** therof max. surcharge tier level 0 15% ** therof max. surcharge tier level 1 10% ** therof no surcharge/discount tier level 2 0% 0 0 ** therof max. discount tier level 3-30% interim sum maneuvering * therof hoteling 70% ** therof max. surcharge tier level 0 15% ** therof max. surcharge tier level 1 10% ** therof no surcharge/discount tier level 2 0% 0 0 ** therof max. discount tier level 3-30% interim sum hotelling Interim sum base price env. component = Deviation from base price env. component 15% 15% 10% 10% 0% 0% -30% -30% The cleaner the vessel (NOx), the less base price to pay 21

23 What is Hamburg doing currently Encourage Port Users who do better- Example IAPP plus Port power Example Ship A (no IAPP) Ship B (IAPP-level 1) Ship C (IAPP-level 2) Ship D (IAPP-level 3) no port power no port power no port power no port power port power 100% renewable port power 100% renewable port power 100% renewable port power 100% renewable b) "IAPP" plus Port power Port power discount based on interim sum hoteling (incentive scheme port power) * min. discount: no port power 0% * other discounts on non-renewable environmentally friendly energy up to n/a n/a n/a n/a n/a n/a n/a n/a * max. discount: 100% renewable port power -80% interim sum hoteling incl. port power Sum environmental component: IAPP plus Port power = Deviation from base price env. component 15% -49% 10% -52% 0% -56% -30% -69% Other discounts / surcharges may apply Ships with less modern engines can gain morge in absolute terms than ships with modern engines 22

24 What else could be done at commercial levels 23

25 What else could be done at commercial levels Miscellaneous Unclear future of alternative power sources (availability, price, legal framework when and how) Will the use of port power become mandatory? - hardly feasible if neighbor ports don t follow Could commercial rationale be influenced by governments? - Yes, but. Tax structure (HFO tax free, port energy currently heavily taxed (renewable energy law)) Will there be external funds to support the Change? - currently not seen for maritime shipping; within Germany some national funds for IWT (change of machines) Will it be enough, if other PA progress similar or even tighter than HPA with a bonus malus scheme? - better, but now enough What Cities, regions and governments could do? 24

26 What else could be done at commercial / practical levels What could other actors in the port part of the transport chain do? What about - tug operators? - boatmen? - pilots? - terminal operators? -? 25

27 Wrap up 26

28 Wrap up Who can achieve what in terms of more sustainability from here to here 27

29 Wrap up 4 Take-aways Relationship Port Dues and Sustainability Port Dues more and more used to pursue sustainable policy goals beyond pure economical goals How much room for action is in the game for port dues Port Dues sustainability schemes alone are not a sufficient tool to reach those goals and have to be used carefully What are the Free State of Hamburg and Hamburg currently doing Stakeholders in port policy should think beyond PA s port dues and enlarge the scope to other actors in the port Exchange best practice: What else can be done by (other) stakeholders in a port and other ports on the commercial level Many more ports and stakeholders in each port could use their charging tools (or other) to help greener shipping 28

30 Thank you for your attention! Questions? Hamburg Port Authority AöR Head of Maritime Affairs Port Estate and Maritime Affairs Division HPA-Bildarchiv, Andreas Schmidt-Wiethoff Mr. Wolf von der Mosel Neuer Wandrahm Hamburg Tel.: