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China policy will drive LNG as a marine fuel in Hong Kong

While there are some strong positive trends that will drive growth in use of LNG as marine fuel use in Hong Kong and the Pearl River Delta (PRD), the reality is progress is likely to be slow and hampered by major issues.

The impetus will come from China’s Ship and Port Pollution Prevention Special Action Plan, BMT Asia Pacific md Richard Colwill said. This plan aims to cut sulphur dioxide emissions in the PRD, Yangtze River Delta and Bohai Rim by 65% by 2020, with the three areas to likely eventually be converted into emissions control areas (ECAs) and envisaging the use of LNG as a primary marine fuel.

“That timeframe (2015-2020), suggests a degree of urgency,” Colwill noted, warning also that for all international shipping that comes into these areas as well as those involved in local shipping such as feeders and shortsea transshipment “you will be caught up in this new framework without a doubt”.

Going back to the four pillars that are needed to make LNG work as a marine fuel, ie policy, price, people and physical infrastructure, Colwill enumerated the areas Hong Kong still needs to work on.

For example, in terms of regulatory support, critical mass and fueling infrastructure, Hong Kong has deficiencies. Giving a sense of urgency, Colwill pointed out that some of these gaps such as in terms of regulatory framework will not be quick to fill so planning needs to be done now to get legislation moving through the Legislative Council, Hong Kong’s notoriously log-jammed de facto parliament.

In addition, stakeholder buy-in and public acceptance are also problematic. “People don’t understand LNG, there are scare stories, inflammatory comment and all this is not helpful,” he said.

There needs to be stakeholder engagement and the industry must start coming together to tell the government that China’s emission control plans will become a reality soon and Hong Kong businesses will be affected if it does not start working on the four pillars mentioned above, Colwill said.

“We’ve got to get in agreement not just on the principles but specific plans for action,” he reiterated.

Solutions Colwill brought up include looking at nearby alternative terminals to the Dapeng terminal which is currently at full capacity, for receiving LNG.

Also, truck/train distribution as an alternative means of distributing LNG from just pipelines alone. With China as the world leader in LNG fuel trucks and small-scale use of the fuel, this is an area where Hong Kong can borrow expertise, Colwill said.

This could be translated into moving fuel operations away from the busy port areas to floating bunker barges and an on-water system of LNG bunkering.

“The Chinese are going to make the running here, pushing the Yangtze River, Bohai and the PRD,” he said. “2020 is a very short time away when we’re thinking about planning facilities and infrastructure let alone getting regulatory approval,” he warned.

Colwill suggested that the first steps to make this happen in Hong Kong could be with PRD local vessels and then on to container vessels and potentially in future for bulk carriers, although this will prove harder with some of the routes they trade on.

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