Reducing Air Emissions through Clean Ship Incentive Programs

Abstract

The Port of Long Beach (POLB) designed the GreenShip Incentive Program in order to improve air quality. This program functions as an incentive scheme encouraging shipping companies to deploy a greater number of lower-emissions ships. The program utilizes the International Maritime Organization (IMO) standard that rank the emission rates of ships by tiers from worst to best —from Tier 0 to Tier 3. POLB awards $2,500 to a shipping company each time one of its Tier 2 ships comes to port. Intuitively, this incentive should entice shipping lines to send cleaner ships (i.e. of a higher Tier) in order to receive the monetary award. However, a new ship costs substantially more than a monetary award of a few thousand dollars, and POLB has a limited budget for such awards. In light of this policy challenge, our paper assesses other factors related to a monetary incentive that could increase shipping lines’ deployment of Tier 2 ships to POLB and other ports in the Pacific. We aim to increase shipping lines’ willingness to deploy cleaner ships by, on the one hand, improving their customer experience and mechanisms for communication and feedback and, on the other hand, lowering administrative costs. This study will evaluate proposed policy options according to the following criteria: (1) Potential to Increase the Share of Tier 2 ships (2) Financial Feasibility(3) Political Adaptability(4) Accountability. Ultimately, we recommend that the current informal working group among Pacific ports establish a new, formal collaboration —the Pacific Port Partnership —and create and utilize an information portal (referred to as the Pacific Environmental Portal) to centralize data and communications with shipping lines. This strategy would improve shipping lines’ awareness of Pacific port incentive programs and reduce the resources required to apply for ports’ separate incentive offerings.