Port of Gothenburg to give environmental discount for LNG-powered ships

July 7, 2014

(Source and Article in Swedish: Sjöfartstidningen)

The Port of Gothenburg is taking the lead in encouraging shipowners to invest in LNG to reduce environmental impact.

The Port of Gothenburg will reduce its port tariff substantially for ships using liquid natural gas (LNG) as fuel. LNG-powered ships will receive a total tariff discount of 30 percent when they call at the port. The discount will come into effect at the beginning of 2015 and will continue for four years. The aim is to induce more shipping companies to switch to cleaner fuel.

“We have long believed that LNG is the fuel of the future. This initiative is entirely in line with our ambition to reduce the environmental impact of shipping and create a sustainable Scandinavian freight hub”, says Magnus Kårestedt, Chief Executive at the Port of Gothenburg.

The Port of Gothenburg believes that there are considerable environmental benefits to be gained from using LNG in shipping and industry. It states that sulphur and particle emissions will be reduced to almost zero, nitrogen emissions by 85-90 percent and carbon dioxide emissions by 25 percent.

New tariff

The discount is included in the new port tariff that the Port of Gothenburg will introduce on 1 January 2015 in conjunction with conditions for shipping in the Baltic and North Sea changing with the introduction of new, stricter regulations governing sulphur emissions. The principle is that ships with a high environmental performance will be recompensed.

Two indexes will be applied as a basis for discounting ? Environmental Ship Index and Clean Shipping Index. The port notes that ESI is used by many ports around the world, both in Europe and the rest of the world. The Clean Shipping Index is based on the demands made by the freight-owners on the shipping industry.

The port has informed its customers that in the new port tariff to be introduced in 2015, ships that are classed according to ESI and have 30 points or more will receive a 10 percent discount (based on GT). Ships that qualify for the green class according to CSI will receive a 10 percent discount (based on GT). In addition to the index-based discount of 10 percent, LNG-powered ships will receive a further 20 percent discount on the port tariff until December 2018.

?With this clear economic incentive in the port tariff, we want to help speed up developments in our region?, the port writes in a circular to its customers.

Quick results

A shipping company that can look forward to the reduced port tariff is Terntank, which has four LNG-powered ships on order at a Chinese shipyard. Two of the ships will be signed to long-term charters with the Finnish oil company NEOT and one of the ports they will be calling on to load cargo will be Gothenburg. Terntank?s newbuildings will receive the maximum discount on the port tariff in Gothenburg.

?We want to thank the Port of Gothenburg for showing their willingness to take action when it comes to environmental investments. If there will also be discounts on fairway dues, as has been indicated, it will be a historic step and will reduce emissions dramatically in a relatively short space of time. Let?s hope that more ports follow Gothenburg?s example?. says Tryggve Möller at Terntank.

Welcome decision

The port?s decision has been welcomed by the whole shipping industry. Carl Carlsson, who is responsible for environmental issues at the Swedish Shipowners? Association, emphasises that it is not technology that is the limiting factor. It is now a question of creating the necessary conditions for investing in the new and environmentally friendly solutions that already exist or are in the pipeline.

?From the perspective of the shipping companies, it?s no longer a question of technology. Now it?s a question of finding financial instruments. We must now focus on the financing and financial side and help each other if we all want this type of shipping to be reality in the Baltic?, he says to the Scandinavian Shipping Gazette.

The Swedish Shipowners? Association is hoping that more ports will adopt the same or a similar system.

?The Port of Gothenburg is demonstrating leadership and a close understanding of the situation facing the shipping companies. Working within the framework of the Zero Vision Tool project and our excellent collaboration with HELCOM, we will also ask other ports in the Baltic to help. Terntank?s LNG-powered newbuildings will be deployed in traffic to and from Finland and, naturally, we will ask these ports first?, says Carl Carlsson.

The Swedish Maritime Administration has announced that it will give an ?early mover? discount on fairway dues although it has not announced the size of this discount.

?We presume and hope that the Swedish Maritime Administration?s discount will be technology neutral?, says Carl Carlsson.