By Peter de Langen
In a recent academic conference in Hamburg, various papers addressed differentiated port dues for green ships partly to address the European Commission’s evident favouritism of such an approach, writes Peter de Langen.
While the idea is appealing, port policy makers may be overly enthusiastic about their potential impact while ports may see this as a relatively easy way to demonstrate their commitment to the environment.
However, the impact of differentiated port dues may be limited for a number of reasons. Port dues represent only a very small part of the total port costs of ships and the core decisions affecting the green performance of the ship are in the design/purchasing phase.
Quite often, ship owners that lease a ship have no detailed idea on the future deployment of the ship. Even if shipping companies purchase new ships they do not know where these will be deployed in the coming years. Therefore, ports, especially in Europe, offering fairly small discounts on ships with a strong environmental performance cannot really influence design choices.
Furthermore, unless the criteria for green shipping is updated every year, ports will end up giving discounts to new ships as technologies advance further reducing the impact of differentiated port dues as newly-built ships will meet the criteria anyway.
In the car sector, governments provide differentiated taxes for low emission cars, but the criteria are continually re-assessed as technologies evolve. However, adopting this strategy for shipping will increase administrative costs and introduces uncertainty for ship owners, reducing the impact of these charges.
Finally, the ‘transaction costs’ of differentiated port dues are significant, as ships must demonstrate that they qualify for the discount and port authorities have to handle a more complex pricing structure.
In short, for small port authorities I would argue that they have to answer the question: do we want to pursue differentiated pricing even when the impact is very small? The question differs for larger port authorities: how does the impact of our investment in differentiated port dues compare to alternatives to improve the sustainability of the port – for example enabling wind energy in the port area, electric shore power, enabling re-use of heath and steam of industries in the port, and the use of electric vehicles in the port.
First published by The Analyst in his Port Strategy column
