Regulate sulphur content of ship fuels or offer more incentives in Hong Kong?

An article in Bloombergbusinessweek (January 14,2013) describes the low sulphur content fuel (0.5 percent sulphur), which is 14% of permissible limits, used by the Maersk shipping line. The Hong Kong port offers a 50% reduction in port costs, but that only covers 40% of the cost to use this reduced sulphur fuel. The benefit if all shipping lines used this fuel in Hong Kong would be an 80% reduction in sulphur dioxide emmissions. But Maersk claims many shipping lines are using the higher sulphur content, cheaper fuel, thus making Maersk uncompetitive. Should the government accede to requests by Maersk wants to issue regulation requiring use of low sulphur fuel ? Or would it be better to increase the incentives for those shipping lines that do comply ? Or would the demand side benefits to Maersk, from shippers who want to reduce their carbon footprint, more than cover the additional cost of the fuel?

About aviyer2010

Professor
This entry was posted in Global Contexts, Operations Management, Supply Chain Issues, Sustainability and tagged , , , , , , , , , , . Bookmark the permalink.

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