A Study on Green Shipping in Major Countries: In the View of Shipyards, Shipping Companies, Ports, and Policies☆,

ABSTRACT

The purpose of this study is to define green shipping and eco-friendly vessels and identify the regulations and current market situation regarding eco-friendly vessels in major countries such as Europe, United States, Japan, China and South Korea within the framework of shipping companies, shipyards, ports, and policies. This conceptual study defines and analyzes the current market situation of green shipping based on the previous literatures as well as the cases of each stakeholder in major countries. As the results, this study identifies six major problems and proposes countermeasures to enhance strategic plans in preparation for green shipping in South Korea. The countermeasures are 1) the establishment of a shipping–shipbuilding collaborative network, 2) information sharing and joint cost reduction for shipping and shipbuilding industry, 3) investment in R&D in eco-friendly vessels by shipbuilding industry, 4) expanded support for LNG fueled ship.

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Keywords

Eco-shipGreen shippingIMO environmental regulation

1. Introduction

Because of the world economic downturn since 2008, worldwide cargo and trade volumes have decreased. The supply–demand imbalance in the shipping market following the decline in cargo volume has led to a decline in long-term freight rates. However, despite the long-term supply–demand imbalance, newbuilding orders have increased. In particular, large-scale ship orders have benefited from economies of scale in the wake of the shipping downturn, although special purpose ship orders have added to oversupply. In this context, the substitution of environmentally friendly, high efficiency vessels for older ships is the main cause of oversupply.

Aside from the recession in the shipping market, related global environmental regulations are strengthening. These regulations include the toughening of the sulfur content standards for bunker oil and the control of the Emission Control Area (ECA), the English Channel, the North Sea, and the Baltic Sea. Thus, despite the recession, shipping companies need to take measures to meet international environmental regulations (Kim, 2015a, Kim, 2015b).

First, the environmental regulations of the International Maritime Organization (IMO) are gradually expanding. According to the IMO Conventions, ships are to be constructed with an immediate reduction in greenhouse gas (GHG) emissions of 15%, then 20% by 2020, and 30% by 2025. In addition, the IMO approved internal guidelines for GHG regulation at the 59th General Assembly of the Marine Environment Protection Committee (MEPC) in 2009 and revised Marine Pollution (MARPOL) Annex VI in order to reduce carbon dioxide (CO₂) emissions from ships by 2030 at MEPC’s 62nd General Meeting in July 2012 (Kim, 2015a, Kim, 2015b).

Currently, eco-friendly vessels are green vessels that meet the IMO Conventions, which came into force in accordance with regulations published by the IMO. Despite the fact that commercialization is yet limited, the introduction of eco-friendly vessels is necessary in order to meet the environmental regulations of international ports and ports in developed countries as well as to handle the replacement of bunker oil, which involves high uncertainty and represents the largest portion of operating costs in the shipping industry (Yang, 2012).

Eco-friendly vessels are recognized as a new competitive advantage because of environmental regulations, fines, and incentives. Thus, many shipping companies are preparing eco-friendly ships that offer such an advantage. As a result, despite the IMO’s MARPOL 73/78 annex, the importance of eco-friendly vessels to shipping companies lies in their role as strategic vessels that can avoid environmental fines, regulations, various other fines, and taxes as well as their energy-efficient capability. The shipbuilding and shipping industry is taking the lead in building eco-friendly vessels that reduce fuel consumption, thereby maximizing fuel efficiency by replacing existing ships that have difficulty competing in terms of cost and that cannot meet environmental standards.

Most of the research studies on this green shipping have focused on finding the antecedents of green shipping or the links between performances and green shipping (Lai et al., 2011, Lun et al., 2015, Yang, 2017, Yuen and Lim, 2016, Yuen et al., 2017). Furthermore, since the subjects of empirical analysis mainly targeted to specific countries such as Singapore and Taiwan, it was difficult to have an overall and comprehensive understanding of green shipping in major countries. Based upon the literature review, we found a serious lack of exploratory study being conducted to understand the current situation and trends of eco-friendly vessels in major countries.

Thus, the purpose of this study is to define current eco-friendly vessels against this background and analyze the need for such vessels, their limitations, and their problems. Specifically, this study identifies market trends, regulatory trends, and shipbuilding technology related to eco-friendly vessels in detail and proposes measures to address these for the shipping industry in Korea.

2. Literature Review

2.1. Definitions of Green Shipping and Eco-Friendly Vessels

Green shipping refers to the use of resources and energy to transport people and goods by ship and specifically concerns the reduction in such resources and energy in order to preserve the global environment from GHGs and environmental pollutants generated by ships. From the operational point of view, green shipping must comply with the environment-related operating conditions regulated by the IMO. These conditions are described by conventions such as MARPOL 73/78, the Convention on Oil Pollution Preparedness, Response, and Co-operation regarding Hazardous and Noxious Substances (OPRC-HNS), the Anti-fouling Systems (AFS) Convention, the Ballast Water Management (BWM) Convention, and the Ship Recycling Convention. They are also discussed in the IMO’s GHG studies. The overall purpose is to manage and monitor all harmful substances (marine pollutants and air pollutants) emitted from ships (Im et al., 2005).

Eco-friendly vessels serve as key tools in the shipping and operational sectors that enable green shipping. A green ship, or eco ship, means a ship that has reduced GHG emissions through the development of technologies related to fuel savings and alternative fuels.

Previous research regarding green shipping mostly focused on finding the antecedents of green shipping or the links with performance. The major studies conducted recently are as follows.

Lai et al. (2011) propose a conceptual framework for evaluating green shipping practices and develop several propositions stating the conditions under which shipping firms would behave in an environmentally responsible manner. Therefore, the paper identified the antecedents that are pertinent to their adoption, and discussed their performance implications.

Lun et al. (2015) suggested the concept of Greening and Performance Relativity (GPR) and used an input-output analytic approach to investigate how greening operations are related to firm performance in shipping operations. According to the survey data form the shipping industry in Hong Kong, the results show that there is a positive association between greening and firm performance in shipping operations.

Yang (2017) presented a study which utilized a conceptual framework with institutional theory as its base to empirically evaluate the impact of institutional pressures, internal green practices, and external green collaborations on green performance. Yang (2017) suggests the coercive, normative and mimetic pressures as the key institutional pressures and green shipping practices and green operations as the internal green practices, green collaboration with supplier, green collaboration with partner, and green collaboration with customer as the external green collaborations. According to the SEM, the results show that institutional pressures have positive effects on internal green practices; internal green practices positively influence external green collaborations; internal green practices and external green collaborations positively influence green performance but institutional pressure is not positively associated with external green collaborations.

Yuen et al. (2017) analyzed the drivers and outcomes of sustainable shipping practices through the lenses of stakeholder, planned behavior, and resource dependence theories. According to the survey data collected from shipping companies, the results reveal that a shipping company’s stakeholder pressure, attitude, and behavioral control directly influence the adoption of sustainable shipping practices, and indirectly influence business performance. Furthermore, stakeholder pressure directly influences attitude, behavioral control, and business performance.

Yuen and Lim (2016) seeks to identify, rank and discuss the barriers to the implementation of strategic CSR in shipping. The results based on the survey from 600 shipping companies in Singapore showed that factors relating to lack of resources, lack of strategic vision, lack of measurement system, high regulatory standards, and low willingness to pay for CCSR are significant barriers to implementing strategic CSR in shipping.

2.2. Key Regulations Related to Green Shipping

2.2.1. IMO Regulations

MARPOL 73/78 is an environmental convention to prevent marine water quality pollution and marine air pollution that may occur because of ships. The convention has been continuously revised since its adoption in 1978. Annex VI contains the Convention on the Prevention of Pollution by Air Pollutants, which limits the emission of sulfur oxides (SOx), nitrogen oxides (NOx), and volatile organic compounds (VOCs) (IMO, 2016).

MARPOL 73/78’s regulatory phases are as follows. Step 1: In accordance with MARPOL 73/78, new building regulations concerning NOx were applied to vessels equipped with diesel engines of 130 kW or more from July 1, 2010. Step 2: Secondary regulations, which started in 2011, aimed to cut NOx emissions by a further 15% to 20%. Step 3: Tertiary regulations, which began in 2016, are designed to cut 80% of the current emissions in the ECA region.

The IMO have announced three ways to reduce GHG emissions. The first is the Energy Efficiency Design Index (EEDI), a technical measure of GHG emissions reduction. The second comprises the Energy Efficiency Operational Indicator (EEOI) and the Ship Energy Efficiency Management Plan (SEEMP), which together are GHG mitigation measures from an operational perspective. The third is market-based measures (MBMs), which consider the carbon market, such as the emissions trading system, in terms of complementary technical and operational measures (IMO, 2016).

As a technical measure to reduce GHG emissions, the EEDI has been added to MARPOL Annex VI and applied to newbuilding orders from January 1, 2013. The EEDI’s primary purpose is to encourage the development of more efficient engines and vessels and to compare CO₂ emission characteristics in terms of vessel size.

The EEDI is a technological regulation that applies only to newbuilding orders from 2013 in order to reduce GHG emissions. The SEEMP and EEOI are operational measures that apply to existing and new ships.

The SEEMP refers to all ships of GT 400 tons or more from January 1, 2013. The aim is to improve the energy efficiency of shipping operations and reduce the amount of GHG emissions.

The SEEMP Directive recommends the improvement of the energy efficiency of ships through four steps: planning, implementation, monitoring, and evaluation. These four steps are voluntary rather than obligatory.

The EEOI is used as a tool to monitor the operational status of vessels and is based on the content of the SEEMP. The EEOI is a recommendation and not a mandatory monitoring tool of the SEEMP.

The purpose of MBMs is to offset any increase in ships’ GHG emissions, provide financial support through incentives for high-efficiency shipbuilding and operations, and reduce and adapt to climate change in developing countries. The basic idea of MBMs is to give incentives to low-carbon-emitting ships and penalize high-carbon-emitting vessels. The funds generated are to be used for climate change mitigation and adaptation in developing countries.

MBMs started at the IMO’s 59th MEPC meeting in 2009. They are an aspect of the various types of such measure proposed by numerous countries and maritime-related international organizations for implementation in 2017. Discussions about the selection of options are being undertaken within the IMO.

2.2.2. Changes in IMO Regulations

Over time, environment-related operating conditions, regulations identified by the IMO, and the accepted directions of related players have changed. The major changes from Annex I to Annex VI in MARPOL 73/78 are as follows. First, the scope of application has expanded and standards have been strengthened. In this regard, the direction of pollution reduction has been changed from marine pollution caused by oil and harmful substances generated by ships during operations and berthing to pollution that is harmful to the human body and caused by air pollutants (SOx, NOx, etc.). Second, the regulations regarding the prevention of accidents have been strengthened. Prior regulations showed a strong tendency to deal with marine pollution that is generated by accidents during shipping operations. However, in recent years, vessels have been regulated and managed from the perspective of their entire life cycles, from the design stage to their dismantling. Finally, active counteractions and regulations have been strengthened. In addition, port-based control is taking place to take account of the interests of shipping companies instead of shipowners; the protection of the health of the citizens of ports of call; and the profits of the manufacturers of ships in their own countries (Kim, 2013).

3. Eco-Friendly Vessels in Major Countries: Shipping Companies, Shipyards, Ports, and Policies

3.1. Eco-Friendly Vessels in Major Shipyards

3.1.1. Major Shipyards in Japan

The world’s shipbuilding and shipping industry is working to develop environmentally friendly shipbuilding technologies with the cooperation of various related organizations.

In Japan, research and development (R&D) of energy saving and carbon emissions reduction for ships is very active. In April 2013, the Japanese shipbuilding industry established the Maritime Innovation Japan Corporation (MIJAC), a collaborative research platform specializing in the R&D of shipping technology. The Oshima Shipyard, Shin-Kurushima Dock, Tsuneishi Shipyard, Sano-Yosu Shipyard, Nihon Yusen, and NK are investors in MIJAC. The research mainly concerns ships’ design, drying technology, ships’ operational technology, the technology involved in reducing harmful materials such as carbon dioxide that are emitted from ships, and the technology behind the utilization of marine energy. MIJAC has the advantage of being able to understand customers’ needs directly by conducting joint research with customers such as shippers, shipping companies, shipbuilders, classification societies, and marine equipment manufacturers. MIJAC can also respond quickly to changes in global market trends and circumstances. Examples of the direct results of such R&D follow.

Mitsubishi Heavy Industries has developed its Mitsubishi air lubrication system (MALS), which reduces air friction by injecting air into the bottom of a ship. Mitsubishi Heavy Industries has said that the use of this technology could cut GHG emissions by up to 25%. Indeed, the air lubrication system has been applied to three new post-Panamax class grain carriers of ADM America by Sumitomo, Japan.

A ship built at the Oshima Shipyard not only has the air lubrication system but also has a new bow design to minimize the resistance generated by the water. Moreover, the pin is placed in front of the propeller and a special device is installed in the propeller’s boss cap. Technology also converts the main engine’s output to propulsion. An important aspect of this example is that Japan is actively encouraging collaboration with the shipbuilding industry; hence, Japan is researching eco-friendly vessels and secure related markets.

Mitsui Shipbuilding won a contract to supply two electronically controlled gas injection diesel engines for each of two large liquefied natural gas (LNG) carriers built by Imabari Shipbuilding and ordered by Elcano, a shipowner in Spain. These energy-efficient, large, two-stroke, low-speed diesel engines can be used with heavy fuel oil and LNG, depending on fuel prices and environmental conditions. Consequently, they are attracting attention as environmentally friendly, next generation engines.

Kawasaki Heavy Industries was the first company in the world to develop a system to reduce pollutants, such as CO₂ and NOx from diesel engines in ships (Kim, 2015a, Kim, 2015b).

3.1.2. Major Shipyards in China

China is also striving to develop environmentally friendly ship-related technologies by cooperating with various related organizations. For example, on June 26, 2015 in Beijing, a research project on the “Core Technology for Round-Trip LNG Vessels,” one of the 863 plans initiated by Hudong-Zhonghua Shipbuilding, was finally agreed with support from the Ministry of Science and Technology’s high-tech center and various experts. Currently, China is spurring the development of eco-friendly ship technology centered on active LNG.

The COSCO Shipyard Group of China has been developing the design of a “Clean Sky” LNG-driven Kamsarmax bulk carrier since 2011. The Kamsarmax is classified as a Panamax-class bulk carrier optimized for Kamsar Port in Guinea, West Africa, the region that is the world’s largest bauxite producer. The Cosco Shipyard Group has developed the design with companies such as Golden Union and Lloyd’s Register. Recently, Lloyd’s Register confirmed the Approval in Principle (AIP); as a result, the design will be ready for construction in 2013. The Clean Sky vessel is expected to reduce GHG emissions by a large amount because it can choose to use a dual fuel or medium fuel system from diesel, heavy oil, and LNG fuels (Kim, 2015a, Kim, 2015b).

3.1.3. Major Shipyards in Europe

Several European countries are working together on eco-friendly ships. Moreover, under the leadership of the Dutch Damen Group, 46 European shipbuilders, equipment manufacturers, and research institutes from 13 countries have officially launched a joint research project to develop eco-friendly shipping technologies. This project, called “LeanShips” (low energy and near to zero emissions ships), is an energy-saving and eco-friendly technological collaboration that is working toward effectiveness and reliability. The aim is to reduce ships’ fuel consumption by up to 25%; CO₂ emissions by at least 25%; and SOx, NOx, and particulate matter (PM) emissions to zero. The LeanShips project is one of the marine research initiatives of Horizon 2020, a European research and innovation framework program that is being undertaken by the European Union from 2014 to 2020. EUR 17 million in R&D funding has been made available by the European Commission, with initial meetings beginning in June 2015, followed by full-scale activities. The LeanShips project is conducting various types of eco-friendly shipping research. This includes the development of energy-efficient and environmentally friendly technologies related to small- and medium-sized vessels, and cruise ships, that navigate European waters. Compressed natural gas (CNG), LNG, and marine diesel oil (MDO) are among the fuels being considered to develop high efficiency LNG carriers, to reinforce the LNG propulsion of offshore cargo ships, and to apply large propellers to general cargo ships.

3.1.4. Major Shipyards in the U.S.

One of the representative examples of eco-friendly ships in the U.S. is the Navy’s Ship Service Fuel Cell (SSFC) project. The project has been implemented by the Navy under the auspices of the Office of Naval Research (ONR) to reduce the fuel budget and develop eco-friendly power generation systems aimed at increasing combat power. SSFC uses a 2.5 kW molten carbonate fuel cell (MCFC) as the main power source for ships. The Maritime Administration (MARAD) has reviewed the application of the fuel cell to the 434 TEU feeder, a diesel/electric propulsion ship. The Water Transit Authority (WTA) has also considered it for use on a high-speed ferry (Kim, 2015a, Kim, 2015b).

3.2. Eco-Friendly Vessels in Major Shipping Companies

Unlike the situation in Korea, companies that are developing eco-friendly ships around the world are actual users of such ships. These companies include MAERSK, Nippon Yusen Kabushiki Kaisha (NYK), and Mitsui O.S.K. Lines (MOL). These large-scale shipping companies such as MAERSK (whose ships are equipped with environment-friendly paints and waste-heat recovery equipment), NYK (which has designed the Super Eco Ship 2030 concept ship), and MOL (which has launched the ISHIN Smart Ship Project) are developing eco-friendly vessels alongside consortiums that comprise governments, shipyards, and institutes, with their own R&D organizations at the center. In Europe, shipping companies are participating in the development and commercialization of marine fuel cells with projects such as Zero Emissions Ships (Zemships), Fellowship, the Validation of Renewable Methanol-Based Auxiliary Power Systems for Commercial Vessels (METHAPU), and e4ships.

3.2.1. The Maersk Group

Maersk’s environmental business strategy is as follows. In 2008, the company approved and promoted a company-wide eco-friendly policy called “co-efficiency.” “Co-efficiency” encourages technological innovation in order to increase energy efficiency, reduce emissions, and lower operating costs. Through its performance indicator monitoring system, Maersk is able to optimize ships’ navigation and minimize fuel use. These achievements include the reduction of fuel consumption through reduced-speed operations, exhaust heat reuse systems, continuous hull cleaning, minimum ballast navigation, and optimized sailing plans. In order to reduce SO_x emissions, Maersk is using low sulfur fuel that meets the IMO standard (0.1% m/m of fuel sulfur content). Moreover, if a vessel is in dock, the auxiliary engine is used to reduce SO_x emissions. In addition to the foregoing design- and operation-related initiatives, Maersk uses Alternative Maritime Power (AMP) to provide a ship with the necessary power from the land and is pursuing the Green Port Policy. The latter uses natural gas to generate electrical energy for running onshore equipment.

As the world’s largest container carrier, and as an oil and gas carrier, Maersk intends not only to comply with international shipping agreements, such as the IMO Conventions, but also to play an important role in the formulation of international conventions. Maersk expects that it will be 10 to 15 years, or possibly more, until the ship recycling agreement comes into force. Maersk will then meet the requirements for the agreement’s implementation. The Maersk Group is actively responding to climate change by continuously developing technologies related to shipping and navigation. Maersk saves 20% of its fuels through engine optimization, reduced hull friction, improved propeller design, eco-friendly ship design, and eco-friendly navigation. In addition, by introducing a waste heat recovery system that recycles thermal energy generated from ship engines, it reduces fuel consumption by 8 to 10%. Currently, Maersk has introduced waste heat recovery equipment in 30 ships and requested the system in 42 ordered ships.

Maersk is hedging against eco-friendly shipping by playing a leading role in introducing ship designs and equipment that increase operational efficiency and decrease environmentally harmful substances. In addition, Maersk has established shipping management plans and standards to respond to the IMO Conventions, such as the ballast water treaty and the recycling agreement, in advance. Further, the company has reduced the emission of toxic substances and increased energy efficiency through low-speed operations. In response to green shipments, Maersk will be subject to benchmarking by other shipping companies and will influence the development and operation of ship-related green technologies. Because of Maersk’s shipbuilding orders and the actions of other shipping lines that are benchmarking the company, it is expected that Maersk will influence maritime transactions such as the difficulty in the chartering and trading of ships that do not meet green shipping conditions.

3.2.2. The COSCO Group

The COSCO (China) Group, a leader in the shipping industry in China, is launching an “Ultra Slow Steaming” campaign. “Ultra Slow Steaming” means that a vessel’s speed is very low and less than its normal speed. Normally a container vessel operates at approximately 20 knots. Through slow steaming, the COSCO Group can save 180,000 tons of fuel oil per year and reduce CO₂ emissions that are equivalent to 540,000 tons.

In addition to slow steaming, the COSCO Group is pursuing measures such as the rational design of route wiring, the reduction of docking times, and the selection of key service points. It is also working toward a “low-carbon ship” plan that includes detailed shipbuilding experiments, nuclear-powered ship construction, and very large crude carrier (VLCC) ballast water reduction projects. Further, sailing vessels can reduce fuel consumption by supporting the propulsion of a ship’s main engine through sails installed in the cargo hold.

The COSCO Group has partnered with Solar Sailor, an Australian Environmental Protection and Navigation Science and Technology Corporation, to install a solar sail in one bulk carrier and one oil tanker in order to promote this maritime environment-friendly ideology. The sail can automatically adjust its angle to match wind direction and sunlight. A ship can then proceed in accordance with the wind, thereby saving 20% to 40% of fuel. Moreover, the sail can provide 5% of the electricity required for shipboard facilities.

3.2.3. The NYK Line

The NYK Line, a large shipping company in Japan, is designing the NYK Super Eco Ship, which could be the ultimate model for eco-friendly vessels, with the goal of introducing the ship into service in 2030. This initiative has spurred the development of related technologies. The ship is a new concept vessel using a fuel cell as the main power source. The fuel cell supplies 40 MW of energy; further, a solar panel and sail produce 1–2 MW and 1–3 MW respectively. According to NYK, 69% of GHG emissions can be reduced compared with the same class of standard vessel if all the technology is completed as designed.

At present, NYK is seeking to improve the propulsion power of ships by developing technologies such as MT-FAST, dual inversion propellers, air lubrication systems, and electronic control engines. In this regard, NYK is testing four bulk carriers and comparing them with similar standard vessels. NYK has confirmed that there is a fuel saving effect of approximately 5%.

NYK has been conducting pilot tests of air lubrication systems using a module carrier (a special ship that carries heavy items such as factory plant) of the NYK-Hinode Line, Ltd. in cooperation with Mitsubishi Heavy Industries Co., Ltd.

3.3. Eco-Friendly Vessels in Major Ports

3.3.1. The U.S.

The U.S. Environmental Protection Agency (EPA) is implementing an eco-friendly port policy called “Clean Port USA.” It is also introducing the SmartWay Transport Partnership Program to streamline port logistics and reduce GHG emissions. Further, the EPA has revised the Clean Air Act based on the Marine Vessel Emission Act of 2007 and specified the use of low-sulfur oil with a content of less than 1,000 ppm as the main engine and auxiliary engine fuel for ships entering more than 90% of U.S. ports.

Moreover, the Maritime Pollution Prevention Act of 2008 has officially adopted the content of the IMO’s MARPOL Annex IV, which came into force in May 2005, within the United States.

The Clean Air Act has been in place since the 1990s to maintain clean air. The EPA has set limits on air pollution by selecting pollutants that are relevant to the transportation sector and are believed to be harmful to public health and the environment.

Vessels entering a port, and when at their berths, emit exhaust gases in accordance with the type of fuel that they use. However, it is possible to reduce these exhaust gas emissions by regulating the speed of the ships in and out of a port and reducing the emissions with low-sulfur oil

Participating vessels in the policy receive a donation discount. At first, a ship’s deceleration measures within a port will be extended to within 20 to 40 nautical miles. In addition, the AMP facility that supplies electricity from the land to a ship when it is at a berth is constructed to simultaneously suppress the emission of the exhaust gas that is generated when the ship is operational. Table 1 summarizes California’s policy for low-sulfur fuel regulation.

Table 1. California low-sulfur fuel regulation policy.

3.3.2. The Netherlands

The Netherlands is implementing a policy to reduce CO₂ emissions by 30% by 2020 compared with the 1990 level. The Netherlands intends to reduce its CO₂ emissions by more than the requirement of the European Union (EU). The reduction target for the EU is 20% lower than the 1990 levels by 2020.

The goal of the Rotterdam Climate Initiative (RCI) is to reduce CO₂ emissions by 50% compared with 1990 levels by 2025 and promote 100% climate proofing by 2025. The target of 50% is 30% higher than the EU’s 2020 target and 20% higher than that of the Netherlands. The Rotterdam Energy Port and Rotterdam Sustainable Mobility are directly related to the harbors that are among those subject to the 50% reduction targets for CO₂ emissions. The Rotterdam Energy Port states that more than 85% of Rotterdam’s CO₂ emissions come from the industrial sector and that energy efficiency, energy produced with low CO₂ emissions, and energy-efficient product use are required. Rotterdam Sustainable Mobility recommends the use of clean fuel and alternative transportation.

In addition, the Green Award Foundation has been established to implement the Green Award system (see Table 2). This system gives benefits such as port cost discounts to certified shipowners.

Table 2. Green award incentives.

3.3.3. Japan

The Japanese government has established a group of specialists and created a port environmental policy that develops the existing port environmental policy and takes account of climate change. The policy was implemented on November 22, 2007 by the Ministry of Land, Infrastructure, and Transport in accordance with article 14, paragraph 1, item 1 of the relevant Act, the “Establishment of Port Policies for Climate Change due to Global Warming.” The specialist group consists of experts from academia and industry. The group has held regular meetings since 2007.

In 2003, Japan’s total global CO₂ emissions was 25.2 billion tons. This figure was expected to increase by 40.6% by 2010 compared with the 1990 level. Japan is planning to make a “Low Carbon Society Action Plan” based on the progress achieved in achieving the goal of cutting GHG emissions by 60% to 80% by 2050.

3.3.4. China

In its twelfth five-year development plan, the Chinese government established a national policy regarding resource saving, environmental protection, and climate change. In accordance with this national policy, the Transportation Bureau has introduced relevant policies and systems.

First, the Transportation Twelfth Five-Year Development Plan had a separate chapter for green transportation. This focused on low energy consumption, the reduction of pollutant emissions, and the establishment of a national green transportation system. These goals were to be achieved through the protection of the ecological environment and the enhancement of pollution elimination. According to the plan, China set a goal to reduce overall energy consumption per unit of cargo in the port sector by 8% from 2005 to 2015. In addition, China’s government set a goal to reduce CO₂ emissions per unit of cargo by 10% by 2015. The latter was in accordance with the Twelfth Five-Year Plan for the Reduction of Road Transportation Energy.

Shenzhen port was due to have converted all of its port trailers from diesel to LNG by 2015. Moreover, all rubber-tired gantry (RTG) cranes were due to change from diesel use to power use. In addition, the government has been working to establish an emissions control area in the Pearl River Delta (PRD) region and has established a low-sulfur fuel subsidy policy. As a result, from January to June 2014, 75% of the fuel cost difference was paid as a subsidy for vessels using low-sulfur fuel.

3.4. Major Countries’ Eco-Friendly Vessel Policies

3.4.1. Policies in the EU

In October 2009, the European Commission proposed that GHG emissions in the shipping industry should be reduced by 20% by 2020 compared with the 2005 levels. In recent years, the EU has been actively participating in GHG measures that include the introduction of carbon taxes for consumers and businesses that use polluting products and technologies.

The EU’s green shipping policies can be divided into policies that directly reduce emissions from ships and modal shift policies that indirectly reduce emissions. A typical policy of the former category is a marine pollution control strategy; a typical policy of the latter is a Marco Polo program. The EU’s direct regulations are in overall harmony with those of the IMO; however, the EU has a stronger response than the IMO regarding shipbuilding GHG reductions and the introduction of double-hull oil tankers.

First, the EU’s policies that directly reduce emissions from ships are enforcing sulfur dioxide emission regulations and encouraging the use of land power equipment. In this regard, the EU has decided to enforce regulations about the sulfur content in fuel oil used in ships through EU Directive/2005/33/EC. This regulation has been applied since January 1, 2010. In accordance with the regulation, fuel oil exchange procedures and equipment operation manuals should be provided on a vessel. Further, the use of fuel oil with a sulfur content of less than 0.1% m/m and the training of crew members regarding fuel oil change times and the application of EU fuel oil regulations should be recorded in the log book. The equipment to be regulated for fuel oil use is all a vessel’s engines and boilers that operate while at its berth.

On May 8, 2006, Commission Recommendation 2006/339/EC was implemented. The Commission stressed that current trends may have a greater impact on polluting emissions than maritime transport by 2020. It also recommended that member states should install land-based power equipment for use by vessels at ports and give economic incentives to operators that use these power facilities. In addition, member states were asked to work on the international standardization of ports’ land power equipment in accordance with IMO guidance.

Second, since 1975, European modal transport policies have encouraged modal shifts from road transport to rail, inland water, and coastal transport. At the time, it was predicted that the current situation would lead to a rapid increase in the proportion of road transport in Europe. In order to overcome this crisis, the Pilot Action for Combined Transport (PACT) was introduced. The EU, which failed to deliver the expected results from PACT, then introduced a new modal shift policy, the Marco Polo program, based on the lessons learned,. The Marco Polo program was designed to be systematic and future-oriented compared with the PACT program. The European Parliament introduced Commission Regulation 1382/2003 (Regulation (EC) No. 1382/2003 on July 22, 2003 and endorsed financial support for the Marco Polo program in order to improve the environmental efficiency of the freight transport system.

The Marco Polo I program, like the PACT program, aimed to support commercial services in the logistics market. However, unlike the PACT program, Marco Polo I set a quantifiable and verifiable goal for modal shift. In other words, the goal was to keep the ratio of vehicles in 2010 at the 1998 level. This program focused on the commercial logistics services market and not research, development, or infrastructure building. The ultimate goal was to help move cargo transport, which amounted to approximately 12 billion t-km per year, from the road to coastal shipping, rail, and inland waterways.

The Marco Polo II program has a purpose similar to Marco Polo I. In other words, its purpose is to contribute to an efficient and sustainable transportation system by reducing traffic congestion and increasing the environmental efficiency of complex transportation systems. The Marco Polo II program has two additional funded projects, the Maritime Expressway and Congestion Avoidance.

3.4.2. Policies in the U.S.

The U.S. is relatively passive in its participation in global eco-friendly shipping policies compared with the EU and Japan; however, it is active in its own internal problems. This can be seen by the addition of the North American coast to the ECA in Annex VI of the MARPOL Annex I mandatory double-hull requirement. In addition, U.S. green shipping policy is regulated and enforced more by local governments than by federal government regulations, especially by western governments around the state of California.

The regulation of atmospheric gas (SOx and NOx) emissions by U.S. vessels is mainly through MARPOL Annex VI and the ECA. In December 2009, the Federal EPA released the final emissions standard for a marine engine (a category 3 marine engine) with a capacity of more than 30 liters per cylinder, mounted on American ships under the Clean Air Act. This new standard is identical to the MARPOL Annex VI amendment and has two stages: a short-term standard for new-build engines applied at the beginning of 2011 and a long-term standard requiring an 80% reduction in NOx applied in 2016. The EPA also changed the diesel fuel program to allow the production and sale of diesel containing more than 1,000 ppm of sulfur for use in category 3 marine engines. Thus, in the event that ship operators fail to achieve emission reductions, most U.S. marine waters will have regulated the production and sale of marine engines (Im et al., 2005).

3.4.3. Policies in Japan

Japan has noted the modal shift that transforms road transport into coastal transport because of its geographical characteristic as an island nation. To this end, Japan intends to promote the construction of modal shift vessels and implement policies such as infrastructure maintenance, regulatory maintenance, and subsidy payments.

In order to facilitate the construction of modal shift vessels, Japan’s railway transport organization has established a shared construction system. It has also abolished the regulation of supply and demand adjustment for the domestic passenger ship business in order to change the licensing system to a permission system that facilitates entry into the coastal freight business.

The port sector is also implementing policies to reduce GHG emissions and that facilitate the transformation of the logistics system centered on ports. The main policy is to improve the infrastructure first; for example, by improving the roads near the port in order to prevent traffic congestion around the gate, which increases GHG emissions around the terminal, and to facilitate the easy use of ports by IT systems such as the EDI. Moreover, ports are introducing land-based power supplies called idling stops. In 2006, the Port of Tokyo checked the connection’s location, the shape and handling of the connection cable, and the response in case of an emergency. It also checked the effect of reducing emissions through a connection experiment between the land-side facility and the ship-side facility. Recently, the Port of Yokohama has been considering the introduction of a GHG emissions policy as a countermeasure against such emissions from container ships on international routes.

In addition, Japan is promoting a coastal feeder service and barge transportation. Energy-saving cargo handling equipment, a hybrid transfer crane, and a policy to promote electric-powered forklifts are also being introduced (Im et al., 2005).

3.4.4. Policies in China

China’s shipbuilding industry is the fourth largest in the world. The shipping sector in China is taking various measures to reduce GHG emissions effectively and reduce a certain amount of other emissions. Specifically, China has conducted in-depth research on relevant international agreements, rules, and regimes; it has then established relevant laws and regulations in a timely manner. China is also strengthening research on technical, management, and operational measures to exchange knowledge internationally. Further, China is promoting the reduction of GHG emissions and the quantitative development of the shipping industry at the same time by establishing an appropriate market mechanism in accordance with the development situation of each shipping company.

The Chinese government submitted a National Plan for Response to Climate Change and called for energy saving and the reduction of GHG emissions. Through this plan, China is promoting the development of a “resource-saving, environment-friendly” transportation industry. Further, the plan reduced the average energy consumption reduction targets for maritime shipping vessels in 2010 and 2020 by 11% and 20% respectively, compared with the 2005 level. Thus, the restructuring of the transportation mode is restricting the operation of vessels with high unit energy consumption and severe environmental pollution. In addition, China strictly implements and supervises the “shipping management regulations for old shipping” and actively promotes ship restructuring. In this regard, China is actively responding to the challenges of the low-carbon economy by pursuing the growth of a young and expert fleet and steadily scrapping vessels that have high energy consumption, high pollution levels, and low stability.

Since the MARPOL 73/78 Annex came into force in China, the government has issued a series of strong rules, regulations, and consensus statements from each relevant agency and city government in order to implement the domestic legislative process required by Annex VI. The spatial coverage of Annex VI is also being expanded.

The enactment of China’s laws and regulations foresees the arrival of China’s maritime low-carbon era; indeed, the development of green shipping in China is considered very urgent (Im et al., 2005).

4. Eco-Friendly Vessels in Korea: Shipping Companies, Shipyards, Ports, and Policies

4.1. Eco-Friendly Vessels in Korean Shipyards

In Korea, the development of eco-friendly ships mostly centers on shipyards. For example, Daewoo Shipbuilding & Marine Engineering (DSME) has been accelerating orders for LNG-powered vessels since 2014. It has also been studying shipping technology with the MAN Diesel Company and Hyundai Heavy Industries. LNG-powered vessels were introduced commercially in 2013 after collaboration with MAN Diesel, whereby the latter developed the vessels’ engines and DSME developed the LNG fuel supply system. DSME filed 200 patents related to this LNG fuel supply system at home and abroad (127 in Korea and 73 overseas) and completed the registration of 44 (40 domestic and four overseas) patents. Further, 38 patents related to the propulsion requirements system (PRS) were filed at home and abroad (22 in Korea and 16 overseas) and five cases were registered in Korea (Kim, 2015a, Kim, 2015b).

In 2017, Samsung Heavy Industries completed the construction of the first LNG carrier in Korea, called the EcoNuri, for the Incheon Port Authority. It is reported that the carrier can operate for 895 km with 10 tons of LNG. The annual fuel cost saving is 100 million won.

Since 2009, Hyundai Heavy Industries has also been developing LNG-propelled vessels. In December 2014, the company completed development of the ME-GI engine with world-renowned engine makers such as MAN Diesel and Wärtsilä. In 2009, for the first time in Korea, Hyundai Heavy Industries was the first to introduce a hybrid ship, Pacific No. 9, that uses engines and electric motors as power sources. Moreover, in 2012, the company succeeded in developing the world’s first dual-fuel engine for ships. This engine is capable of selectively using heavy oil and LNG, uses fuel oil with a high level of efficiency when navigating the oceans, and uses LNG to reduce pollutant emissions when approaching ports. This technology is called hybrid engines for marine use and is one of the green technologies that focuses on the overseas market in Japan and other countries (Kim, S., 2015; Lee, 2015).

4.2. Eco-Friendly Vessels in Korean Shipping Companies

Hyundai Merchant Marine has built a “GHG inventory,” a comprehensive GHG management system, which systematically manages all indirect sources such as electricity use as well as GHGs generated from ships, terminals, and buildings. In addition, the “Supply Chain Carbon Calculator” and “Ship Energy Efficiency Index” have been developed to systematically manage the energy used by a ship.

Hanjin Shipping has introduced a carbon emission calculator that can calculate the amount of CO₂ generated by each container transportation section. The company has also introduced “Eco Steaming” and “Route Optimization,” which set a vessel’s shipping speed at an economical level. This program is currently being tested. Further, a green management team has been newly established in order to respond positively to the minimization of carbon emissions.

4.3. Eco-Friendly Vessels in Korean Ports

In 2008, the Korean government announced the “Low Carbon Green Growth” policy and declared that the Ministry of Land, Transport, and Maritime Affairs would make all ports in Korea green ports with low carbon green growth. The Ministry has established a Basic Plan for Sustainable Transportation Logistics Development (2011–2020), based on article 7 of the Sustainable Transportation Logistics Development Act and article 53 of the Low Carbon Green Growth Basic Act, and with a CO₂ reduction target of 8.6 million tons. In 2012, the government introduced the 2020 Logistics GHG Reduction Implementation Plan (2012–2020) and set the total CO₂ reduction target in the logistics sector at 11.92 million tons, an increase of 3.32 million tons from the prior target (8.6 million tons). For the first time in this plan, the government set a port sector CO₂ reduction target. According to the newly set goals, Korea plans to reduce port sector CO₂ by 970,000 tons by 2020. This reduction is equivalent to a 39% reduction target compared with business as usual (BAU). Korea is also pursuing a green port adoption policy and green port technological development policy in accordance with the Basic Plan for Sustainable Transportation Logistics Development (2011–2020) and the 2013 Sustainable National Transportation Logistics Development Plan (Im et al., 2005).

According to the status of eco-friendly vessels in Korea, we can conclude that a large part of development is undertaken by shipyards in Korea. However, elsewhere, such development is mainly undertaken by shipping companies, which are the real users. In other words, taking into account the characteristics of shipping overseas, Korean shipyards (e.g., STX, DSME, and Samsung Heavy Industries) are in the process of developing eco-friendly vessels. The reasons are the technical limitations of shipping companies, the lack of R&D funding, and the lack of financial support from the government and private organizations (Kim, 2013).

4.4. Korea’s Eco-Friendly Vessel Policies

Because South Korea is a party to the IMO Conventions, amendments to MARPOL 73/78 must be accepted in national law. The Marine Environment Management Act provides for comprehensive and systematic management of the marine environment, including the coast, and is one of the domestic Acts that accepts the content of the international convention on MARPOL 73/78. The content of this Act includes a mix of other characteristics such as marine environmental assessment, a comprehensive plan for managing the marine environment, marine environment improvement charges, marine waste unrelated to ships, marine pollution from ships, and air pollution prevention. Thus, if the international convention on the regulation of NOx emissions changes and these changes must be reflected in domestic laws, there is a lot of legislation in place that needs to be amended. In addition, it is difficult to make rapid changes because the departments related to the content of domestic laws are dualized (Im et al., 2005; Kim, H., 2015).

With regard to personnel, the R&D and training budgets for staff within the government departments responsible for ships and shipping-related research are insufficient. However, in order to evaluate whether vessels meet the standards, certificates, and inspection certificates required by Annexes I to VI of MARPOL 73/78, OPRC-HNS, AFS, BWM, ship recycling, and the GHG Convention require many certification experts. Currently, the agency that conducts this work is the Korean Register of Shipping, which is a representative agency of government certification. If all the aforementioned agreements take effect, there is a limit to what the current personnel can achieve. Thus, it is necessary to train green inspection and certification experts. Further, in order to prevent the results from differing in accordance with the knowledge of the inspection and certification experts, it is necessary to manage the inspection data, inspection history data, and certification guideline data systematically.

In particular, when the MBM becomes part of the GHG Convention, carbon trading experts, experts who calculate carbon emissions, experts who charge fines such as carbon taxes, and experts who decide when a ship can enter or leave are needed. If the MBM is comprehensive in the future, experts in the carbon trading system markets of Europe and Singapore will be needed. Currently, there are no institutions and potential plans in Korea to foster such experts (Im et al., 2005).

As part of its green port construction policy, South Korea is preparing policies related to LNG carrier navigation and bunkering. For example, on January 22, 2013, LNG carrier standards were announced that commercialize LNG carriers. Further, in August 2013, the Port Shipping Business Act changed the name of the ship-based oil business to ship fuel supply business, amended the Ports Act (articles 2, 5), and added related clauses (Kim, 2013).

5. Problems and Suggestions for Korea’s Eco-Friendly Strategy

5.1. Problems

There are six major problems in preparing for green shipping in Korea. First, shipping companies and shipyards approach the subject of green shipping in their own ways. Thus, a significant difference exists in the level of perception and actions, depending on the size of the shipping companies and shipyards. Second, budgets are constrained and costs are increased because of the lack of consortiums. In particular, there is a lack of development and purchasing of green vessels among shipping companies and shipyards. This failure of commercialization is due to the development of green ship equipment centered on shipyards, which exclude shipping companies. Further, the cost of developing and purchasing a green ship is increasing because of a lack of collaboration and an information-sharing system among related companies. Third, the repairs that shipyards can undertake for green ships are inferior; thus, shipping companies have no choice but to request repairs in foreign shipyards. Fourth, there are few experts on international agreements. This is because the system to foster experts for IMO agreements, green ship inspections, certification, and market-based measures is inadequate. Fifth, it is difficult to respond to IMO conferences continuously and systematically because there is no specialized organization for the systematic management of green ship development and for providing responses to IMO initiatives. Last, there are problems with domestic law and its acceptance of changing international conventions. For example, the frequency of amendments to the International Conventions on shipping is high and the content of the IMO regulations related to shipping in the Marine Environment Management Act is mixed; consequently, the acceptance of new regulations and amendments of domestic law are slow processes (Park, 2016, Yang, 2012).

5.2. Suggestions

Considering the problems related to the preparation for green shipping in Korea, we suggest the following solutions. First, the unilateral burden of the shipping industry needs to be resolved. Unlike the shipbuilding industry, which is excited about expectations, the shipping industry tends to be burdened by new spending. The shipping industry is faced with the task of addressing the challenges of rising fuel costs and meeting environmental regulations despite a lack of improvement in the low rate of freight caused by global oversupply. Thus, the establishment of a shipping–shipbuilding collaborative network is required. Second, through this collaborative network, it is possible to plan information sharing and joint cost reduction for shipping and shipbuilding. It is also necessary to establish win-win plans by building an information system that can share information on the demand and supply of vessels in accordance with changes in the shipping market. Third, the shipbuilding industry should address the recession by investing in R&D in eco-friendly vessels. Korea’s shipbuilding industry is experiencing difficulties because of a lack of global and domestic orders. Korea’s ordering ratio is very low compared with its competitors: The percentage of orders placed between January and September 2016 was 80% for Japan, 69% for China, and 21% for Korea. Korean shipbuilders need to prepare for a second heyday by investing in R&D regarding green ships. Finally, support for LNG fueled- ship should be expanded. As ECA and MARPOL Annex VI come into effect, the direct green shipping technology related to GHG reduction is attracting attention. Among this technology, LNG fuel propulsion is creating interest as the most efficient alternative. Considering the external economic effects of eco-friendly vessels, it is necessary to promote investment through a certain level of public sector support. It takes two to three years to build a vessel, although the actual time frame depends on a vessel’s size; thus, it is critical to build a bunker vessel for LNG first than to build a bunker on land. To this end, it is necessary to develop a ship-to-ship bunkering system that receives LNG from existing land-based storage units and recharges vessels at sea. In this context, the establishment of safety standards for the operation of LNG-powered vessels is required. Moreover, an institutional basis is needed. Thus, R&D needs to develop into R&PD (research and policy development) in order for companies to link R&D with policy rather than just develop and commercialize technology.

6. Conclusion

This study is the leading examples of shipyards, shipping companies, and governments to green shipping and eco-friendly vessels in major countries. The theoretical contribution point is that this study improved the overall understanding of major countries’ green shipping by analyzing the cases within the framework of shipyards, shipping companies, and governments, while most of the previous research focused on the technology that the eco-friendly vessels use or finding the antecedents or the results of green shipping.

Practical implications are that this study will help to build strategies for Korea ‘s shipyards, shipping companies and government policy in that it compares the cases of these major countries and objects and identifies the green shipping problems in Korea and suggested the counteracts. More specific implications and utilization plans for each practitioner are as follows.

6.1. Implications for Shipping Companies and Utilization Plans

First, this paper presents important implications for domestic shipping companies in that they need to order eco-friendly vessels so as to secure cost competitiveness and respond to environmental regulations. In 2011, the eco-friendly ship era began when the Maersk Line ordered 20 vessels of 18,000 twenty-foot equivalent units (TEU) from DSME. Since then, overseas shipowners have been quick to charter or order eco-friendly vessels. Indeed, the current boom in eco-friendly ship development in China and Japan suggests the need for domestic shipping companies to order eco-friendly vessels.

Second, the market dominance of Korean shipping companies must be increased by improving fuel efficiency through environment-friendly shipping operations. Over the past decade, global trade volume has more than doubled, and although the hub of freight volume is in Asia, the focus of the global shipping industry is concentrated on a small number of European shipping companies. This is because European shipping companies make bold investments in the future and take into account the strengthening of environmental regulations. At present, Korean shipping companies focus on quantitative scale. In addition, the average age of their ships is high. A higher average age of ships means less fuel efficiency. Korean shipbuilders’ rapid investment in new vessels will greatly increase the currently reduced share of cargo demand.

6.2. Implications for Shipyards and Utilization Plans

R&D investment in eco-friendly ship technology should be expanded. In this regard, a partnership between shipping companies and shipyards to link eco-friendly ship ordering and technological development is recommended. This partnership would be an opportunity for domestic shipyards to address the price gap with China through eco-friendly ship technology. In the container ship market, even if the fuel efficiency gap is maintained at 2% to 3% of that of China, it is possible to recover the difference in shipping prices only through fuel-efficient technology. Eco-friendly ship technology will not only boost the shipbuilding industry, which is currently stagnant, it will also be the most important factor in deciding whether the industry survives beyond the current competitiveness among shipyards.

6.3. Implications for Government and Utilization Plans

First, in terms of shipping finance, the proportion of eco-friendly ship-related funds should be increased. Eco-friendly vessels are high-risk vessels with significant initial investment in technological development and initial commercialization. However, if commercialization is sufficiently verified, Korea will become a leading country in the environment-friendly marine business. Thus, it is necessary to establish a fund that can complement the business risks of unproven eco-friendly vessels. If long-term loans for eco-friendly shipbuilding are promoted and compensation given for the failure of technological development, stakeholders such as shipping companies and shipyards will be actively promoted. In addition, it is expected that in the future, profit sharing due to eco-friendly shipping management will encroach on the market because of the changed paradigm; thus, individual and institutional investors will be able to participate more actively.

Second, standards for environment-friendly shipping should be established. The domestic regulations and management standards for eco-friendly vessels are not yet adequate. Thus, legal standards should be established as the business related to eco-friendly vessels is promoted. In other words, laws and institutional standards for ships, equipment, and operations that do not have relevant regulations and management standards should be prepared for vessels built with environmentally friendly technology.

Third, experts in eco-friendly vessels should be trained. Currently, there is a shortage of people studying eco-friendly vessels. The government should select an organization capable of advancing knowledge about eco-friendly vessels and developing eco-friendly maritime expertise. The aim should be to promote the development of business models that address the inspection and certification of eco-friendly vessels’ compliance with international standards. Moreover, the newly trained personnel should provide basic training about eco-friendly vessels to shipowners, shipbuilders, and shipbuilding equipment companies and convey awareness and knowledge about the changing shipping paradigm.

Fourth, the government should support the technological development of equipment and parts for the implementation of eco-friendly shipping systems. Further, in order to implement such systems, related technological development should be undertaken continuously. Thus, technological development should be supported for not only shipbuilders and large shipyards, but also suppliers, trading partners, small- and medium-sized shipyards, academics, and researchers in order to develop the related equipment and parts technology. This support will lead to the development of the domestic shipbuilding marine equipment industry.