Globalization is regarded as the key driver of growing container trade activities due to economic development. With a technology relying heavily on the combustion of fuel, international shipping is responsible for 2.7 percent of total world emissions and ocean transportation is becoming increasingly linked to environmental problems. The concepts of sustainability and greener shipping are expected to be the prime focus of transportation in the coming decades, but the impending developments require a deep understanding of the emission impact and costs related to the inputs and outputs of world economies. This textbook quantifies and analyses atmospheric pollution for Hong Kong trade-lane specific container activities over the past decade using a new methodology, EcoTransIT World, a web-based application. Input data is generated from the Hong Kong Census & Statistics Department while emissions and energy consumption for the entire energy chain are measured as an output. Based on the findings, the costs to the society are estimated by an advanced top-down approach with a general market price for carbon. The results certainly indicate that the shift from long-distance to short-distance world container sourcing for laden container throughput has a positive effect on the environment. Most notably, the estimated emission costs per container show a declining trend in opposition to the trade growth. The results provide unique trade-lane specific container emission factors and costs indications for Hong Kong shipping business that can be used for several purposes, such as: environmental performance control, benchmarking, policy making and the promotion and stimulation of green shipping to mitigate the environmental impact. The performance indicators represent a comprehensive picture of Hong Kong atmospheric pollution for different trade-lanes. Further studies and practical tools to gather real operating data from the original source such as ship owners and ocean carriers are required in future to verify the data. This will create awareness along global supply chains and crucially support the achievement of environmental synergies by common understanding of the serious consequences from international maritime transportation on our planet.

Text Sample: Chapter 3, Environmental Costs: The significance of environmental costs is sometimes regarded with disorientation because the damage to the environment is not automatically considered when transportation occurs. Indeed, it is reasonable to expose how cost allocations and estimations are justified. In the end of this Chapter, different approaches will be discussed and justify the evaluation model of emission costs in international container trade activities applied in this textbook. 3.1, Internalization of External Costs: As initially mentioned, transport contributes significantly to economic growth and enables global trade. What becomes more apparent with increasing transport activities, are growing side effects that impact the nature and public life negatively. Taking road traffic as an example, congestions are generated in particular during peak hours within urban areas with high population density. Aircrafts and trains cause noise and ocean vessels pollute the air. The effects of transportation are generally referred to as external cost. Examples for external costs are air pollution, congestions, noise, infrastructure and accidents. Economically speaking, external costs are also called ‘externalities’. Loefgren (1995, p.21) distinguishes between positive and negative externalities. He stresses that a positive externality usually means a benefit to the society, but in such way that the originator cannot take advantage from these benefits made (e.g. environmental clean-up and research). Negative externalities are indeed more common. The originator has no financial commitment in negative externalities but the society (e.g. pollution). The ‘Handbook on estimation of external cost in the transport sector’ of the European Commission defines external cost as […] costs to society and - without policy intervention - they are not taken into account by the transport users.” (CE Delft, 2008, p. 11). In this regard, internalization of pollution is described by McKinnon et al. (2010, p. 68) with the ‘polluter pays principle’ and is essentially regarded as an effective way to limit the negative side effects of transportation. Pigou (1920) discussed a model to internalize environmental (social) cost in higher taxes but up to this day it is quite questionable whether these costs are allocated suitable. The European Commission has seen the rising need to internalize the social cost most notably. Various research papers and textbooks have addressed the effort for internalization, such as the Green Book on fair and efficient pricing (European Commission, 1995), the White Paper on efficient use of infrastructure, the European Transport Policy 2010 (European Commission, 2001) and the midterm review of 2006. These papers aim to ensure that all external damages caused by personal or freight movement are fully internalized in the price of transport. Pricing, in fact, should be fair so that ‘polluters’ are obliged to pay the marginal social cost of their activities, giving them an economic incentive to mitigate and/or limit the negative effects of their transport activities (EEA, 2006). The latest study of the European Commission in applying the polluter-pays principle to transport (CE Delft, 2008) is not implemented yet. Some arguments disagree with internalizing of environmental cost from transport. As a matter of fact, McKinnon et al. (2010, p. 70) argued that there is no guarantee that governments will use ‘green’ taxes to finance environmental projects. Similar to road transport, ocean transportation occurs on the sea and it is obvious that most consumers in any economy do not perceive the activity much. It is simple for them to condemn seaborne shipping and complain about the pollution due to. Besides, there is no guarantee, that environmental cost will raise the price of transport and logistics activity to provide sufficient motivation to the implementation of mitigation measures. Critical tones also come up due to the uniform application of the principle across a national economy and the validity of the monetary valuations of externalities. Succinctly, internalization is discussed controversially among scientists and is regarded difficult to implement. It is revealed that Its effectiveness as a policy measure depends on the way in which it is applied and coordinated with other sustainability measures.” (McKinnon et al., 2010, p. 72). Most notably, monetary valuation of environmental damage must be accurate in order to justify policy-making measures by governmental agencies. Thus, a specific valuation method is required. 3.2, Monetary Valuation: External costs must normally carry a value to make internalization successful. The calculations for external costs with respect to the negative effects of air pollution, GHG emissions, noise, accidents and traffic congestions vary in many different ways. One possibility to estimate environmental cost monetary is to value the damage done to the environment ex post, as introduced by Adamowicz (2003), also known as the so-called `Damage Function´ approach. Another method is to evaluate the costs of avoiding this damage ex ante. Costs of environmental damage can only partly be measured properly. For instance, costs that occur due to a vehicle accident when a car frontally drives against a safety fence are easy to calculate as the loss of material usually carries a certain value and the repairing cost will be added to the losses that incurred while the road cannot be used without a safety fence. In contrast, atmospheric pollution with adverse health effects is much less direct and much more difficult to observe and quantify. McKinnon et al. (2010, p. 75) indicate that the environmental damage approach is often regarded as more appropriate since it helps to reduce the cost of damage in advance. What becomes increasingly important in this matter is to place a value on the external costs that can compensate the effects of air pollution beyond the visible damages. To be precise, the costs for avoiding environmental damage need to be based on the effects of externalities and the damage to the public that are not visible as well, such as health problems caused by air pollution (e.g. asthma) and possible death in consequence. Considering these circumstances, environmental researchers have to address visible and lateral damages in a long-term perspective when developing adequate methods for making monetary evaluations of environmental effects. It is obvious that such damages can rarely been considered entirely in a monetary context due to the scarcity of information and visibility of effects. Since the entire elimination of environmental impacts cannot be reached in practice, the reduction of it is often objected. 3.3, Estimation of Emission Costs in Shipping: Basically, there are two major methods that can be used in order to project fuel consumption, estimate emissions and the related costs for transportation. These approaches described in this Chapter are mostly used by governmental agencies. The third approach that will be elaborated advocates the estimation of costs in maritime transport performed in this textbook. 3.3.1, Top-down Approach: As suggested by the European Commission in the ‘Handbook on estimation of external costs in the transport sector’ (CE Delft, 2008, p. 49) air pollution for external costs is calculated straightforward as follows: External Air Pollution Costs = Specific emission*Costs factor per pollutant. Where specific emission” states the total amount of emissions over a certain period (e.g. 4 tons, grams or kilos per day), subjective to the mode of transport and the costs factor is carrying a value per pollutant (e.g. EUR 30 per tonne CO2). Emissions are described in the Guidelines for National Greenhouse Gas Inventories and are defined as basic equation in estimating emissions as follows (IPCC, 2006, p. 1.6): Emissions = Activity Data* Emission Factor. Where fuel consumption (in litres) is used as activity data” and the mass of CO2 emitted per unit (e.g. grams CO2 per tonne or litre) of fuel consumed is referred to as emission factor”. The cost factor per pollutant suggested by the European Commission refers to the damage costs that are estimated by another application not involved in this method. The IPCC approach is a top-down approach or fuel-based approach and requires input data on the fuel use or fuel sales to estimate emissions. Marine fuel sales or consumption respectively could be used for shipping activities. In terms of international ocean transportation, this method appears to be the most reliable approach to estimate total fuel consumption and emissions, if the number of marine fuel bunker reported was reliable. Usually, the bunker supply data is gathered from databases by the Energy Information Administration (EIA) as well as by the International Energy Agency (IEA) and the United Nations Framework on Climate Change (UNFCCC). Corbett and Koehler (2003) pointed out critically that the fuel consumption for international ocean transports is more than twice the quantity reported as international bunker. As a conclusion of their analysis, they found out that fuel used by internationally registered fleets is obviously allocated to both international and domestic fuel statistics. Thus, it was pointed out that ships operate either along domestic routes much of the time or that marine fuel sales to these ships might be misallocated. These troublesome results approve the present doubt concerning reliability of bunker fuel statistics as an indicator of actual fuel used in shipping. Eliminating such difficulties in using the top-down approach as an alternative method has given rise. A more advanced approach seeks to estimate emissions by calculating them for all feasible activities.

• Container Carbon Footprint

• Maritime Emissions

• Trade-Lane Performance

• Environmental Costs

• Sustainable Transportation

Christoph Heinbach, born in 1982, grew up in Lower Saxony, Germany. After high school he first served an apprenticeship as a forwarding agent in the field of logistics services in 2003. Due to the global container revolution at that time he decided to study a BSc degree at the Department of Maritime Studies in Elsfleth. In 2008 he performed an exchange semester in Hong Kong. Fascinated by both the countryside and cultural diversity he came back in 2010 to study a postgraduate program with ‘The Hong Kong Polytechnic University’ and a major in ‘International Shipping and Transport Logistics’. Inspired by the necessity to develop sustainable transport solutions he was encouraged to examine Hong Kong’s atmospheric pollution originated by global container trade activities. After two years in Asia and a stopover in New York, the author now lives in Munich and works in the field of supply chain security.