Hong Kong's green-fuel plans face adoption hurdle

Suppliers and shipowners are waiting for each other to commit.

Uncertain demand and high fuel costs remain major hurdles to building a commercially viable green maritime fuel market in Hong Kong, analysts said.

“The hardest gap is getting producers and shipowners to commit to each other,” Pascal Siu, head of green and sustainability research at Our Hong Kong Foundation, said in an emailed reply to questions.

Suppliers need confidence that demand will materialise before investing in fuel production, storage, and bunkering facilities, whilst shipowners want certainty on fuel prices and availability before committing to new vessels and technologies, he told Hong Kong Business.

“Infrastructure alone will not create demand if the fuel remains commercially unattractive,” Siu said.

Under its first five-year plan announced by Chief Executive John Lee, Hong Kong aims to establish five green energy corridors and have 7% of its registered ships adopt green maritime fuels by 2030.

“The priority is to match investment in fuel supply with commitments to use it,” Christine Loh, chief development strategist at the Institute for the Environment at Hong Kong University of Science and Technology, said in an emailed reply to questions.

Loh said suppliers need reliable production, storage, and bunkering capacity, whilst shipowners must weigh investments in cleaner vessels against fuel costs, vessel age, trading routes, and fuel availability.

Bunkering operators must also invest in fuel-specific equipment, safety procedures, and traceability systems, she added.

Port facilities will need to expand electrification and ensure bunkering can take place alongside cargo operations, Siu said.

Early adoption is likely to come at a premium, with costs potentially passed on to carriers, cargo owners, and consumers, depending on freight rates and commercial arrangements.

Loh said Hong Kong could accelerate adoption by ensuring verified fuels are available and by developing recognised documentation and contract standards.

“Contracts will need to specify the promised emission performance, acceptable evidence, responsibility for compliance costs, and remedies for shortfalls,” Siu said.

Infrastructure delivery will also be critical. The government's timetable calls for tenders for the Tsing Yi South storage facilities in early 2028, leaving limited time to bring capacity online before the end of the decade.

Big shipping lines and energy companies are likely to hold an advantage because of their access to financing, purchasing power, and ability to absorb early losses, Siu said. He added that smaller companies could participate by leasing storage, chartering bunker vessels, or providing technical services.

Siu said shared facilities and partnerships could also help reduce barriers to entry.

Conventional fuel suppliers and operators of older vessels may face the greatest disruption as they weigh investments in equipment and skills against uncertainty over future fuel demand, Loh said.

Green energy corridors could help lower fuel costs by improving supply reliability and creating economies of scale, she said.

Concentrating activity along selected routes could also give suppliers and shipping companies greater certainty when planning investments, she added.

Beyond supplying fuel, Hong Kong could benefit from fuel trading, vessel financing, and infrastructure development. It could also capture value by helping arrange and verify transactions across the regional green-fuel supply chain, including fuel not physically delivered in the city, Loh said.