Report: China Shipping reneges on environmental commitment after getting L.A. port subsidy

The Chinese container line received a large handout to help upgrade vessels with anti-pollution technology, but has since routed the vessels to ports in other parts of the world instead, according to a report from the L.A. Times.    The Port of Los Angeles essentially wasted $5 million in subsidies to ocean carrier China Shipping, which used the money to retrofit 17 container vessels so they could plug into electric shore power and then stopped sending the vessels there, according to an investigation by the Los Angeles Times.
   The ports of Los Angeles, Long Beach and Oakland invested hundreds of millions of dollars in recent years to install electric infrastructure on wharves to power onboard systems instead of vessels running auxiliary diesel engines that produce toxic, smog-forming emissions while at berth. Vessel owners similarly have added the electrical connections to newly constructed vessels and have retrofitted existing vessels to use the systems.
   Under a California law that went into effect two years ago, half of all containerships calling at ports within the state must plug into electric substations while docked. The threshold rises to 70 percent of vessels in 2017 and 80 percent in 2020.
   The Port of Los Angeles gave the money to China Shipping as an incentive to proceed with a terminal development deal, but has not received the expected environmental benefits, the newspaper reported Thursday. The Chinese government recently folded together China Chipping with fellow state-owned shipping conglomerate COSCO, including the companies’ container transport divisions.
   Under a court-approved agreement with environmental and neighborhood groups in 2004 that allowed expansion of the China Shipping terminal to proceed, the carrier’s vessels were required over a transition period to plug into electric power as an alternative to idling auxiliary diesel engines to power lighting, cooling, water and other systems. New developments at the ports of Los Angeles and Long Beach were frozen by lawsuits until the port authorities came up with plans to significantly reduce air pollution, which have had negative health consequences for those living in surrounding neighborhoods.
   The Los Angeles port authority agreed to help upgrade vessels after China Shipping objected to the conditions and suggested they might switch some vessel calls to other ports in the state.
   The L.A. Times said a review of industry and port data showed that China Shipping substituted other vessels on the transpacific trade lane that continued to run their engines while at port.
   The newspaper previously reported in December that the Port of Los Angeles, under former director Geraldine Knatz, allowed China Shipping for several years to skirt emission-reduction requirements tied to the terminal expansion to help the struggling carrier through the economic downturn in 2008 and 2009. China Shipping is the port’s largest customer.
   Knatz’s action freed China Shipping to use the upgraded vessels in other parts of the world where they might be more profitable because of features they had unrelated to shore power.
   Overall, the port authority has paid China Shipping more than $30 million for costs related to the residents’ lawsuit, about half of which related to construction delays and lost business, the L.A. Times said. Another $7 million was provided to China Shipping to buy clean-fuel-burning yard equipment, but the December investigation showed didn’t reduce emissions produced by container-handling equipment as much as promised, and didn’t slow down the speed of vessels approaching the harbor to reduce fuel burn.
   When the port paid to upgrade the firm’s vessels, “there was no stipulation for how long the ships would remain calling at the Port of L.A.,” port spokesman Philip Sanfield said. After port officials signed the settlement with residents in 2004, they did not include language in China Shipping’s lease that would have required the company to abide by the new environmental measures, port officials acknowledged.
   The current executive director of the port, Gene Seroka, said he didn’t know why his predecessors allowed that omission, but told the L.A. Times, “I would have done it differently and put the mitigation measures in the lease.”
   Neighborhood groups are considering filing suit seeking punitive damages for impaired health because of China Shipping’s non-compliance with environmental commitments, the paper said.