NSW Ports, the company which owns Port Kembla and Port Botany, said this will begin next year, and will offer the discount off port charges and levies for vessels with lower airborne pollution.

While the size of the discount has not been worked out yet, NSW Ports CEO Marika Calfas said it was expected to cost the company “up to $1 million a year across the two ports”.

“NSW Ports has introduced the incentive to reward companies that use vessels with better air emissions performance,” Ms Calfas said.

“We are passionate about environmental issues and wanted to take a lead in Australia to help encourage change through an incentive to encourage shipping lines to improve their emissions.”

The environmental incentive would be applied to vessels that lower emissions better than the present standards of the International Maritime Organisation.

It will involve vessels registered with the environmental ship index (ES), a scoring system that rates air pollution from ships. This includes emissions of nitrogen oxide and sulfur oxide, as well as greenhouse gas emissions.

Ms Calfas said Kembla and Botany would be the first Australian ports with an environmental incentive, which was common practise worldwide, at 53 ports globally.

NSW Ports is a private consortium of institutional investors including Cbus, HESTA, Hostplus, Australian Super, Tawreed Investments Limited and Q Super.