Course set for a cap? A case study among ship operators on a maritime ETS

Koesler, Simon; Achtnicht, Martin; Köhler, Jonathan

doi:10.1016/j.tranpol.2014.10.009

Cited by 33 publications

(17 citation statements)

References 26 publications

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“…Shi (2016) examines whether it is the right timing to adopt ETS in shipping now and suggests his own revised MBM proposal based on the existing solutions. Koesler et al (2015) conduct a case study involving ship operators to assess the organizational and operational implications of the METS on shipping companies. The results of this study show that shipping companies are optimistic about the potential performance of METS.…”

Section: Literature Reviewmentioning

confidence: 99%

“…• According to the literature, a cap-and-trade scheme can be either an open or a close system (Kågeson, 2007(Kågeson, , 2008Koesler et al, 2015;Wang et al, 2015). The former allows the companies in the system to trade with other sectors, while the latter requires the trade of allowance to be restricted inside this cap-and-trade scheme.…”

Section: Problem Description and Assumptionsmentioning

confidence: 99%

“…However, too much "mercy" in the cap setting process may also bring negative effects to the original intention, emission reduction, of the capand-trade scheme. Therefore, we assume the METS in this paper to be an open system in which the shipping companies can trade with other sectors, e.g., electricity generation, that have a lower marginal CO 2 abatement cost (Wang et al, 2015;Koesler et al, 2015).…”

Section: Problem Description and Assumptionsmentioning

confidence: 99%

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Can an Emission Trading Scheme really reduce CO2 emissions in the short term? Evidence from a maritime fleet composition and deployment model

Wallace

Wang

2019

Transportation Research Part D: Transport and Environment

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Global warming has become one of the most popular topics on this planet in the past decades, since it is the challenge that needs the efforts from the whole mankind. Maritime transportation, which carries more than 90% of the global trade, plays a critical role in the contribution of green house gases (GHGs) emission. Unfortunately, the GHGs emitted by the global fleet still falls outside the emission reduction scheme established by the Kyoto Protocol. Alternative solutions are therefore strongly desired. Several marketbased measures are proposed and submitted to IMO for discussion and evaluation. In this paper, we choose to focus on one of these measures, namely Maritime Emissions Trading Scheme (METS). An optimization model integrating the classical fleet composition and deployment problem with the application of ETS (global or regional) is proposed. This model is used as a tool to study the actual impact of METS on fleet operation and corresponding CO 2 emission. The results of the computational study suggest that in the short term the implementation of METS may not guarantee further emission reduction in certain scenarios. However, in other scenarios with low bunker price, high allowance cost or global METS coverage, a more significant CO 2 decrease in the short term can be expected.Recently, the voice for implementing a market-based measure (MBM) in the shipping sector has become strong. An MBM addresses the negative externalities of a market, such as pollution, through market mechanisms. Different from command-and-control measures (e.g., legislations), a MBM offers economic incentives rather than fixed rules to achieve a more cost-effective and sustainable pollution control (Miola et al., 2011). In terms of shipping, an MBM can help to internalise the external costs of the fleet emission by making the ship owner or operator pay for the CO 2 emitted from their ships, which finally creates an incentive for them to cut the emissions (Psaraftis, 2012).Although seven MBM proposals have been submitted to the IMO for discussion and evaluation, it seems that only two of them, namely the Emissions Trading Scheme (ETS) and the GHG Fund, are favoured and widely studied in the literature (Shi, 2016). The ETS is a type of cap-and-trade system. In such a system, first a legally binding limit on total emissions (cap) during a certain period is set by the authority. Then the equivalent amount of emission allowances are issued by the administration and assigned to or purchased by different concerned parties. In the system, participants can choose to submit the allowance for their own emissions or trade with other players for cash based on the market price of the allowance. However, if all the issued allowances are consumed, no more emissions will be allowed due to the legal limit. Such a market-based cap-and-trade system will help achieve the emission reduction target with certainty as well as minimal costs. However, the uncertainty of the allowance price may cause problems, for example cost volatility and investment risks ...

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Section: Literature Reviewmentioning

confidence: 99%

Section: Problem Description and Assumptionsmentioning

confidence: 99%

Section: Problem Description and Assumptionsmentioning

confidence: 99%

See 1 more Smart Citation

Can an Emission Trading Scheme really reduce CO2 emissions in the short term? Evidence from a maritime fleet composition and deployment model

Wallace

Wang

2019

Transportation Research Part D: Transport and Environment

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“…Furthermore, market-based measures for GHG were discussed by researchers, such as Psaraftis [41], Nikopoulou et al [42], and Wang et al [43]. Koesler et al [44] discussed the emission trading scheme (ETS) in the shipping industry and argued that the ETS has the potential to make the maritime sector more cost-efficient. The potential effects of maritime ETS were identified and investigated using empirical analysis of several shipping operators.…”

Section: Emission Regulations For Maritimementioning

confidence: 99%

Impacts of the Increasingly Strict Sulfur Limit on Compliance Option Choices: The Case Study of Chinese SECA

Fan

2019

Sustainability

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The International Maritime Organization (IMO) has proposed several environmental regulations on controlling SOx and NOx emissions from ships in coastal areas. Under the framework of IMO, some areas have established strict emission control areas (ECAs) to reduce emissions, which mainly contain Europe and North America. To further strengthen the control and supervision over air pollutants from shipping activities, the Sulfur cap regulation of 0.5% by mass will come into effect on 1 January, 2020 globally, when all the sailing vessels on the high sea should use fuels with sulfur content less than 0.5%. This limit is stricter for the global recognized sulfur emission control areas (SECAs), where it was 0.1% since 1 January 2015. However, Chinese local SECA lags behind the globally recognized SECAs, where the 0.5% Sulfur cap was implemented from 2016 and it has to be strengthened along with the global sulfur cap 2020. These increasingly stringent emission regulations have huge effects on shipping operators. The current study discusses the potential impacts of the stricter sulfur cap on operators’ compliance option choices, where fuel-switching and scrubber system are analyzed under different sulfur limits. Meanwhile, the slow steaming practice is incorporated into the fuel-switching option by considering speed differentiation in different sulfur limit areas. This study develops a cost-minimizing model using NPV (net present value) method. It analyzes the optimal option within vessels’ lifespan considering the tradeoff between the initial investment and future operational cost for newbuilding vessels based on a case study. In addition, emissions of CO2 and SOx are compared under different compliance options in different sulfur cap scenarios. Our results find that the scrubber system is a suitable option to comply with the 0.5% global sulfur limit, and a higher efficiency of sulfur abatement can be attained by the scrubber system option. However, it emits more carbon emissions due to higher energy consumption used by the scrubber system. In addition, the effects of additional vessels deployed in the cycle on the compliance choices are also demonstrated in the analysis.

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“…Wang et al (2015) discussed on the impacts of ETS between sectors and provided a framework for understanding and identifying ETS, in detail. Koesler et al (2015) assessed the potential implications of ETS applied on maritime sector. The authors mainly focused on the organisation and operations of shipping companies and they concluded that cap and trade approach can be implemented on maritime sector, efficiently.…”

Section: Salimmentioning

confidence: 99%

Salim Ti̇careti̇ Si̇stemi̇ni̇n Türk Deni̇z Taşimaciliği Ve Fi̇nansal Raporlama Açisin-Dan İncelenmesi̇

Kılıç

Bilgili

2018

Dokuz Eylül Üniversitesi Denizcilik Fakültesi Dergisi

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Although the amount of greenhouse gases (GHGs) from maritime transport is very low amongst total anthropogenic emissions, reducing shipping related airborne emissions has become an important topic for policy-makers during last decades. Emission Trading Scheme (ETS), which is introduced by Kyoto Protocol, is a cap & trade system used to reduce GHGs by promoting the economic competitiveness. ETS policies should include maritime transport and should develop accounting approaches within the framework of financial reporting standards to increase the applicability of financial instruments notable for their complexity. The aim of this study is to examine the applicability of ETS policies to the Turkish maritime sector and the impact of ETS on financial reporting. A comprehensive review based on the literature has shown that it is necessary to implement emission trading considering international standards for international sectors and it is important to prepare national policies accordingly in order to avoid pressure factors in national economies and not to avoid international harmonization in financial reporting.

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Course set for a cap? A case study among ship operators on a maritime ETS

Cited by 33 publications

References 26 publications

Can an Emission Trading Scheme really reduce CO2 emissions in the short term? Evidence from a maritime fleet composition and deployment model

Can an Emission Trading Scheme really reduce CO2 emissions in the short term? Evidence from a maritime fleet composition and deployment model

Impacts of the Increasingly Strict Sulfur Limit on Compliance Option Choices: The Case Study of Chinese SECA

Salim Ti̇careti̇ Si̇stemi̇ni̇n Türk Deni̇z Taşimaciliği Ve Fi̇nansal Raporlama Açisin-Dan İncelenmesi̇

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