The role of a cap-and-trade market in reducing NO_x and SO_x emissions: Prospects and benefits for ships within the Northern European ECA

Abstract

This article presents a financial evaluation of alternative approaches to the abatement of NO x and SO x emissions from ships operating within the emission control area (ECA) of Northern Europe. The objective of this article is to assess the financial viability of a range of alternative technologies and fuel types, by accounting for revenue that might be generated from emissions trading within a cap-and-trade market for NO x and SO x emissions. Using a sample of real ships that operate within the ECA, NO x and SO x emissions for each alternative are estimated, and the revenue generated within a capand-trade system is calculated under a given set of assumptions. The results suggest that distillates are not an economic solution to meeting regulatory requirements. Conservative estimates of revenue generated within any prospective capand-trade system suggest that seawater scrubbers and Humid Air Motor (HAM) and Selective Catalytic Reduction (SCR) systems would all constitute financially attractive abatement options, while the use of liquefied natural gas (LNG) is the most financially attractive alternative. A cap-and-trade system is found to be highly efficacious in providing a relatively inexpensive source of finance for investments in improved environmental performance, as well as incentivizing such improvements, thereby removing any requirement for public sector support.

Emission Reduction Technology and Cost Efficiency for Ships Operating on the Northern Sea Route: A Case Study

“…The SWS is a cleaning technology that allows the ship to operate within a SECA with regular sulphur fuel and without operating on a more expensive fuel that is potentially difficult to locate. SOx emission reductions of up to 95 % has been reported with SWSs (Entec UK Ltd. 2005b;US EPA, 2009;Nikopoulou et al, 2013). Additionally, other exhaust emissions can be reduced.…”

“…Furthermore, the volume of water required to filter the exhaust is an issue (Nikopoulou et al, 2013). The required consumption of water is non-linear with the level of reduction achieved.…”

“…Additionally, other exhaust emissions can be reduced. Nikopoulou et al (2013) reports of NOx reductions of up to 10 % to 20 %, 80 % of PM and 10 % to 20 %, of HC. Due to sea waters natural alkalinity, the sea water scrubber is one of the most versatile, available and cost-effective scrubbing processes.…”

“…By using LNG, SOx emissions are negligible and only small amounts of NOx and PM are emitted. Additionally, it reduces CO 2 emissions (Nikopoulou et al, 2013).…”

“…The remains may either be burned in the ship's incinerator or disposed of ashore. The scrubbed water is diluted with more water before discharge, and is discharged with a pH of 6.5 to the sea (Nikopoulou et al, 2013).…”