Capacity investment of shore power berths for a container port: Environmental incentive and infrastructure subsidy policies

Abstract

China has vowed to peak its carbon dioxide emissions by 2030 and achieve carbon neutrality by 2060. The emissions generated by the shipping industry cannot be ignored. Shore power or cold ironing is one of the commonly-used technologies to reduce emissions from berthing vessels for port cities. The port is the executor of power capacity investment. The over-investment of the power capacity causes lower utilization and capital waste, while the under-investment results in service congestion and reduces the enthusiasm of vessels to use shore power berths (SPBs). This paper investigates the optimal capacity of SPBs by considering the choice behaviors of vessels with power receiving facilities (VWs) on SPBs and traditional berths (TBs). Furthermore, we consider that the government adopts two mechanisms of the environmental incentive (EI) and infrastructure subsidy (IS) to develop a bi-level mathematical programming problem to realize that government subsidies promote the capacity investment of port authorities on SPBs. The government rewards the port authority according to the environmental improvement under the EI policy and subsidizes the port authority based on the infrastructure capital cost under IS policy. The subsidy and reward rates can affect the port authority to change the capacity decision of SPBs and then affect the total emission reduction. Both IS and EI mechanisms can promote the installation of shore power in ports, and IS can achieve the best emission reduction effect.