Economic evaluation of alternative technologies to mitigate Sulphur emissions in maritime container transport from both the vessel owner and shipper perspective

Abstract

International maritime shipping is confronted from 2006 onwards with regulation until 2030 by different policy actors (i.e. International Maritime Organization, hereafter IMO), the EU) in order to improve the ecological performance of maritime shipping, and will face more so in the future. Many of these regulations concern the reduction of air pollution of vessels both globally and in particular in so-called Emission Control Areas (ECA’s).In this research, the economic impact of alternative technologies in order to reduce the Sulphur emissions in existing ECA zones is analyzed both from the perspective of the vessel owner, as well as for the evaluation of generalized chain cost, hence from the shipper point of view.The container carriers can choose different methods to comply with the new regulations, such as switching fuel types (Liquefied Natural Gas (LNG), Marine Diesel Oil (MDO)) or opting for innovative technologies like installing scrubber systems.The goal of this research is twofold: first, to discover alternative available technologies to mitigate Sulphur emissions according to the literature; second, to evaluate economically the selected technologies both from vessel owners and shippers perspectives.In order to study this, an update of an existing model is used. The added value of the extended model is threefold: calculating the generalized chain cost of transporting a container from the origin (US and Asia) to a destination in the EU, incorporating in the model the different ECA zones in the world and integrating more detailed fuel cost calculations and capital cost for different engine types or technologies used.The methodology used in this research is an extension of an existing model which is updated for the purpose of this research. This update includes a new functionality to allow calculating the vessel owner cost for different fuel types and propulsion systems (Heavy Fuel Oil or HFO, MDO and LNG). Next to that, more maritime distance data is collected containing the distance sailed in ECA zones. This means that for each port-to-port combination, in the total maritime distance database in the model, this additional information is added. Based on this information, the fuel cost can be calculated when a vessel is sailing in ECA zones using either MDO, LNG or HFO (including a scrubber).The research is particularly interesting for logistics operators, legislation regulators and academia. The extended model allows calculating the best economic solutions for selected routes. For logistics operators and in particular for shippers, the results allow making the most rewarding investments from an economic point of view and affirm the importance of different technologies on the generalized chain cost. The results indicate that the price of the different fuels (and the spread between them) displays an important factor in the overall outcome.