Emission abatement in shipping – is it possible to reduce carbon dioxide emissions profitably?

Abstract

The shipping sector generates significant amounts of carbon dioxide emissions on annual basis. The excess amount of carbon dioxide is harmful for both the environment and the society, and partly for that reason, there is willingness and pressure to decrease the volume of anthropogenic carbon dioxide emissions in shipping. Shipping is a highly competitive market, and the decisions to invest in environmentally sustainable solutions are often linked to questions related to money.In this article, we investigate operational and technological measures by which shipping companies can not only reduce carbon dioxide emissions but also obtain an economical payoff for doing so. We do this by modeling year-to-year emission reduction potentials and cost structures for a sample of cargo ships operating in the sector of short sea shipping. Our model responds to the natural life-cycle of operating vessels, meaning that these ships are docking every five years and getting to end-of-their-life at the age of 30 years. Based on these principles, the ships are equipped with chosen emission reduction measures in different emission abatement scenarios. Both the emission abatement potentials as well as the investment costs and possible cost savings due to the improved operating efficiency are calculated.We conjecture that with many possible emission-reduction methods available and the investments of time and money these all require, we find methods and solution combinations that would be economically reasonable and net-present-value positive for the shipping companies to execute. Our findings are in line with the prior literature arguing that a significant amount of carbon dioxide emissions can be reduced from the shipping sector profitably. This is partly because of the improved operational performance and partly because of the enhanced energy efficiency.