How would EEDI influence Chinese shipbuilding industry?

Abstract

This paper is a preliminary attempt to illustrate how the shipbuilding industry in China would be influenced by the implementation of International Maritime Organization's Energy Efficiency Design Index (EEDI), a measure on the amount of CO2 emitted by a ship for one unit of cargo carried. It is supposed to promote more energy-efficient ship designs and gradually reduce the emissions from the world fleet, as CO2 emissions from shipping account for a larger proportion of all global emissions of the greenhouse gas (GHG). However, the implementation of EEDI is not easy given the number of stakeholders involved, the split incentives and the lack of technical knowhow in some of the major shipbuilding countries such as China. This paper identifies the characteristics of energy consumption in shipping and the stakeholders involved in the EEDI application process, analyses the relationships among stakeholders in the shipbuilding industry in China, and points out the drivers and barriers in the implementation. It also discusses the impacts of EEDI on Chinese shipbuilding industry, and explores future scenarios including the possible income and China's position in the global shipbuilding industry using the two cases of typical Chinese shipbuilding firms. Some policy recommendations are provided to the shipbuilders and the governments, to promote the objective of the GHG reduction as well as the development of Chinese shipbuilding industry. Finally, it concludes that EEDI has profound impacts on not only China but also all shipbuilding countries around the world, and it may even trigger another migration of shipbuilding industry in the future.