Impact of CO2 emission taxation and fuel types on Arctic shipping attractiveness

Abstract

This study investigates the impact of hubs, CO 2 emission taxation policy, and bunker fuels on the economic and environmental attractiveness of the Northern Sea Route (NSR). Twenty-eight years of historical ice data have been combined to define the uncertainty level of ice thickness and concentration and converted to risk indexes using POLARIS, a risk management tool. The shortest travel times have been defined using the risk levels and a time-dependent shortest path algorithm. The results stress that the carbon tax is not antinomic with profit. Moreover, the use of hubs was not found to be economically advantageous for a majority of the examined scenarios. Furthermore, although it increases the overall emissions, this reduces the CO 2 emissions per container due to the rise in the shipping volumes. Demand elasticity to transit time and to freight rates shows that the choice of hubs significantly impacts the NSR’s economic and environmental attractiveness.