Scrubber installation of inland container ships: Discrepancy between government and carriers

Abstract

Scrubbers are the commonly used green technologies for a ship to reduce sulfur emissions. Various speed adjustment behaviors would distort the cost and desulfurization efficiency of scrubbers for ships, which causes a discrepancy between the government and the carrier to install scrubbers. This paper addresses the issue by considering three speed adjustment behaviors: rigidity, partial flexibility, and full flexibility. Under rigid behavior, the carrier maintains a constant sailing speed when adopting low-sulfur fuel oil (LSFO) and installing a scrubber. Partially flexible behavior only involves speed adjustments when adopting LSFO, while fully flexible behavior includes speed adjustments when adopting LSFO and installing a scrubber. Our analysis indicates that scrubber installation consistently precedes adopting LSFO in speed. Full flexibility behavior is the least costly speed adjustment behavior, while partial flexibility behavior results in the lowest emissions. The investment discrepancy on scrubbers between the carrier and the government would occur on whether or not to install a scrubber and which level of the scrubber’s quality since the two parties are concerned about the sulfur emissions and cost, respectively. Government subsidies address these discrepancies, leading to improved emission reduction.