ZEW Discussion Papers
Capped Steam Ahead - A Case Study Among Ship Operators on a Maritime ETS
Koesler, Simon, Martin Achtnicht and Jonathan Köhler (2012), Capped Steam Ahead - A Case Study Among Ship Operators on a Maritime ETS, ZEW Discussion Paper No. 12-044, Mannheim. Download
In 2007, international shipping emitted 870 million tons of CO2, which represents
about 2.7 percent of worldwide CO2 emissions and it is expected that the emissions
from ships will continue to increase significantly in the near future. Against this
background, the Marine Environment Protection Committee (MEPC) of the International
Maritime Organization (IMO) is currently discussing different approaches aiming at
reducing emissions in the maritime sector, in particular market-based mechanisms
such as a levy on bunker fuel or a maritime emission trading scheme (ETS).
In this paper, we assess potential implications of a maritime ETS on the organisation
and operations of shipping companies, primarily by means of a case study involving
ship operators. On the basis of our results, we discuss whether and how a maritime
ETS needs to make special provisions to account for frequently raised criticisms in the
context of cap-and-trade, for example high transaction costs and issues associated to
a fixed cap on emissions such as high price volatility and excessive costs in times of
unexpected high demand for shipping services.
Our results suggest that any additional costs for monitoring and reporting of
emissions are expected to play only a minor role in the context of a maritime ETS,
since for business reasons ship operators already undertake comprehensive
monitoring and reporting efforts for bunker fuel usage. With regard to the costs for
potential trading activities, it is to be expected that compared to other operational
costs, the additional expenditures will be rather small. The issues associated to a fixed
cap cannot be ruled out as easily and are also identified by the interviewed experts as
potentially significant problems. However, such difficulties may be alleviated by
adequate linking and/or banking provisions.
Overall, there appears to be no knock-out criterion why a cap-and-trade approach
should not work in the shipping sector in practice. In fact, a maritime ETS has the
potential to engage the maritime sector into cost-efficient emission reduction if
designed to account for the special characteristics of the international shipping
industry.
