The cost-effectiveness of CO2 mitigation measures for the decarbonisation of shipping. The case study of a globally operating ship-management company

Abstract

The International Maritime Organisation has set a goal to achieve a 50% reduction of the total annual greenhouse gas emissions related to the international shipping by 2050 compared to the 2008 baseline emissions. Thus, companies are looking for solutions and measures to align with the Organisation's goal. Marginal Abatement Cost Curves have been extensively used in the literature to rank several Greenhouse Gas mitigation measures based on their costs of reducing an additional unit of pollution. In this paper an expert-based, bottom-up approach was employed to construct Marginal Abatement Cost Curves for a globally operating ship-management company. Several mitigation measures were examined for the following vessel categories (a) Containerships 8000+ TEU, (b) Containerships 2000–2999 TEU, (c) Bulkers 35000–59999 DWT, and (d) Gas Tankers <49999 CBM. Furthermore, the fuel price fluctuation and carbon taxation were used to investigate the sensitivity of baseline Marginal Abatement Cost Curves. The measures, which remain cost-effective under all sensitivity analyses, undergo a Pareto Analysis and a Marginal Cost-Effectiveness Analysis. The results suggest that most of the recommended mitigation measures are of an operational and technical nature, with exception the burning of Liquified Natural Gas and the installation of Flettner Rotors for the Gas Tankers. The company could save up to 17% CO2 emissions and approximately 2 million dollars per year compared to the 2019 baseline by employing all recommended mitigation measures to all vessel categories. In addition, Carbon Storage and Capture could become a cost-effective solution with appropriate carbon taxation, but it is not the ultimate solution since it does not lead to independence from fossil fuels. The study also reveals that depending on the operating condition, even within the same vessel category, different mitigation measures should be employed.