Impact of maritime emissions trading system on fleet deployment and mitigation of CO2 emission

Abstract

Global emissions trading system is an incentive-based instrument purported to achieve environmental objectives through allocating and auctioning GHG emission allowances. This paper investigates the potential impact of an open maritime emissions trading system (METS) on individual containership operators' fleet composition strategies and CO2 emissions levels. A stochastic programming model that formulates the fleet composition problem is developed. It considers the outcomes (i.e. fleet composition and CO2 emissions of operators) of various scenarios by varying CO2 prices. Real-world data from the industry were collected for case experiments. The results demonstrate that METS can motivate operators to utilise new technologies, deploy more energy-carbon-efficient ships, and even lay up less energy-efficient ships. Furthermore, the efficacy of METS is more pronounced when bunker prices are high. The results also reveal that bunker prices have a larger effect on CO2 reduction than applying stricter CO2 allowance allocation. This study implicates the formulation of METS policies and provides recommendations to enhance the effectiveness of METS to achieve the shipping industry's impetus to improve its environmental performance. It also offers guidelines for existing containership operators to minimise cost by managing their fleet compositions when METS is implemented.