A Bi-Level Programming Model for China’s Marine Domestic Emission Control Area Design

Due to the adverse impact of seaborne sulfur emissions on coastal areas, the Ministry of Transport of the People’s Republic of China is planning to implement a 0.1% sulfur cap on bunker fuel in the domestic emission control area (DECA) on 1 January 2025. As the current DECA width is only 12 NM, ships can bypass the DECA to reduce the use of high-priced ultra-low sulfur fuel oil (ULSFO) and thus save on fuel costs. The purpose of this study is first to assess the effect of China’s 12-NM-wide DECA policy and then to assist the government in determining the optimal DECA width. We develop a bi-level programming model to capture the relationship between the government policy and ship operators’ operations. In the lower-level programming model, we capture ship operators’ decisions regarding their ships’ sailing routes and speeds while considering the time required for fuel switching, which aims to minimize the total fuel costs over a given voyage. The optimal solution to the lower-level programming model is then embedded in the upper-level programming model to determine the optimal DECA width for the government, with the aim of minimizing the impact of seaborne sulfur emissions on the coastal area environment. The final results, obtained from computational experiments, validate the idea that ships tend to bypass the 12-NM-wide DECA and reduce their sailing speeds inside the DECA to decrease their use of ULSFO. Therefore, we recommend that the government increase the current DECA width to at least 112 NM to prevent ships from bypassing it and to achieve the desired sulfur reduction target.