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Can an Emission Trading Scheme really reduce CO2 emissions in the short term? Evidence from a maritime fleet composition and deployment model

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  • Gu, Yewen

    () (Dept. of Business and Management Science, Norwegian School of Economics)

  • Wallace, Stein W.

    () (Dept. of Business and Management Science, Norwegian School of Economics)

  • Wang, Xin

    () (Dept. of Industrial Economics and Technology Management, Norwegian University of Science and Technology)

Abstract

Global warming has become one of the most popular topics on this planet in the past decades, since it is the challenge that needs the efforts from the whole mankind. Maritime transportation, which carries more than 90% of the global trade, plays a critical role in the contribution of green house gases (GHGs) emission. Unfortunately, the GHGs emitted by the global fleet still falls outside the emission reduction scheme established by the Kyoto Protocol. Alternative solutions are therefore strongly desired. Several market-based measures are proposed and submitted to IMO for discussion and evaluation. In this paper, we choose to focus on one of these measures, namely Maritime Emissions Trading Scheme (METS). An optimization model integrating the classical fleet composition and deployment problem with the application of ETS (global or regional) is proposed. This model is used as a tool to study the actual impact of METS on fleet operation and corresponding CO2 emission. The results of the computational study suggest that in the short term the implementation of METS may not guarantee further emission reduction in certain scenarios. However, in other scenarios with low bunker price, high allowance cost or global METS coverage, a more significant CO2 decrease in the short term can be expected.

Suggested Citation

  • Gu, Yewen & Wallace, Stein W. & Wang, Xin, 2018. "Can an Emission Trading Scheme really reduce CO2 emissions in the short term? Evidence from a maritime fleet composition and deployment model," Discussion Papers 2018/10, Norwegian School of Economics, Department of Business and Management Science.
  • Handle: RePEc:hhs:nhhfms:2018_010
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    References listed on IDEAS

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    1. Scheelhaase, Janina & Maertens, Sven & Grimme, Wolfgang & Jung, Martin, 2018. "EU ETS versus CORSIA – A critical assessment of two approaches to limit air transport's CO2 emissions by market-based measures," Journal of Air Transport Management, Elsevier, vol. 67(C), pages 55-62.
    2. Meifeng Luo, 2013. "Emission reduction in international shipping-the hidden side effects," Maritime Policy & Management, Taylor & Francis Journals, vol. 40(7), pages 694-708, December.
    3. Shi, Yubing, 2016. "Reducing greenhouse gas emissions from international shipping: Is it time to consider market-based measures?," Marine Policy, Elsevier, vol. 64(C), pages 123-134.
    4. Giovanni Pantuso & Kjetil Fagerholt & Stein W. Wallace, 2016. "Uncertainty in Fleet Renewal: A Case from Maritime Transportation," Transportation Science, INFORMS, vol. 50(2), pages 390-407, May.
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    More about this item

    Keywords

    Maritime Emissions Trading Scheme; CO2 emissions; maritime fleet composition; deployment model;

    JEL classification:

    • C44 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Operations Research; Statistical Decision Theory
    • C60 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - General
    • Q50 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - General

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