Market Based Measures for Sustainable Shipping

The objective of this PhD project is to develop a Market Based Measure (MBM) scheme by which greenhouse gas (GHG) emissions from international shipping can be reduced by at least 50% by 2050 as compared with 2008 levels. This target is what the International Maritime Organization (IMO) has decided in April 2018 (among others), in the context of what is known as “Initial IMO Strategy to reduce GHG emissions from ships”. GHGs mainly include carbon dioxide (CO2), but also methane (CH4), nitrous oxide (N2O) and others. MBMs are instruments that apply the “polluter pays” principle and internalize the external costs of GHG emissions. By doing so they induce ship owners to adopt measures that reduce these emissions. A levy on bunker fuel or an Emissions Trading System (ETS), also known as cap-and-trade, are MBMs, even though other types of MBMs have also been proposed. In the short run an MBM can induce speed reduction and other logistical adjustments and in the long run it can incentivize technological advances (such as better hulls, engines, propellers and other technologies, and/or low carbon fuels). In both cases GHG emissions would be reduced. The project’s idea is based on the experience of the Principal Investigator in ship emissions research (including extensive involvement with IMO activities including MBMs) during the last 10 years and in maritime transport research for more than 40 years. As the IMO is currently considering measures to achieve the 2050 target, and as the pressure on the shipping community to take drastic action is mounting, this project will have a strong impact by proposing measures that can have significant short run and long run impacts as regards maritime GHG emissions. The ultimate impact of the project will be societal, in the form of a substantial reduction of GHG emissions from shipping and in the form of the internalization of the associated external costs. The project is compatible with the goals of the Blue Denmark strategy and is expected to enhance Denmark’s leadership position on maritime GHG emissions.