Scandinavian Working Papers in Business Administration

Discussion Papers,
Norwegian School of Economics, Department of Business and Management Science

No 2017/8: Sulphur Abatement Globally in Maritime Shipping

Elizabeth Lindstad (), Carl Fredrik Rehn () and Gunnar S. Eskeland ()
Additional contact information
Elizabeth Lindstad: Sintef Ocean AS (MARINTEK), Postal: MARINTEK,, POB 4125 Valentinlyst, NO-7450 Trondheim, Norway
Carl Fredrik Rehn: Dept. of Marine Technology, Norwegian University of Science and Technology, Postal: Norwegian University of Science and Technology, Department of Marine Technology, 7491 Trondheim, Norway
Gunnar S. Eskeland: Dept. of Business and Management Science, Norwegian School of Economics, Postal: NHH , Department of Business and Management Science, Helleveien 30, N-5045 Bergen, Norway

Abstract: In 2016, the International Maritime Organization (IMO) decided on global regulations to reduce sulphur emissions to air from maritime shipping starting 2020. The regulation implies that ships can continue to use residual fuels with a high sulphur content, such as heavy fuel oil (HFO), if they employ scrubbers to desulphurise the exhaust gases. Alternatively, they can use fuels with less than 0.5% sulphur, such as desulphurised HFO, distillates (diesel) or liquefied natural gas (LNG). The options of lighter fuels and desulphurisation entail costs, including higher energy consumption at refineries, and the present study identifies and compares compliance options as a function of ship type and operational patterns. The results indicate distillates as an attractive option for smaller vessels, while scrubbers will be an attractive option for larger vessels. For all vessels, apart from the largest fuel consumers, residual fuels desulphurised to less than 0.5 % sulphur are also a competing abatement option. Moreover, we analyse the interaction between global SOX reductions and CO2 (and fuel consumption), and the results indicate that the higher fuel cost for distillates will motivate shippers to lower speeds, which will offset the increased CO2 emissions at the refineries. Scrubbers, in contrast, will raise speeds and CO2 emissions.

Keywords: Shipping and the environment; Abatement cost and options; CO2; Marine fuels; MARPOL; IMO

JEL-codes: L92; Q50; Q52

25 pages, June 29, 2017

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