Research

We discuss the impact of a carbon tax on the maritime transport sector, which is responsible for approximately 3% of global emissions. The International Maritime Organization (IMO) has set long-term targets to reduce carbon intensity and achieve carbon neutrality, but the impact of the policies to achieve those targets on the global and local economies must be assessed. We use a global and multi-region Computable General Equilibrium (CGE) model - Global Trade Analysis Project Energy-Environmental augmented version (GTAP-E) – to evaluate the environmental and economic effectiveness of a carbon tax of $50/tCO2e on international shipping. GTAP-E does not provide emissions data by transport mode and accurately estimating emissions is crucial to proposing a carbon pricing measure. Therefore, we have applied machine-learning techniques to predict the share of international trade transported by sea by sector, origin and destination countries and calculate ship emissions for each bilateral flow by sector. The findings indicate that while the tax considerably reduced emissions from ships, it also had a negative impact on exports and resulted in mixed impacts on GDP, exacerbating existing inequalities across regions. Our analysis highlights the importance of considering various economic and social variables in impact assessments to identify potential trade-offs and synergies between policy objectives.

To reduce greenhouse gas emissions from maritime transport, the International Maritime Organization has been studying measures to be implemented in the short term. However, there is a need to carefully analyze the impact of these measures on transport costs. The present work presents an assessment of cost and CO2 emissions from mandatory speed reductions on the world merchant ship fleet. Considering the product usually transported by each ship type and the distance navigated, expenditures and CO2 emissions are calculated to perform a cost-effectiveness analysis. Results reveal that a given speed reduction is more beneficial for some regions and ship types than for others. Higher speed reductions were found to be environmentally beneficial but significantly increase the annual seaborne transport cost. Finally, the cost-effectiveness analysis shows that the cost per avoided ton of CO2 emission ranges between USD 23 and USD 58, in 30% and 40% speed reduction scenarios, respectively.

New rules and regulations in the maritime sector are under discussion to reduce GHG emissions. Decision-makers are keen to understand the effects of such policies, to choose the more cost-effective ways to reduce emissions from ships. In this paper, we propose two alternative frameworks, based on a global and integrated perspective, to assess the cost-effectiveness of the policies under discussion and, therefore, to contribute to this debate. We use two possible mitigation actions as examples: fuel tax adoption and speed reduction. We also present the most utilized partial equilibrium models (based on trade models) and general equilibrium models to evaluate economic and environmental effects of policies. We also indicate the necessary components to develop a specific general equilibrium model for environmental policy evaluation in the maritime sector. Finally, we compare the advantages and disadvantages of each approach and present ways to calculate the relevant indicators to support the decisions on the best policies to be implemented.

Some of our team members participated in the Fourth IMO GHG Study, contributing to the forecasting of transport demand which formed the basis for emissions projections spanning 2018 to 2050. The key findings are as follows:

(I) emissions are expected to rise from approximately 90% of 2008 emissions in 2018 to a range of 90-130% of 2008 emissions by 2050, encompassing various plausible long-term economic and energy scenarios; 

(ii) emissions could surpass the projections in cases where economic growth rates exceed the assumptions made here, or if the reduction in greenhouse gas emissions from land-based sectors falls short of the requirement needed to limit global temperature increase to well below 2 degrees Celsius;

(iii) depending on the trajectory of recovery after COVID-19, emissions for the coming decades might be slightly below the projected levels, at most. Overall, the influence of COVID-19 is likely to be smaller than the range of uncertainty encompassing the presented scenarios.