Abstract
In terms of environmental improvements, maritime shipping and its regulators (IMO in particular) are perfectly positioned for an unprecedented example of new source bias. New source bias is a tendency that environmental policies typically are introduced in ways (standards, for instance) that a) work more forcefully on new equipment than on old and b) raises the costs of new equipment and thereby c) raises the expected lifetime of existing equipment, and the intensity of its use. For maritime shipping, regulatory policies such as IMO’s Energy Efficiency Design Index (EEDI) will raise the costs of new-buildings (for a given freight capacity) and reduce emissions from those, but will also delay their introduction, and thus prolong the active lives and raise speed for existing vessels. This raises emissions from existing vessels, and more than proportionally to their output in terms of ton-miles. We present illustrative calculations – the intermediate period with higher emissions caused by the regulation may be long – and suggest what a more complete set of policy instruments would aim for and look like.
The reasons for our concern that new source bias will be stronger in maritime shipping than in many other sectors are: a) the speed-fuel equation which allows emissions to rise more than proportionally to capacity utilization; b) the idea – weakly founded, in our view – that ‘mare libre’ makes it harder to regulate existing vessels and operations than new designs; c) lifetimes of assets in shipping, which are not only long but responsive to market conditions. This latter observation is partly because important shipping market segments presently have high capacity relative to demand, and a young fleet, which can serve demand for an extensive period.
The reasons for our concern that new source bias will be stronger in maritime shipping than in many other sectors are: a) the speed-fuel equation which allows emissions to rise more than proportionally to capacity utilization; b) the idea – weakly founded, in our view – that ‘mare libre’ makes it harder to regulate existing vessels and operations than new designs; c) lifetimes of assets in shipping, which are not only long but responsive to market conditions. This latter observation is partly because important shipping market segments presently have high capacity relative to demand, and a young fleet, which can serve demand for an extensive period.
