טכניון מכון טכנולוגי לישראל
הטכניון מכון טכנולוגי לישראל - בית הספר ללימודי מוסמכים  
M.Sc Thesis
M.Sc StudentElyakim Ben-Hakoun
SubjectEconomic Evaluation of the Environmental Impact of Shipping
from the Perspective of CO2 Emissions
DepartmentDepartment of Industrial Engineering and Management
Supervisors Full Professor Mordechai Shechter
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Full Thesis text - in Hebrew Full thesis text - Hebrew Version


Abstract

In this research, we evaluate the environmental economic impact of shipping from the perspective of CO2 emissions, by implementing Marine Emission Trading Scheme (METS) that we defined, this trading scheme based on the EU-ETS program with adjustment to the shipping industry needs.

First, we evaluate the socio-economic cost of carbon emission from seaborne trade activity per borne tonne criteria and per consume tonne gas criteria in Business As Usual (BAU) and METS State .

Then we continue to evaluate the relative cost of socio-economic effect with regional segmentation, transportation Mode and the expected effect on the shipping industry from the economic and environmental perspective. 


The METS economic model is calibrated with the fuel consumption data (FC), forecasted FC growth rate (based on the proportion between FC growth rate and global trade growth rate), forecasted emission abatement rate (based on EU-ETS actual performance) and EUA prices. This generates an economic evaluation basing on multiple CO2 emission scenarios, allowing us to estimate the socio-economic impact on the environment from seaborne trade activity per borne tonne criteria and per consume tonne gas criteria in BAU State and METS State. 


The research shows that METS is effective, for an annual reduction rate of 7% and more, but its efficiency is dependent upon the low growing rates of fuels demands. 

International shipping, in a state of BAU, expected to increase its economic-environmental influence by 356% from 2007 to 2030, with the maximum increase of CO2 emissions estimated at 324%. 

Contrarily, implementation of METS, expected to decrease CO2 emissions by 54-93% with the maximum emission growth rate at 207%, and the minimal at 110%.

In relation to BAU state and the external costs per ton of fuels consume under BAU is expected to grow by 16%, although with the expected rise in fuels prices this rate could be decrease to 5%. 

However, we found that under METS regulation this rate would grow only by up to 10% and decrease up to 4%. In addition, we found that calculation of external cost per transported ton is likely to create a disproportion between payments to actual contribution to the pollution problem.


To conclude, pricing system nowadays does not take into account the external costs of CO2 emissions, and therefore we suggest that IMO, must take charge and lead an international program of emission trade, that could achieve an effective reduction with a minimum impact on the business activity.