Abstract
Gas emissions from ships are a major environmental concern of the international maritime community. Market-based measures with incentive have been developed to reduce gas emissions. One such measure is the differentiation of port dues through the provision of rebates to environmentally friendly vessels. Existing research reveals several limitations that hinder their actual impact on emissions, such as low rebate rates, the lack of transparency of the schemes, and the costs for the port authorities, among other factors. Our article reveals that differentiated schemes can be improved to elicit changes in the shipping industry. Based on data from the Port of Tallinn, we develop an illustrative air emission index to show how transparency in the scheme can be reconciled with environmental targets. The brackets and rates of the scheme should be determined transparently based on an ex ante target and on the distribution of the emission index of vessels that call at the port. From a policy perspective, we highlight how such a transparent process can increase compliance with the schemes and how surcharges are essential to the provision of attractive rebates by preserving the financial stability of the port authority.
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Notes
Particulate matter, such as PM10, PM2.5, and PM1, is defined as the fraction of particles with an aerodynamic diameter smaller than 10, 2.5, and 1 µm, respectively.
Mass by mass.
The other being investment support or co-funding by the public sector and emission trading ( Traficom 2020).
Indices are not the only tools considered by ports for environmental concerns. Alternative instruments include labels such as Green Award certification, Green Flag incentive program, or Blue Angel ecolabel. Only indices are detailed in this article as they are the most used by ports.
See the EPI portal at https://epiport.org/ (last consulted by the authors: August 5, 2023).
See the CSI portal at https://www.cleanshippingindex.com/projektwebbar/clean-shipping-index.html (last consulted by the authors: August 3, 2023). The methodology is presented in Fridell et al. (2023).
See the ESI portal at https://www.environmentalshipindex.org/public/ports for the list of ESI-based port discounts with their date of activity (last consulted by the authors: August 3, 2023).
Minimum and maximum values of the index that trigger a surcharge or a rebate.
To our knowledge, only cruise ships bear surcharges in the Baltic Sea Region.
Majors ports comprised most (more than 90%) of port calls (IHS Markit data). The year 2019 represents the most recent pre-pandemic data.
It is possible to relax the equal weights assumption and use, for example, the inverse of the external costs of the greenhouse gases and pollutants as their weights: \(E{F}_{EI}=\frac{E{F}_{EI}^{C{H}_{4}}\times \left(\frac{1}{{\eta }_{C{H}_{4}}}\right)+E{F}_{EI}^{C{O}_{2}}\times \left(\frac{1}{{\eta }_{C{O}_{2}}}\right)+E{F}_{EI}^{S{O}_{x}}\times \left(\frac{1}{{\eta }_{S{O}_{x}}}\right)+E{F}_{EI}^{N{O}_{x}}\times \left(\frac{1}{{\eta }_{N{O}_{x}}}\right)+E{F}_{EI}^{P{M}_{10}}\times \left(\frac{1}{{\eta }_{P{M}_{10}}}\right)}{\left(\left(\frac{1}{{\eta }_{CH4}}\right)+\left(\frac{1}{{\eta }_{C{O}_{2}}}\right)+\left(\frac{1}{{\eta }_{S{O}_{x}}}\right)+\left(\frac{1}{{\eta }_{N{O}_{x}}}\right)+\left(\frac{1}{{\eta }_{P{M}_{10}}}\right)\right)},\)
where \(\eta\) represents the external cost in € per kg emitted (European Commission, 2020). Another alternative way to set unequal weights would be to do so right before the grade calibration (of the 0–100 scale) and calculate \(E{F}_{EI}\) as an unweighted mean. Although these configurations change the statistical distribution of the EI, they do not affect the overall implications. These results are available upon request.
For example, for SOx, the highest EF was that of HFO (0.0508 g SOx/g fuel), which corresponded to the lowest grade (\(E{F}_{EI}^{S{O}_{x}}=0\)). Although the lowest EF for SOx was 0.0000317 g SOx/g fuel (for LNG), we considered the zero-emission target (0 g SOx /g fuel) for the highest grade \(E{F}_{EI}^{S{O}_{x}}=100.\)
A kink point is a point at which several observations bunch. In our case, kink points indicate that several vessels share the same EI values. The higher the jump in the ECDF at a kink point (cf. Figure 2), the more vessels there are with that same value.
It is possible for vessel operators or shipowners to act as free riders by not reducing their emissions while benefiting (e.g., consuming cleaner air) from the efforts of others.
Under the existing ESI-based scheme, the Port of Tallinn gave discounts to 19% of port calls in 2019 (AS Tallinna Sadam—Port of Tallinn, 2020).
The financial target of the scheme could have been derived through other means, e.g., from discussions with stakeholders (ship owners), but this would not have affected the outcome of the scheme, which only depends on the value of the target. Alternative amounts for the financial target are considered in the results section.
5%× €10,989,560×26 vessels
In 2019, the Port of Tallinn generated a total revenue of 130.5 million euros, of which 46.7 million euros were from dues on vessels (tonnage charge, mooring charge, and waste fee included) (AS Tallinna Sadam—Port of Tallinn, 2020). Assuming an equal share between the three types of vessel charge, and given that 19% of calls received rebates on tonnage charge, the Port of Tallinn would have granted approximately 2.85 million euros under the ESI-based scheme. For perspective, in 2014, the ports of Rotterdam and Antwerp allocated approximately 6 and 3 million euros, respectively, to finance their ESI-based rebates (Geerts et al. 2017).
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This study was supported by the ShipTRASE project (Belmont Forum via ANR Grant ANR-20-BFOC-0003).
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Sèbe, M., Recuero-Virto, L., Yao, A.F. et al. Environmentally Differentiated Port Dues: A Case Study for a Transparent Scheme. Environ Resource Econ 87, 2993–3009 (2024). https://doi.org/10.1007/s10640-024-00921-7
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DOI: https://doi.org/10.1007/s10640-024-00921-7