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The impact of split incentives on energy efficiency technology investments in maritime transport

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  • Rehmatulla, Nishatabbas
  • Smith, Tristan

Abstract

This paper presents the first analysis of how the split incentive market failure affects the implementation of energy efficiency technologies in the maritime transport sector. In maritime transport, split incentives occur due to the different types of charter (resulting in the divided responsibility for fuel costs) existing between shipowners and charterers. The paper uses a robust and rigorous framework of methods to operationalise the split incentive concept in a cross-sectional survey of 275 shipowners, representing around 25% (6000 ships) of the target population, resulting in the most comprehensive data on the implementation of energy efficiency technologies in shipping. The findings show, contrary to that postulated in the literature, that firms that have majority of their ships on time charter (i.e. those that don't directly observe the energy price signal but may potentially receive an energy efficiency premium) have a higher implementation of energy efficiency technologies compared to firms that operate ships on the spot charter (i.e. directly observe the price signal). To some extent the findings could be due to the effect that other confounding variables may have on the implementation of measures and the extent to which the shipping market is correcting or overcoming the split incentive efficiency problem.

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  • Rehmatulla, Nishatabbas & Smith, Tristan, 2020. "The impact of split incentives on energy efficiency technology investments in maritime transport," Energy Policy, Elsevier, vol. 147(C).
    • Handle: RePEc:eee:enepol:v:147:y:2020:i:c:s0301421520304481
    DOI: 10.1016/j.enpol.2020.111721
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    1. Nepomuceno de Oliveira, Maurício Aguilar & Szklo, Alexandre & Castelo Branco, David Alves, 2022. "Implementation of Maritime Transport Mitigation Measures according to their marginal abatement costs and their mitigation potentials," Energy Policy, Elsevier, vol. 160(C).

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