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Marginal abatement cost of alternative marine fuels and the role of market-based measures

Author

Listed:
  • Sotiria Lagouvardou

    (Technical University of Denmark)

  • Benjamin Lagemann

    (Norwegian University of Science and Technology
    SINTEF Ocean AS)

  • Harilaos N. Psaraftis

    (Technical University of Denmark)

  • Elizabeth Lindstad

    (SINTEF Ocean AS)

  • Stein Ove Erikstad

    (Norwegian University of Science and Technology)

Abstract

Uncertainties on the global availability and affordability of alternative marine fuels are stalling the shipping sector’s decarbonization course. Several candidate measures are being discussed at the International Maritime Organization, including market-based measures (MBMs) and environmental policies such as carbon taxes and emissions trading systems, as means to decarbonize. Their implementation increases the cost of fossil fuel consumption and provides fiscal incentives to shipping stakeholders to reduce their greenhouse gas emissions. MBMs can bridge the price gap between alternative and conventional fuels and generate revenues for funding the up-scaling of alternative fuels’ production, storage and distribution facilities and, thus, enhance their availability. By estimating the fuels’ implementation and operational costs and carbon abatement potential, this study calculates marginal abatement costs and estimates the level of carbon pricing needed to render investments into alternative fuels cost-effective. The results can assist policymakers in establishing robust and effective maritime decarbonization policies.

Suggested Citation

  • Sotiria Lagouvardou & Benjamin Lagemann & Harilaos N. Psaraftis & Elizabeth Lindstad & Stein Ove Erikstad, 2023. "Marginal abatement cost of alternative marine fuels and the role of market-based measures," Nature Energy, Nature, vol. 8(11), pages 1209-1220, November.
    • Handle: RePEc:nat:natene:v:8:y:2023:i:11:d:10.1038_s41560-023-01334-4
    DOI: 10.1038/s41560-023-01334-4
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