Market Based Instruments for Abatement of Emissions from Shipping

Project duration
01.2006 - 12.2008
Projekt order
Federal Environment Agency (UBA)

The MBI project is an environmental research project on behalf of the Federal Environment Agency in Germany.

Emissions from shipping, especially SOx, NOx and PM, are increasingly perceived as a problem for human health and the environment. Efforts by the International Maritime Organisation (IMO) to reduce these emissions by international agreements have not resulted in legislation which takes account of more than a very limited part of the existing technological potential. These efforts will even not offset the expected increase in emissions due to traffic growth. This seemed a good reason to start investigating potential market based incentives aimed at motivating action beyond internationally legally required measures.

The project shows in detail the environmental and health impacts of shipping, existing regulations of emissions from shipping, emissions from ships in the Baltic Sea, abatement measures and costs, existing Market Based Instruments in Shipping as well as evaluation of the NERA (National Economic Research Associates) proposals.

This project summarizes the situation for the Baltic Sea with regard to technical standards and opportunities to reduce ship emissions and looks at the expected growth in traffic and emissions up to 2020. Then it provides an analysis of the legal enforceability and feasibility of Market Based Instruments for the reduction of SOx and NOx emissions in the area.

A pilot scheme for reduction of NOx in the Baltic Sea, a scheme for the abatement of SOx, the legal feasibility of the proposed scheme, results and a cost/benefit-analysis are given. Based on two scenarios for traffic growth in the Baltic Sea, the effect of the implemented measures for the reduction of SOx and NOx emissions is calculated and compared with the reduction of social costs. The calculation shows that under socio-economic cost/benefit considerations (including a wide range of environmental costs) it is reasonable to expect that emissions can be reduced to below what can be achieved under current rules. However, the additional measures have to start soon and be substantial in order to at least offset the expected increase in ship emissions.

Finally, a proposal is made on how to begin implementing market based instruments for the reduction of SOx and NOx emissions in the Baltic Sea

Beside the ISL participants of the project are GAUSS (Bremen) and Nature Associates (Stockholm).