Knowledge

The accelerated melting of the Arctic ice leads to the navigation of the Northern Sea Route (NSR) linking Asia and Europe, shortening transport channel between China and the European Union (EU). This has a significant impact on the China-EU bilateral trade which is analyzed in the present study. We present a framework based on a general equilibrium model for analyzing the impact of the NSR on the trade and the economies of China and the EU. Different fuel cost scenarios, consisting of fuel prices and sailing speeds on ice, are also considered. Specifically, we measure the changes in shipping costs between China and the EU, brought about by NSR navigation. These are used as a basis to quantify changes in transport technology. The Global Trade Analysis Project (GTAP) model is used to predict the trade and economic impacts. The results show that the NSR can save 0.98% in shipping costs and generate an increase in the exports of China and the EU in the order of 14,986 and 8,228 million US dollars, respectively. Among these exports, the mining industry shows the fastest growth, while the electronics industry experiences the largest increase in trade volume. Our findings reveal the potential of the NSR as an alternative route and its positive impact on bilateral trade between China and the EU. The results can provide a basis for shipping companies and governments to make decisions regarding the use of Arctic routes.

The European Union (EU) seeks to become a global maritime-security actor, yet strategic challenges influence its maritime-security strategy process. Is there a distinctive and coherent EU approach to global maritime security, and how should the EU address the growing range of maritime challenges, including the intensification of militarized competition in the Indo-Pacific?

The paper focuses on the impacts of the inclusion of the maritime sector in the EU Emissions Trading System (ETS). The enforcement of a regional Market-Based Measure (MBM) such as the EU ETS may provide financial incentives to shipping operators to reconfigure their networks and avoid voyages inside the European Economic Area (EEA). This paper investigates the risk of container vessels engaging in evasive port calls by replacing EEA transshipment hubs with nearby non-EEA competitors. We perform a cost-benefit analysis that calculates the cost of EU Allowances (EUAs) for several international services and compares it with a relocation scenario. Our case studies focus on the Piraeus-Izmir and the Algeciras-Tanger Med scenarios and identify the EU carbon price turning point that will render the switch of the transshipment hubs a cost-effective choice for the operator. The results show that the preference of a non-EEA hub will become attractive for carbon prices well below 25 EUR per metric ton of CO2. Further, in all cases, the hub switch results in a rise in the overall carbon emissions attributed to the service which amplifies the risk of carbon leakage. Our results show that the relocation would lead to revenue loss for the EU ETS and penalization of the EEA transshipment hubs in close proximity with hubs outside the EEA, thus posing a threat to their economic activity and development.

The maritime sector is a key asset for the world economy, but its environmental impact represents a major concern. The sector is primarily supplied with Heavy Fuel Oil, which results in high pollutant emissions. The sector has set targets for deacrbonisation, and alternative fuels have been identified as a short-to medium-term option. The paper addresses the complexity related to the activities of the maritime industry, and discusses the possible contribution of alternative fuels. A sector segmentation is proposed to define the consumption of each sub-segment, so to compare it with the current alternative fuel availability at European level. The paper shows that costs and GHG savings are fundamental enablers for the uptake of alternative fuels, but other aspects are also crucial: technical maturity, safety regulation, expertise needed, etc. The demand for alternative fuels has to be supported by an existing, reliable infrastructure, and this is not yet the case for many solutions (i.e. electricity, hydrogen or methanol). Various options are already available for maritime sector, but the future mix of fuels used will depend on technology improvements, availability, costs and the real potential for GHG emissions reduction.

Maritime transport is the backbone of international trade. The amount of total international maritime trade in million tonnes loaded was 8408 in 2012 and had increased to 11.076 by 2019, for an average annual increase of 3.12%. In early 2020, the world fleet contained 98.140 ships of 100 gross tonnes and above with 2.06 million dead weight tonnage of capacity. The greenhouse gas (GHG) emissions from shipping activities are not negligible. According to the fourth GHG study commissioned by the International Maritime Organization (IMO), in 2018, global shipping emitted a total of 1056 million tonnes of carbon dioxide (CO2), accounting for around 2.89% of global anthropogenic CO2 emissions. Due to the international nature of shipping, efforts to control CO2 emissions from ships are absent from the Kyoto Protocol and the Paris Agreement. In an attempt to phase out carbon emissions from shipping entirely, the IMO formulated a strategy to cut the total annual GHG emissions from shipping by at least 50% from their 2008 levels by 2050; however, no mandatory rules have been promulgated since the release of this strategy.

Given the insufficient progress made by the IMO, the European Union (EU) decided to take a leading role in promoting the reduction of CO2 emissions from maritime transport. In 2015, the EU issued regulations on the monitoring, reporting, and verification (MRV) of CO2 emissions from ships with a gross tonnage above 5000 arriving at, within, or departing from ports under the jurisdiction of an EU member state, to come into force at the beginning of 2018. It should be noted that, under the MRV regime, even if only one port on a voyage is within the European Economic Area (EEA) and the other is not (e.g., a voyage from Rotterdam directly to Singapore), the ship must still report the total CO2 emissions of the whole voyage, rather than just the emissions of the part of the voyage within EU waters.

The MRV regime has been in operation for over two years, and the CO2 emissions data for the 2018 and 2019 reporting periods have already been published. Based on the data collected, on 16 September 2020, the European Parliament took the bold step of voting for the inclusion of maritime transport in the EU Emissions Trading System (ETS). This is a market-based system that uses economic tools such as a levy on bunker fuels and an emission trading system to provide monetary incentives for polluters to reduce emissions. The European Commission is conducting an impact assessment of the ETS, the results of which are expected in 2021. At this time, it is unclear how the inclusion of shipping into the EU ETS will work. There are two possibilities. The first is that only intra-EU voyages will be included; that is, only voyages from one EEA port to another EEA port will have to pay CO2 emission costs. The second is that both intra-EU voyages and voyages between an EEA port and a non-EEA port will have to pay CO2 emission costs, with the cost of a voyage between an EEA port and a non-EEA port being based on the CO2 emissions over the whole voyage, rather than the part of the voyage within EU waters. As the second possibility also covers the first possibility, we examine the implications of both possibilities but focus more on the second.

In this video, Professor Harilaos Psaraftis (DTU Technical University of Denmark) will outline the main decarbonization challenges.

The International Maritime Organization (IMO) adopted the so-called Initial IMO Strategy in 2018, stipulating that greenhouse gas (GHG) emissions from international shipping need to be reduced by at least 50% by 2050, and CO2 emissions per transport work are to be reduced by at least 40% by the year 2030, both compared to the 2008 levels.

At the same time, there is an elephant in the room: It is the intent of the European Commission and the European Parliament to include shipping into the EU ETS. How the elephant will be handled is not clear. In this talk we will outline the main decarbonization challenges through a focus on a RoPax case study.
The session was developed in collaboration with MARLOG.

Given the move toward automation, an increased focus on the liability for technical defects must be anticipated. This brings into play liability regimes that have traditionally been less used in the maritime area. One of these liability regimes is product liability. It is the purpose of this contribution to examine the implications of product liability rules in the maritime area, seen in light of the automation of ships.

Aiming at reducing CO2 emissions from shipping at the EU level, a system for monitoring, reporting, and verification (MRV) of CO2 emissions of ships was introduced in 2015 with the so-called ‘MRV Regulation’. Its stated objective was to produce accurate information on the CO2 emissions of large ships using EU ports and to incentivize energy efficiency improvements by making this information publicly available. On 1 July 2019, the European Commission published the relevant data for 10,880 ships that called at EU ports within 2018. This milestone marked the completion of the first annual cycle of the regulation’s implementation, enabling an early assessment of its effectiveness. To investigate the value of the published data, information was collected on all voyages performed within 2018 by a fleet of 1041 dry bulk carriers operated by a leading Danish shipping company. The MRV indicators were then recalculated on a global basis. The results indicate that the geographic coverage restrictions of the MRV Regulation introduce a significant bias, thus prohibiting their intended use. Nevertheless, the MRV Regulation has played a role in prompting the IMO to adopt its Data Collection System that monitors ship carbon emissions albeit on a global basis.