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Is There Business Potential for Sustainable Shipping? Price Premiums Needed to Cover Decarbonized Transportation

Authors: Henry Schwartz; Tomi Solakivi; Magnus Gustafsson;

Is There Business Potential for Sustainable Shipping? Price Premiums Needed to Cover Decarbonized Transportation

Abstract

The shipping sector is encountering remarkable costs concerning decarbonization of the maritime business. Both the International Maritime Organization and the European Union are developing tools to limit greenhouse gas emissions of shipping. Given all the tools and planned regulations, it seems that energy efficiency and cost cutting would be a feasible strategy of the future. However, in addition to cost cutting, shipping with net-zero or zero emission fuels might be a way to promote sustainable shipping services. A growing consumer segment is ready to pay for sustainability-marketed consumer goods, and it is possible that people would be ready to pay for net-zero or zero emission shipping as well. Our objective is to pinpoint, how big price premiums would be needed to cover the costs of shipping with sustainable, and typically more expensive, maritime fuels. We do this by calculating the amounts of fuel needed to ship specific good categories at first, and then we estimate the costs of shipping these goods with alternative fuels. We analyze Finnish maritime foreign trade during the year 2018, the time prior to the outbreak of COVID-19 pandemic. We estimate fuel consumption to the value and quantities of goods. Our findings indicate that a shift to low carbon and carbon neutral fuels would have a limited effect to the price of most goods.

Keywords

decarbonization, Environmental effects of industries and plants, TJ807-830, decarbonized transportation, TD194-195, biofuels, electro fuels, Renewable energy sources, Environmental sciences, GE1-350, price premium, ta512, sustainable shipping

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    This is an alternative to the "Influence" indicator, which also reflects the overall/total impact of an article in the research community at large, based on the underlying citation network (diachronically).
    5
    popularity
    This indicator reflects the "current" impact/attention (the "hype") of an article in the research community at large, based on the underlying citation network.
    Average
    influence
    This indicator reflects the overall/total impact of an article in the research community at large, based on the underlying citation network (diachronically).
    Average
    impulse
    This indicator reflects the initial momentum of an article directly after its publication, based on the underlying citation network.
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citations
This is an alternative to the "Influence" indicator, which also reflects the overall/total impact of an article in the research community at large, based on the underlying citation network (diachronically).
BIP!Citations provided by BIP!
popularity
This indicator reflects the "current" impact/attention (the "hype") of an article in the research community at large, based on the underlying citation network.
BIP!Popularity provided by BIP!
influence
This indicator reflects the overall/total impact of an article in the research community at large, based on the underlying citation network (diachronically).
BIP!Influence provided by BIP!
impulse
This indicator reflects the initial momentum of an article directly after its publication, based on the underlying citation network.
BIP!Impulse provided by BIP!
5
Average
Average
Top 10%
gold