Optimum routing for dry bulk voyages with the effect of an emission trading system: NSR vs SCR

Abstract

Concerning the significant environmental emissions from the maritime sector, an Emission Trading System (ETS) is an effective market-based emission control measure. This study analyses the effect of ETS on the optimum routing between the Northern Sea Route (NSR) and Suez Canal Route (SCR), considering 174 dry bulk voyages between Asia and Europe. First, cost-, emissions- and time-saving made by voyages via NSR compared to SCR are estimated, and marginal abatement costs are estimated to identify feasible NSR voyages with an ETS. Accordingly, nearly 35, 80, and 160 voyages were cost-saving with NSR if SCR speed equals 10, 15, and 20 knots, respectively. Although all voyages save emissions with NSR if SCR speed equals 15 or 20 knots, only limited voyages save emissions via NSR if SCR speed equals 10 knots. Moreover, a much faster voyage via NSR than SCR could save more voyage costs, although it could not save emissions. However, a much shorter voyage via NSR than SCR could save more emissions, although it could not save costs. The optimization model derives over 90 feasible voyages for NSR, varied based on the free-emissions quota, icebreaker availability, navigation month, fuel prices, and types. Some voyages that were environmentally feasible but economically infeasible via NSR without an ETS were both environmentally and economically feasible with an ETS. However, if vessels slow steam via SCR, ETS would not significantly enhance NSR’s feasibility. Moreover, NSR is more feasible if the maritime industry uses expensive and cleaner fuel types.