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

Nature Energy volume 8, pages 1209–1220 (2023)Cite this article

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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.

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Fig. 1: MACs and GHG abatement potential of alternative marine fuels for a newbuilding vessel.
Fig. 2: MACs and abatement potentials of alternative fuels for a retrofit of a 5-year-old diesel ICE vessel.
Fig. 3: MACs and abatement potentials of alternative fuels for a retrofit of a 10-year-old diesel ICE vessel.
Fig. 4: MACs and abatement potentials of alternative fuels for a retrofit of a 5-year-old LNG ICE vessel.
Fig. 5: MACs and abatement potentials of alternative fuels for a retrofit of a 10-year-old LNG ICE vessel.
Fig. 6: Summary of the range of carbon prices and the percentage of GHG emissions reduction achieved for each alternative fuel.

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Data availability

The data set is included in the online version of the published article and its Supplementary Information. Source data are provided with this paper.

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Acknowledgements

We are grateful for the funding from DTU and Orient’s Fond under the MBM SUSHI project and the Research Council of Norway under the SFI Smart Maritime (project no. 237917).

Author information

Authors and Affiliations

  1. Department of Technology, Management and Economics, Technical University of Denmark, Kongens Lyngby, Denmark

    Sotiria Lagouvardou & Harilaos N. Psaraftis

  2. Department of Marine Technology, Norwegian University of Science and Technology, Trondheim, Norway

    Benjamin Lagemann & Stein Ove Erikstad

  3. SINTEF Ocean AS, Trondheim, Norway

    Benjamin Lagemann & Elizabeth Lindstad

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Contributions

S.L. contributed to conceptualization, methodology, software, validation, formal analysis, investigation, resources, writing of original draft and visualization. B.L. contributed to methodology, investigation, resources, writing (review and editing) and visualization. H.N.P. contributed to conceptualization, investigation, writing (review and editing), supervision, project administration and funding acquisition. E.L. contributed to investigation, resources and supervision. S.O.E. contributed to writing (review and editing) and supervision.

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Correspondence to Sotiria Lagouvardou.

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Nature Energy thanks Akira Okada, Laura Lonza and Eoin O’Keeffe for their contribution to the peer review of this work.

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Supplementary information

Supplementary Information

Supplementary Tables 3 and 4.

Source data

Source Data Fig. 1

MAC calculations for newbuilding vessel.

Source Data Fig. 2

MAC calculations for 5 year retrofit diesel ICE.

Source Data Fig. 3

MAC calculations for 10 year retrofit diesel ICE.

Source Data Fig. 4

MAC calculations for 5 year retrofit LNG ICE.

Source Data Fig. 5

MAC calculations for 10 year retrofit LNG ICE.

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Lagouvardou, S., Lagemann, B., Psaraftis, H.N. et al. Marginal abatement cost of alternative marine fuels and the role of market-based measures. Nat Energy 8, 1209–1220 (2023). https://doi.org/10.1038/s41560-023-01334-4

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