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The impact of split incentives on energy efficiency technology investments in maritime transport

Rehmatulla, N; Smith, T; (2020) The impact of split incentives on energy efficiency technology investments in maritime transport. Energy Policy , 147 , Article 111721. 10.1016/j.enpol.2020.111721. Green open access

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Abstract

This paper presents the first analysis of how the split incentive market failure affects the implementation of energy efficiency technologies in the maritime transport sector. In maritime transport, split incentives occur due to the different types of charter (resulting in the divided responsibility for fuel costs) existing between shipowners and charterers. The paper uses a robust and rigorous framework of methods to operationalise the split incentive concept in a cross-sectional survey of 275 shipowners, representing around 25% (6000 ships) of the target population, resulting in the most comprehensive data on the implementation of energy efficiency technologies in shipping. The findings show, contrary to that postulated in the literature, that firms that have majority of their ships on time charter (i.e. those that don't directly observe the energy price signal but may potentially receive an energy efficiency premium) have a higher implementation of energy efficiency technologies compared to firms that operate ships on the spot charter (i.e. directly observe the price signal). To some extent the findings could be due to the effect that other confounding variables may have on the implementation of measures and the extent to which the shipping market is correcting or overcoming the split incentive efficiency problem.

Type: Article
Title: The impact of split incentives on energy efficiency technology investments in maritime transport
Open access status: An open access version is available from UCL Discovery
DOI: 10.1016/j.enpol.2020.111721
Publisher version: https://doi.org/10.1016/j.enpol.2020.111721
Language: English
Additional information: Coipyright © 2020 The Authors. Published by Elsevier Ltd. This is an open-access article under the CC BY-NC-ND license
Keywords: Split incentives, Energy efficiency, Barriers, Transport, Maritime, Technologies
UCL classification: UCL
UCL > Provost and Vice Provost Offices > UCL BEAMS
UCL > Provost and Vice Provost Offices > UCL BEAMS > Faculty of the Built Environment
UCL > Provost and Vice Provost Offices > UCL BEAMS > Faculty of the Built Environment > Bartlett School Env, Energy and Resources
URI: https://discovery.ucl.ac.uk/id/eprint/10102973
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