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Energy efficiency and time charter rates: Energy efficiency savings recovered by ship owners in the Panamax market

Agnolucci, P; Smith, T; Rehmatulla, N; (2014) Energy efficiency and time charter rates: Energy efficiency savings recovered by ship owners in the Panamax market. Transportation Research Part A: Policy and Practice , 66 173 - 184. 10.1016/j.tra.2014.05.004. Green open access

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Abstract

This paper presents the first analysis on how financial savings arising from energy efficient ships are allocated between owners and those hiring the ships. This as an important undertaking as allocation of financial savings is expected to have an impact on the incentives faced by ship owners to invest in more energy efficient vessels. We focus on the dry bulk Panamax segment as it contributes to around 50 Mt (5%) of total CO2 emissions from shipping in 2007 and therefore its importance in terms of environmental impact should not be neglected. The time charter market represents a classical example of the principal–agent problem similar to the tenant–landlord problem in the buildings sector. We discovered that on average only 40% of the financial savings delivered by energy efficiency accrue to ship owner for the period 2008–2012. The finding that only part of the savings are recouped by shipowners affecting their incentives towards energy efficiency could consequently have implications on the type of emission reduction policies opted at both, global and regional levels.

Type: Article
Title: Energy efficiency and time charter rates: Energy efficiency savings recovered by ship owners in the Panamax market
Open access status: An open access version is available from UCL Discovery
DOI: 10.1016/j.tra.2014.05.004
Publisher version: http://dx.doi.org/10.1016/j.tra.2014.05.004
Language: English
Additional information: This is an Open Access article distributed under the terms of the Creative Commons Attribution License (http://creativecommons.org/licenses/by/3.0), which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.
Keywords: Energy efficiency, Panamax, Dry bulk, CO2 emissions, Time charter, EEDI
UCL classification: UCL
UCL > Provost and Vice Provost Offices
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/1452719
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