Analysis of GHG Marginal Abatement Cost Curves

Many studies have shown that the fuel efficiency of ships can be improved considerably at a net profit. This report identifies the main barriers for uptake of cost-effective measures and presents a comparative analysis of different marginal abatement cost curves (MACCs).

It transpires that the differences in the available MACCs can be largely explained by use of different emission baselines and slightly varying sets of measures. Other contributing factors are minor differences in the costs and estimated potentials of specific measures and differences in the projected fleet structure.
 
The report identifies three main reasons why not all cost-effective measures are currently being taken:

1. Technological barriers. Not all the technologies featuring in the MACCs are considered to yield fuel savings by the ship owners and operators interviewed. Moreover, some technologies are perceived to be associated with a high risk of failure.
2. Institutional barriers. Two institutional barriers are of particular importance. The first is the fact that vessel fuel efficiency is not currently reflected in either charter rates or second-hand prices. This means that ship owners investing in fuel efficiency measures cannot generally recoup their investment unless they operate their own ships or have long-term agreements with charterers. The second is that many yards do not have the capacity to offer changes to existing designs, or are only willing to do so at substantial cost. Many yards seem to have focussed on reducing newbuild costs, with little regard to lifecycle costs.
3. Financial barriers. The main financial barrier appears to be associated with the risk associated with certain technologies.