Impact of fuel prices on energy efficiency of maritime ships

Impact of fuel prices on energy efficiency of maritime ships
Over the last decade, several policies have been implemented by the International Maritime Organisation (IMO) and the European Commission (EC) to affect the environmental performance of maritime shipping. Many of these policies result in higher fuel costs for shipping, either direct (e.g. in case of EU ETS) or indirect (e.g. in case of FuelEU Maritime). In this study for T&E, we have investigated whether and to what extent such kind of fuel cost increases influence shipping companies to invest in energy efficiency technologies or to improve their operational energy efficiency. For that purpose, we have econometrically studied the impact of historic variations in fuel prices on both technical and operational energy efficiency of maritime ships in the global fleet.

The main findings of our study are:

• There is significant evidence that higher fuel prices incentivise ship owners to build more energy efficient vessels. As an illustration: one of our models shows that, on average and all other factors kept equal, a 1% increase in fuel prices leads to a 0.26% increase in technical energy efficiency (EIV) of new-build vessels six years later.
• The relationship between fuel prices and the technical energy efficiency of new-build ships seems less strong in the period 2015-2024 compared to the period 1990-2014. This can probably be explained by the fact that after 2015 several policy instruments targeting the technical energy efficiency of new-builds have been implemented, affecting the relationship between fuel prices and technical energy efficiency.
• A fuel cost increase due to the implementation of EU policies like the inclusion of maritime shipping in EU ETS or the introduction of Fuel EU maritime may lead to an improvement of the technical efficiency of ships coming to the market in the period 2031-2035 by roughly 1%. Due to the long lifetime of maritime vessels, the impact on the average technical energy efficiency of the fleet is more limited, about 0.03% for the period 2030-2035.
• Our economic analysis does not provide significant evidence for a relationship between fuel prices and average sailing speed. Most likely, relevant variables explaining variations in sailing speed (e.g. weather conditions, contract details) were missing from the analysis. These variables were not included due to lack of data. More research on this topic is required.