Overview of third study

maritime ETS and the implications of design choices. Incentives to adopt clean technologies under a maritime ETS could be increased by incorporating the emission reduction targets into the policy design. This feasible property depends on the credible commitment of policy makers to the defined reduction targets through, for example, monetary ramifications if a ship owner’s abatement efforts are insufficient. Another insight is that a maritime ETS can be a key instrument for the green transition of the industry even in an uncertain environment, as the uncertainty does not erode the value of actively managing the investment decision and incentives to invest in clean technologies.

Purpose and research questions: Two key traits of mandatory policy measures focusing on the energy efficiency of ship designs are their focus on subsets of vessels and comparisons against min-imum requirements. To illustrate, the EEDI regulation is designed to target mostly vessels built after 2013 and prescribes minimum performance standards these vessels must fulfill depending on the ship type and year. However, this perspective is not well suited for an analysis of the current potential for improvements in the energy efficiency of ship designs in the maritime industry. I argue that this potential is mostly determined by two factors, which likely vary across shipping sectors: the scope for improvements by adopting existing best-practice ship designs within sectors and the technological conditions across sectors limiting technology choice at the design stage and, thus, curbing the scope for improvements in a sector. The study seeks to examine the scope for efficiency improvements and the technological conditions for the different sectors by asking:

RQ 1: “What is the scope for efficiency improvements within the sectors of the maritime industry?”

RQ 2: “What are the technological conditions across the sectors of the maritime industry?”

Knowledge about these factors in the different sectors is crucial for policy makers to evaluate existing instruments and to develop additional instruments, as their effectiveness depends on the situational context in which they are implemented (Givoni, 2014; Justen, Fearnley, et al., 2014). To answer the research questions, the study derives estimates for the relative performance of vessels based on best-practice benchmarks and describes their distribution in the container, tanker, and dry bulk sectors, which account for roughly 90% of total maritime cargo transportation capacities (Faber et al., 2020). Based on these estimates, it is possible to quantify the two factors empirically and to describe the differences in situational contexts for the considered shipping sectors.

Methodology: The methodology utilizes a general framework for the energy efficiency of ship designs in the maritime industry and quantitative benchmarking methods for multiple inputs and outputs to derive empirical measures of relative performance. Departing from the rationale of existing energy efficiency indices, I develop a general theoretical framework for comparing the en-ergy efficiency of ship designs to formulate empirical models. I collect a secondary data set with

detailed information about the ship design characteristics for over 6,000 vessels from the CWFR and the TRES database. The data collection process is then validated with reported energy effi-ciency indices from the EU-MRV database to ensure the data set is a good representation of the actual vessel characteristics. To derive robust efficiency scores, the study employs a nonparamet-ric metafrontier method based on data envelopment analysis in combination with bootstrapping techniques. This approach enables the assessment of the scope for efficiency improvements within sectors and to make industry-wide comparisons across sectors. Lastly, a sensitivity analysis con-firms the robustness of derived results with respect to alternative empirical model specifications and data outliers.

Results: The results overall suggest that the two factors vary considerably across the examined sectors. To illustrate, the scope for improvements by adopting existing best practice ship designs within sectors ranges from 6.4% for the container shipping sector to 17.4% for the dry bulk sector.

This variation in scope might be driven by differences in market structures and market dynamics in the considered shipping sectors, which impact the adoption of clean technologies in ship designs.

Further, there appears considerable variation as well in the technological conditions across sectors.

The results indicate that the chemical tanker sector has the most limiting technological conditions of the considered shipping sectors, which might make it more challenging for the sector to adopt existing industry best practices when compared to the other sectors. In summary, the results highlight that the sector-specific contexts are heterogeneous across the different shipping sectors.

Contribution: By shifting the focus from comparisons against minimum requirements to best practices and utilizing a general framework for the energy efficiency of ship designs, the study gen-erates important insights and implications for policy. As suggested by O’Donnell et al. (2008), the analysis can act as a quantitative decision support tool for policy makers in the maritime industry to evaluate existing and to develop additional instruments. First, it is plausible that the presented perspective can improve the effectiveness of existing policy measures focusing on technology to en-hance the energy efficiency of ship designs. Previous work has already questioned the effectiveness of the EEDI regulation in reaching the policy objective due to adverse side effects and the policy design (Anˇci´c et al., 2018; Polakis et al., 2019; Vladimir et al., 2018). The presented approach

addresses adverse side effects, such as design speed reductions, to comply with the regulation, and it introduces competitive market forces into the policy design. Second, based on the observed het-erogeneity in sector-specific contexts, it appears that the considered shipping sectors can benefit from different additional policy measures. For instance, while additional initiatives fostering the adoption of existing best-practices can be still fruitful in the dry bulk sector, additional initiatives for the container shipping sector should support the development and introduction of innovative clean technologies in container ship designs.

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