Probabilistic Analysis of Marine Fuels in Emission Controlled Areas

AbstractThis study presents a probabilistic analysis for conventional diesel-fuelled engines, LNG-fuelled engines or dual-fuelled (LNG and diesel) engines to establish which is more optimal for container shipping within emission controlled areas. Variables investigated include uncertainty over future NOx and EE regulations, downtime due to engine failure, limitations to LNG bunkering and fuel prices. Decision analysis given perfect information and risk analysis were used to generate varying scenarios to understand how the optimal decision was affected. The optimal decision for a risk neutral decision maker is to invest in a diesel fuelled engine. With perfect information over future NOx regulations, the optimal decision changes to that of purchasing a LNG-fuelled engine. The model also highlights the importance of risk tolerance to the decision problem. On the whole, the more risk averse decision makers are, the likelier they would consider LNG as an alternative fuel source