Cost-benefit analysis of NOX control for ships in the Baltic Sea and the North Sea

Emissions of air pollutants from shipping (NOx, SOx, and PM2.5) make a significant contribution to the total emissions in Europe and world-wide. According to the analysis by Brandt et al. (2013), shipping emissions cause about 50 thousand premature deaths per year in Europe. Significant share of the sulphur and nitrogen deposition that causes acidification and eutrophication emanates from ship emissions. NOx emissions contribute to formation of secondary particles and ozone, resulting in increased number of respiratory and cardio-vascular diseases among the population, especially in coastal states. NOx emissions from anthropogenic sources reported by the 28 member countries of the European Union to the Convention on Long-Range Transboundary Air Pollution (CLRTAP) amounted to ∼7820 ktonnes in 2014 (CEIP, 2017) whereas emissions from international shipping in the European seas for the same year are estimated at 3186 ktonnes (EMEP, 2016). As more stringent NOx emission control is gradually enforced for stationary and mobile sources on land, the share of NOx emission reduction potential attributable to international shipping is expected to increase in the future. One instrument is a NOx emission control area (NECA) in the Baltic Sea and the North Sea; the other is a combination of NECA and a NOx levy with revenues going back to shipping companies as subsidy for NOx abatement uptake. Both instruments are assumed to be in force in 2021. In the analysis, we operate with three main scenarios: • Baseline (no additional policy instruments) • NECA • NECA+Levy&fund In the NECA scenario we assume that no extra use of liquefied natural gas (LNG) is introduced and that the Tier III requirements for marine gasoil (MGO) fuelled vessels are fulfilled by installing selective catalytic reduction (SCR). In the NECA+Levy&fund scenario it is further assumed that Tier 0 vessels will not install SCR but pay levy instead, and that 75 per cent of Tier I and Tier II vessels will take up retrofit SCR, given that it is more profitable than paying the levy. Total abatement costs have been assessed from the socio-economic perspective, implying low interest rate and long investment lifetime at investment costs’ annualization. Health benefits have been estimated with the GAINS and the Alpha-RiskPoll models. The method for estimating health benefits is the same as applied in cost-benefit analyses supporting the European Commission’s work on the air pollution abatement strategies and the work of the Convention on Long-Range Transboundary Air Pollution.The purpose of this study is to perform a cost-benefit analysis for two selected policy instruments aimed at decreasing nitrogen oxides (NOx) emissions from shipping in the Baltic Sea and the North Sea. One instrument is a NOx emission control area (NECA) in the Baltic Sea and the North Sea the other is a combination of NECA and a NOx levy with revenues going back to shipping companies as subsidy for NOx abatement uptake. Both instruments are assumed to be in force in 2021