Real option analysis for environmental compliance: LNG and emission control areas

A wide array of technical and operational solutions is available to shipowners in order to comply with existing and upcoming environmental regulation within Emission Control Areas (ECAs). Liquefied Natural Gas (LNG) is a promising alternative since it offers potential cost savings in addition to ensuring compliance with ECA regulation. But investment to retrofit existing vessels to be able to use LNG carries significant upfront costs, and a high degree of uncertainty remains on the differential between the prices of LNG and conventional maritime fuels, as well as on the availability of LNG and the reliability of its supply chain. New technologies such as LNG inherently carry substantial risk and an ill-chosen investment strategy may have irreversible consequences that could jeopardise the future of the shipping company. One important question is whether interested owners should invest in LNG now to comply with ECA rules in 2015 and reap the benefits of lower LNG prices, or whether it would be advisable to wait until some of the uncertainty is resolved.While traditional discounted cash flow techniques are unable to account for the value of managerial flexibility linked, for example, to the possibility of deferring an investment, real option analysis can be used to analyse such cases. The paper discusses the optimal time for investment in LNG retrofit and takes specific account of the value of an investment deferral strategy versus the advantages obtainable from the immediate exploitation of fuel price differentials. Through the use of a real option model the paper shows that there is a trade-off between low fuel prices and capital expenses for investment in LNG retrofit. The development in LNG is critically dependent on its future price as well as the reduction in capital costs and ship retrofitting costs. In this respect, policy makers can play a critical role in providing support to advance technical knowledge, maintain LNG prices at favourable levels and in avoiding ambiguity on regulation.     

LNG燃料动力船在广西内河推广应用的思考

文章分析了液化天然气(LNG)在航运业推广应用的必要性和以LNG作为船舶动力燃料的主要危险特性,介绍了国内外LNG燃料动力船改造应用的基本情况及难点,提出了广西内河现有船舶进行LNG动力改造面临的主要问题与对策,为LNG燃料动力船在广西内河的推广应用提供参考。     

Sulphur abatement globally in maritime shipping

In 2016, the International Maritime Organization (IMO) decided on global regulations to reduce sulphur emissions to air from maritime shipping starting 2020. The regulation implies that ships can continue to use residual fuels with a high sulphur content, such as heavy fuel oil (HFO), if they employ scrubbers to desulphurise the exhaust gases. Alternatively, they can use fuels with less than 0.5% sulphur, such as desulphurised HFO, distillates (diesel) or liquefied natural gas (LNG). The options of lighter fuels and desulphurisation entail costs, including higher energy consumption at refineries, and the present study identifies and compares compliance options as a function of ship type and operational patterns.The results indicate distillates as an attractive option for smaller vessels, while scrubbers will be an attractive option for larger vessels. For all vessels, apart from the largest fuel consumers, residual fuels desulphurised to less than 0.5% sulphur are also a competing abatement option. Moreover, we analyse the interaction between global SO_X reductions and CO₂ (and fuel consumption), and the results indicate that the higher fuel cost for distillates will motivate shippers to lower speeds, which will offset the increased CO₂ emissions at the refineries. Scrubbers, in contrast, will raise speeds and CO₂ emissions.     

Maritime routing and speed optimization with emission control areas

Strict limits on the maximum sulphur content in fuel used by ships have recently been imposed in some Emission Control Areas (ECAs). In order to comply with these regulations many ship operators will switch to more expensive low-sulphur fuel when sailing inside ECAs. Since they are concerned about minimizing their costs, it is likely that speed and routing decisions will change because of this. In this paper, we develop an optimization model to be applied by ship operators for determining sailing paths and speeds that minimize operating costs for a ship along a given sequence of ports. We perform a computational study on a number of realistic shipping routes in order to evaluate possible impacts on sailing paths and speeds, and hence fuel consumption and costs, from the ECA regulations. Moreover, the aim is to examine the implications for the society with regards to environmental effects. Comparisons of cases show that a likely effect of the regulations is that ship operators will often choose to sail longer distances to avoid sailing time within ECAs. Another effect is that they will sail at lower speeds within and higher speeds outside the ECAs in order to use less of the more expensive fuel. On some shipping routes, this might give a considerable increase in the total amount of fuel consumed and the CO₂ emissions.     

Probabilistic analysis of the release of liquefied natural gas (LNG) tenders due to freight-train derailments

Liquefied natural gas (LNG) has emerged as a possible alternative fuel for freight railroads in the United States, due to the availability of cheap domestic natural gas and continued pursuit of environmental and energy sustainability. A safety concern regarding the deployment of LNG-powered trains is the risk of breaching the LNG tender car (a special type of hazardous materials car that stores fuel for adjacent locomotives) in a train accident. When a train is derailed, an LNG tender car might be derailed or damaged, causing a release and possible fire. This paper describes the first study that focuses on modeling the probability of an LNG tender car release incident due to a freight train derailment on a mainline. The model accounts for a number of factors such as FRA track class, method of operation, annual traffic density level, train length, the point of derailment, accident speed, the position(s) of the LNG tender(s) in a train, and LNG tender car design. The model can be applied to any specified route or network with LNG-fueled trains. The implementation of the model can be undertaken by the railroad industry to develop proactive risk management solutions when using LNG as an alternative railroad fuel.     

Impacts of fuel quality on indoor environment onboard a ship: From policy to practice

Environmental considerations, concerning the negative impacts of ship exhaust gases and particles on ambient air quality, are behind the requirements of cleaner marine fuels currently applied in designated emission control areas (ECAs). We investigated the impact of a ship operating on two types of fuel on the indoor air quality onboard. Gaseous and particulate air pollutants were measured in the engine room and the accommodation sections on-board an icebreaker operating first on Heavy Fuel Oil (HFO, 1%-S), and later Marine Diesel Oil (MDO, 0.1%-S). Statistically significant decrease of SO₂, NOx, PM_2.5 and particle number concentration were observed when the ship was operating on MDO. Due to the higher content of alkylated PAHs in MDO compared to HFO, the concentration of PAHs increased during operation on MDO. The particulate PAHs classified as carcinogens, were similar to or lower in the MDO campaign. Chemical analysis of PM_2.5 revealed that the particles consisted mainly of organic carbon and sulfate, although the fraction of metals was quite large in particles from the engine room. Principal Component Analysis of all measured parameters showed a clear difference between HFO and MDO fuel on the indoor environmental quality on-board the ship. This empirical study poses a first example on how environmental policy-making impacts not only the primary target at a global level, but also brings unexpected localized benefits at workplace level. The study emphasizes the need of further investigations on the impact of new marine fuels and technologies on the indoor air environments on board.     

Port-city exhaust emission model: An application to cruise and ferry operations in Las Palmas Port

Exhaust emissions cause air pollution and climate change. The exhausts of shipboard fuel combustion are equally damaging particularly, so close to the environmentally sensitive mainland and island coasts, as well as at ports due to their urbanized character. This paper estimates, for the first time, exhaust pollutants related to cruise and ferry operations in Las Palmas Port and, in an island context. Emission assessment is based on a full bottom-up model and messages transmitted by the Automatic Identification System during 2011. Results are described as a breakdown of NOx, SOx, PM_2.5, CO and CO₂, according to ship classes, operative type and time, providing valuable information to environmental policy makers in port-city areas and islands under similar conditions. It is generally concluded that vessel traffic and passenger shipping in particular are a source of air pollution in Las Palmas Port. Emission maps confirm location of hot spots in quays assigned for cruise and ferry operations. Policy recommendations encourage regular monitoring of exhaust emissions and market-based incentives supported by details on polluting and operative profiles. On the other hand, feasibility studies are suggested for automated mooring, LNG bunkering facilities and also shore-side energy services, prioritizing berthing of shipping sectors (or sub-sectors) with the highest share of exhaust emissions once their local effects have been confirmed by a dispersion, exposure and impact assessment.     

天津港典型LNG码头海洋环境风险研究

文章针对天津港特殊的地理位置,周边敏感资源的特点,对天津港典型LNG码头的运输货种及燃料油的污染危害性进行了分析,对码头及船舶存在的风险进行了研究。运用Oilmap溢油轨迹和归宿模型,采用情景分析法假定溢油事故场景,对燃料油泄漏事故进行了模拟。根据研究结果,对天津LNG码头提出了风险的防范措施以及建议。     

Designing a decision support model for the LNG market

Abstract

As the Liquefied Natural Gas (LNG) market is supply-driven and subject to long-term contracts, both liquefaction companies and shipowners need to make strategic decisions on fleet chartering requirements. These planning decisions become ever more difficult in light of the transformations permeating the LNG market, propelling into a more competitive market with more flexible trades and expanding spot markets. The overcapacity of LNG ships during 2008–2009 triggered by massive overcontracting is a good case in point where the use of decision support models would have been beneficial, especially considering the fortunes and risks at stake. In this paper we present an LNG shipping model that effectively supports decision-making in practice. To demonstrate the value added of the model, we study the implications of LNG project delays and increased decommissioning of ships with respect to market balance and fleet requirements.     

The viability of pure vegetable oil as an alternative fuel for large ships

Heavy fuels are likely to remain the dominant fuel source for two-stroke, low-speed diesel engines for large ship propulsion for the next decade or more. There is however, potential for increased use of pure vegetable oils (PVO) as an alternative and, by emitting lower levels of several pollutants, this can help the attainment of Annex VI of the MARPOL 73/78 convention aimed at large ships using fuels with less than 4.5% sulphur or 1.5% sulphur in SO_X emission control areas The use of alternative fuels can also influence the attainment of the Kyoto protocol that requires greenhouse gas emissions to be reduced by 5% by 2010 compared to 1990. This paper analyses the physical and chemical properties of various pure vegetable oils as an alternative to heavy fuel oil for large ship propulsion.     

An epsilon-optimal algorithm considering greenhouse gas emissions for the management of a ship’s bunker fuel

This paper provides an algorithm to minimize the fixed ordering, purchase, and inventory-carrying costs associated with bunker fuel together with ship time costs; and environmental costs associated with greenhouse gas emissions. It determines the optimum ship speed, bunkering ports, and amounts of bunker fuel for a given ship’s route. To solve the problem, we use an epsilon-optimal algorithm by deriving a property. The algorithm is illustrated by applying it to typical sample data obtained and the effects of bunker prices, carbon taxes, and ship time costs on the ship speed are analyzed. The results indicate that the ship speed and CO₂ emissions are highly sensitive to the factors considered.     

Shipping log data based container ship fuel efficiency modeling

Container shipping lines have been initiating various ship fuel efficiency management programs because bunker fuel costs always dominate the daily operating costs of a container ship. As the basis of these kinds of programs, we develop a viable research methodology for modeling the relationship between the fuel consumption rate of a particular container ship and its determinants, including sailing speed, displacement, sea conditions and weather conditions, by using the shipping log data available in practice. The developed methodology consists of an outlier-score-based data preprocessing procedure to tackle the fuzziness, inaccuracy and limited information of shipping logs, and two regression models for container ship fuel efficiency. Real shipping logs from four container ships (two with 13000 TEUs and two with 5000 TEUs) over a six-month sailing period are used to exhibit the applicability and effectiveness of the proposed methodology. The empirical studies demonstrate the performance of three models for fitting the fuel consumption rate of a ship and the industrial merits of ship fuel efficiency management. In addition, we highlight the potential impacts of the models developed in this study on liner shipping network analysis, as these models can serve as base models for additionally considering the influence of displacement and weather conditions on ship fuel efficiency and exhaust emissions.     

On a pathway to de-carbonization – A comparison of new passenger car CO2 emission standards and taxation measures in the G20 countries

Considering the role of transport for a 1.5 Degree stabilization pathway and the importance of light-duty vehicle fuel efficiency within that, it is important to understand the key elements of a policy package to shape the energy efficiency of the vehicle fleet. This paper presents an analysis focusing on three types of policy measures: (1) CO₂ emission standards for new vehicles, (2) vehicle taxation directly and indirectly based on CO₂ emission levels, and (3) fuel taxation. The paper compares the policies in the G20 economies and estimates the financial impact of those policies using the example of a Ford Focus vehicle model. This analysis is a contribution to the assessment of the role of the transport sector in global decarbonisation efforts. The findings of this paper show that only an integrated approach of regulatory and fiscal policy measures can yield substantial efficiency gains in the vehicle fleet and can curb vehicle kilometres travelled by individual motorised transport. Using the illustrative example of one vehicle model, the case study analysis shows that isolated measures, e.g. fuel efficiency regulation without corresponding fuel and vehicle taxes only have minor CO₂ emission reduction effects and that policy measures need to be combined in order to achieve substantial emission reduction gains over time. The analysis shows that the highest level of impact is achieved by a combination regulatory and fiscal policies rather than only one policy even if this policy is more aggressive. When estimating the quantitative effect of fuel efficiency standards, vehicle and fuel tax, the analysis shows that substantial gains with regard to CO₂ emission are only achieved at a financial impact level above 500 Euros over a four year period.     

Exploring built environment impacts on transit use – an updated meta-analysis

ABSTRACT

The built environment (BE) is widely accepted to influence transit use (TU). Evidence to date suggests the relationship is dependent on many factors which can be difficult to account for in quantitative studies. This creates barriers to transferring research into practice. Considering many studies together can be useful for accounting for more of the factors impacting transit use. Yet, meta-analysis of research measuring these influences was last undertaken in 2010 based on 18 studies. Since then 90 new quantitative studies have been published. These recent studies use improved methodologies and are conducted in more diverse geographies. This paper reports an improved and updated meta-analysis of built environment impacts on transit use. It compares elasticity estimates from research published pre-and post-2010 and explores the impact of new methods and a more diverse geographical representation on findings. Updated meta-elasticities range from <0.01 to 0.26; a similar range to the 2010 study. However, at the individual indicator levels, more recent results are different. Elasticities for urban density, including population, employment and commercial density, have increased significantly in studies published since 2010, as did that of land use mix. However, measures of local access, design and jobs-housing balance decreased in post-2010 studies. These results confirm the small but imprecise relationship between the BE and TU. Results also suggest that while the range of elasticity impacts is relatively consistent, new study methodologies, notably those that control for regional accessibility and self-selection, and the increasing geographical diversity in study applications, is acting to change BE-TU findings at the indicator level. Research setting and context are important to consider when using empirical results to design BE strategies to promote transit use.     

In Search of the Link between Ship Size and Operations

Abstract

Since 1990s the liner shipping industry has faced a period of restructuring and consolidation, and been confronted with a continuing increase in container vessel scale. The impact of these changes is noticeable in trade patterns, cargo handling methods and shipping routes, in short ‘operations’. After listing factors influencing size, growth in container ship size is explained by economies of scale in deploying larger vessels. In order to quantify economies of scale, this paper uses the liner service cash flow model. A novelty in the model is the inclusion of +6000-20-foot Equivalent Unit (TEU) vessels and the distinction in costs between single and twin propeller units on ships. The results illustrate that scale economies have been – and will continue to be – the driving force behind the deployment of larger container vessels. The paper then assesses the link between ship size and operations, given current discussions about the increase in container vessel scale. It is found that (a) ship size and operations are linked; (b) optimal ship size depends on transport segment (deep-sea vs. short-sea shipping, SSS), terminal type (transhipment terminals vs. other terminals), trade lane (East-West vs. North-South trades) and technology; and (c) a ship optimal for one trade can be suboptimal for another.     

Ex-Post Evaluations of Demand Forecast Accuracy: A Literature Review

Abstract

Travel demand forecasts play a crucial role in the preparation of decision support to policy-makers in the field of transport planning. The results feed directly into impact appraisals such as cost–benefit analyses and environmental impact assessments, which are mandatory for large public works projects in many countries. Over the last few decades, there has been increasing attention given to the lack of demand forecast accuracy. However, since data availability for comprehensive ex-post appraisals is problematic, such studies are still relatively rare. This study presents a review of the largest ex-post studies of demand forecast accuracy for transport infrastructure projects. The focus is threefold: to provide an overview of observed levels of demand forecast inaccuracy, to highlight key contextual and methodological differences between studies and to highlight key focus areas for future research in this field. The results show that inaccuracy remains problematic for road, rail and toll projects alike, but also how the lack of methodological clarity and consistency calls for a careful interpretation of these results. Mandatory, systematic ex-post evaluation programmes are suggested as a necessary tool to improve decision support, as data availability for ex-post studies is often remarkably poor even for internal audits.     

System for assessing Aviation’s Global Emissions (SAGE), Part 2: Uncertainty assessment

This paper focuses on assessing and applying the Federal Aviation Administration’s System for assessing Aviation’s Global Emissions (SAGE), Version 1.5, to evaluate global aircraft fuel consumption and emissions. The model is capable of computing fuel burn and emissions on a flight-by-flight, fleet and global basis. Here, a parametric study was conducted to rank-order the effects that the modeling uncertainties had on estimates of fuel burn and emissions. Statistical methods were applied to analyze both the random and systematic errors of the model. Also, applying the model to a sample policy analysis case allowed an examination of more stringent engine certification standards for mitigating aviation emissions. Uncertainties of the model were carefully accounted for in the fuel burn and emissions scenarios of the policy options. Results show that for some applications, SAGE may be used to resolve small differences in fleet emissions performance. Although the absolute uncertainty in flight-by-flight NO_x predictions from the model are of the order of 40%, results show that it is well within the current capabilities of the model to distinguish between the fleet average NO_x emissions associated with the typical NO_x stringency options considered in policy analyses.     

The costs and benefits of reducing SO2 emissions from ships in the US West Coastal waters

Potential costs and benefits of policy options for reducing offshore ship pollution are examined using a meta-analysis of studies synthesized regionally for the US West Coast. Net benefits of reducing SO₂ emissions from cargo ships in the US West Coast waters are found to range between $98 million and $284 million, annually; the benefit–cost ratio varies between 1.8 and 3.36, depending on the size of the control area and the sulfur content limit. The results show that about 21,000 tons of on-land equivalent SO₂ emissions or about 33% of SO₂ emissions from all mobile sources in California in 2005 can be reduced annually if the US West Coast exclusive economic zone is designated as an International Maritime Organization-compliant SO_x emission control area (SECA) with fuel-sulfur content not exceeding 1.5%. The analysis demonstrates that designating this area reduces more emissions than establishing a smaller zone at a lower but favorable benefit-cost ratio. Control measures that require 0.5% low-sulfur fuels reduce more SO₂ emissions, and also may have higher net benefits. Technological alternatives may achieve benefits of emissions reductions on the US West Coast across higher ranges of potential fuel prices. Combinations of fuel switching and control technology strategies provide the most cost-effective benefits from SECAs on the US West Coast and other world regions.     

LNG-fuelled fishing vessels: A systems engineering approach

Air emissions from fishing vessels must be reduced to comply with progressively stringent environmental regulations. Among the available solutions, liquefied natural gas (LNG) fuel may represent a promising solution, particularly from an environmental perspective. However, the use of LNG as a marine fuel creates different types of hazards than those that exist for traditional fuels. In addition, the increased complexity, safety requirements, and space required for LNG installation increase the capital cost. This article uses a systems engineering approach to clarify the technical aspects of LNG-fuelled systems, their potential implementation costs, and the expertise and training required to operate them safely. Ship owners can use such an approach to aid decision-making and trade-off analyses. Naval architects may also benefit from better information management. Finally, crews may better understand the logic behind the safety actions they are instructed to take.     

Systematic variability in repetitious travel

The focus of this paper is the degree to which day-to-day variability in the individual's travel pattern has a systematic, or nonrandom, component. We first review the different sources of variability in travel, emphasizing the difference between between-individual and within-individual variation and the implications of this difference for travel analysis. After discussing the impact of measurement (i.e. the way in which travel behavior is measured) on the study of repetition and variability, we use the Uppsala data to examine the level of systematic variability in an individual's longitudinal travel record. The analysis focuses on two questions:

- How well does observation over one week capture longer-term (five-week) travel behavior; in other words, is behavior highly repetitive from week to week?

- How systematic is within-individual variability; in other words, are certain stops distributed over the five-week record in a nonrandom, that is either regular or clustered, fashion?

Using measures of travel that include more than one stop attribute (e.g. activity, mode, time of day, and location), we found that:

- A seven-day record of travel does not capture most of the separate behaviors exhibited by the individual over a five-week period, but it does capture, for most people, a good sampling of the person's different typical daily travel patterns.

- Whereas a considerable portion of intraindividual variability is systematic (nonrandom), clustering is a more important source of nonrandom variation than is regularity.

The results suggest that behavior does not follow a weekly cycle closely enough for a one-week travel record to measure the longer-term frequency with which the individual makes certain stops or to assess the level of day-to-day variation present in the individual's record. Because these results are likely to reflect the particular measures of behavior we used, one conclusion of this study is the need for other studies that replicate the aims of this one but use a variety of other travel measures. Only through such additional work can we truly assess the sensitivity of our findings to measurement techniques.