Risk Assessment of Emission Abatement Technologies for Clean Shipping

  • Sina AtariEmail author
  • Gunnar PrauseEmail author
Conference paper
Part of the Lecture Notes in Networks and Systems book series (LNNS, volume 36)


The purpose of this study is recognizing and assessing the existing risks of SECA related investments of ship owners and the consideration of their risk attributes. Complying with the SECA regulations, maritime stakeholders have to choose among different abatement strategies, which are generally linked to high and risky investments. The paper focusses on the evaluation of scrubber technologies and their relationship to other abatement techniques.

Literature review reveals shortcomings in investment risk evaluation among the ship owners operating in emission control areas (ECA). The research fills this gap by presenting a comprehensive compilation of identified risks attributes in an analytical framework together with a risk assessment in the context of HFO and MGO fuel and scrubber related performance indicators comprising CAPEX and OPEX. The results in a classification framework categorize the investment risks and different elements of value at risk (VaR) as well as historical and parametric evaluation of risks. Besides that, this study contributes to new knowledge in the disciplines of green transport and shipping. For future research, the identified risk and investment must be tested in a real business case study and in different scenarios to measure and analyze its performance and efficiency.

The results of the paper are based on empiric activities, which were realized during 2017 in the frame of the EU project “EnviSuM”. The empiric measures comprise primary and secondary data analysis, focus group meetings and expert interviews with specialists from shipping sector in BSR.


Investment appraisal SECA regulation Payback period Value at risk Scrubber 


  1. 1.
    IMO. Guidance on the application of regulation 13 of MARPOL annex VI tier III requirements to dual fuel and gas-fuelled engines. MEPC.1/Circ.854. London (2015)Google Scholar
  2. 2.
    Notteboom, T.: The impact of low sulphur fuel requirements in shipping on the competitiveness of roro shipping in Northern Europe. WMU J. Marit. Aff. 10(1), 63–95 (2010)CrossRefGoogle Scholar
  3. 3.
    Panagakos, G.P., Stamatopoulou, E.V., Psaraftis, H.N.: The possible designation of the Mediterranean Sea as a SECA: a case study. Transp. Res. Part D Transp. Environ. 28, 74–90 (2014)CrossRefGoogle Scholar
  4. 4.
    Olaniyi, E.O., Viirmäe, M.: The economic impact of environmental regulations on a maritime fuel production company. Res. Econ. Bus. Central Eastern Europe 8(2) (2016)Google Scholar
  5. 5.
    Olaniyi, E.O., Prause, G., Boyesan, J.: Economic impact of SECA regulations on clean shipping in the BSR: First empiric results from EnviSuM project (2017)Google Scholar
  6. 6.
    Basak, S., Shapiro, A.: Value-at-risk-based risk management: optimal policies and asset prices. Rev. Fin. Stud. 14(2), 371–405 (2001)CrossRefGoogle Scholar
  7. 7.
    Acciaro, M.: Real option analysis for environmental compliance: LNG and emission control areas. Transp. Res. Part D Transp. Environ. 28, 41–50 (2014)CrossRefGoogle Scholar
  8. 8.
    Daduna, J.R., Prause, G.: The Baltic Sea as a maritime highway in international multimodal transport. In: Operations Research Proceedings 2015, pp. 189–194. Springer, Cham (2017)Google Scholar
  9. 9.
    Patricksson, Ø., Erikstad, S.O.: A two-stage optimization approach for sulphur emission regulation compliance. Marit. Policy Manag. 44(1), 94–111 (2017)CrossRefGoogle Scholar
  10. 10.
    Bergqvist, R., Turesson, M., Weddmark, A.: Sulphur emission control areas and transport strategies-the case of Sweden and the forest industry. Eur. Transp. Res. Rev. 7(2), 10 (2015)CrossRefGoogle Scholar
  11. 11.
    Hämäläinen, E., Hilmola, O.P., Prause, G., Tolli, A.: Forecasting maritime logistics costs – Will the low oil price remain? In: Serry, A., Lévêque, L. (eds.) Le transport maritime à courte distance (Short-Sea Shipping), Devport 2016 Conference, pp. 19–34. EMS Geodif, Le Havre, France (2016)Google Scholar
  12. 12.
    Herbst, A.F.: Capital Asset Investment: Strategy, Tactics and Tools. Wiley, New York (2003)Google Scholar
  13. 13.
    Hull, J., White, A.: Incorporating volatility updating into the historical simulation method for value-at-risk. J. Risk 1(1), 5–19 (1998)CrossRefGoogle Scholar
  14. 14.
    Angelidis, T., Skiadopoulos, G.: Measuring the market risk of freight rates: a value-at-risk approach. Int. J. Theor. Appl. Finan. 11(05), 447–469 (2008)CrossRefGoogle Scholar
  15. 15.
    Dowd, K.: Measuring Market Risk. Wiley, Hoboken (2007)Google Scholar
  16. 16.
    Jorion, P.: Value at Risk (2000)Google Scholar
  17. 17.
    Baker, H.K., Haslem, J.A.: The impact of investor socioeconomic characteristics on risk and return preferences. J. Bus. Res. 2(4), 469–476 (1974)CrossRefGoogle Scholar
  18. 18.
    Farid, J.A.: Risk Frameworks and Applications. Alchemy Technologies (2010)Google Scholar
  19. 19.
    Hendricks, D.: Evaluation of Value-At-Risk Models Using Historical Data (1996)Google Scholar

Copyright information

© Springer International Publishing AG 2018

Authors and Affiliations

  1. 1.School of Business and GovernanceTallinn University of TechnologyTallinnEstonia

Personalised recommendations