A Real Option Application to Investment in Low-sulphur Maritime Transport

Michele Acciaro*

*Corresponding author af dette arbejde

Publikation: Bidrag til tidsskriftTidsskriftartikelForskningpeer review

Abstrakt

In the last few years, sulphur emissions to air from shipping have been of heightened interest to policymakers and the media, and more stringent regulation is on the way. Various alternatives are available in the shipping industry to comply with emission regulation and minimise impacts on shipowners' bottom-line. New regulation is adding complexity to managerial decision-making, so that advanced decision support tools can provide useful contributions to management processes. The present paper presents an analysis of the options available to shipowners taking into consideration the value of deferring the investment decision vis-à-vis the advantages obtainable from the exploitation of fuel price differentials. The model shows that there is a trade-off between low LNG prices and LNG capital expenses. While in most cases it would not be recommended to invest in LNG as early as today, the model shows that investment in LNG can make economic sense as early as 2015. This is highly dependent on the capital costs necessary for retrofitting ships with LNG engines and the difference between LNG prices and distillates prices.
OriginalsprogEngelsk
TidsskriftInternational Journal of Shipping and Transport Logistics
Vol/bind6
Udgave nummer2
Sider (fra-til)189-212
Antal sider24
ISSN1756-6517
DOI
StatusUdgivet - 2014
Udgivet eksterntJa

Emneord

  • Green shipping
  • Sulphur emissions
  • Real options
  • LNG retrofit
  • SOx regulation
  • Maritime fuel prices
  • Option to defer
  • Maritime scrubbers
  • Emission control areas
  • ECAs
  • Low-sulphur shipping

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