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The role of a cap-and-trade market in reducing NOx and SOx emissions: Prospects and benefits for ships within the Northern European ECA

Nikopoulou, Zoi; Cullinane, Kevin; Jensen, Arne


Zoi Nikopoulou

Kevin Cullinane

Arne Jensen


This article presents a financial evaluation of alternative approaches to the abatement of NOx and SOx emissions from
ships operating within the emission control area (ECA) of Northern Europe. The objective of this article is to assess the
financial viability of a range of alternative technologies and fuel types, by accounting for revenue that might be generated
from emissions trading within a cap-and-trade market for NOx and SOx emissions. Using a sample of real ships that operate
within the ECA, NOx and SOx emissions for each alternative are estimated, and the revenue generated within a capand-
trade system is calculated under a given set of assumptions. The results suggest that distillates are not an economic
solution to meeting regulatory requirements. Conservative estimates of revenue generated within any prospective capand-
trade system suggest that seawater scrubbers and Humid Air Motor (HAM) and Selective Catalytic Reduction (SCR)
systems would all constitute financially attractive abatement options, while the use of liquefied natural gas (LNG) is the
most financially attractive alternative. A cap-and-trade system is found to be highly efficacious in providing a relatively
inexpensive source of finance for investments in improved environmental performance, as well as incentivizing such
improvements, thereby removing any requirement for public sector support.

Journal Article Type Article
Online Publication Date Oct 17, 2012
Publication Date 2013-05
Deposit Date Jul 29, 2014
Print ISSN 1475-0902
Electronic ISSN 2041-3084
Publisher SAGE Publications
Peer Reviewed Peer Reviewed
Volume 227
Issue 2
Pages 136-154
Keywords Cap and trade; emissions; NOx; SOx; emission control area; abatement;
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