The effectiveness of a European speed limit versus an international bunker-levy to reduce CO2 emissions from container shipping

In the fight to reduce CO2 emissions from international shipping, a bunker-levy is currently under consideration at the International Maritime Organization (IMO). Faced with the inability of the IMO to reach an agreement in the short term, the European Commission is now contemplating a unilateral measure of a speed limit for all ships entering European Union (EU) ports. This paper argues that this measure is counterproductive for two reasons. Firstly, because it may ultimately generate more emissions and incur a cost per ton of CO2 which is more than society is willing to pay. Secondly, because it is sub-optimal compared to results obtained if an international bunker-levy was to be implemented. These elements are illustrated using two direct transatlantic services operated in 2010.

► A speed limit will have a limited impact on the operator’s optimal choice.
► A speed limit in European waters is likely to increase the amount of CO2 emitted.
► Or it may reduce emissions but at a cost far more than society is willing to pay.
► A regional speed limit policy is less efficient than a bunker-levy policy.