“Abstract

Measures towards net-zero transition need to ensure the well-functioning of the market. This paper focuses on shipping where the existing environmental regulations lack considerations for the industry’s economic performance. We apply a stochastic frontier analysis to estimate the carbon, production, cost, and allocative efficiencies for 14 major shipping segments and 664 individual vessels. Our findings suggest that carbon and production efficiencies have increased but cost efficiency has decreased from 2021 to 2024. There is scope for the average vessel to reduce its carbon emissions by 31%. Additionally, fuel is underused by 37% and capital is overused by 58%. Technical and operational inefficiencies increase the total cost by 6%, with market price dynamics increasing it by 17%. The results suggest that, without further policy intervention and clear economic incentivisation, there is limited potential for the industry to follow the energy transition pathway.”

 

Shi, Yao and Moutzouris, Ioannis, The Economics of Decarbonisation Regulation: The Case of Shipping Efficiency (March 31, 2025). Available at SSRN: https://ssrn.com/abstract=5205272 or http://dx.doi.org/10.2139/ssrn.5205272

The full report is also accessible via: Page-48_56-CID-Summer-2025-IM-YS-061925.pdf

 

For related publications please see Resources – UK National Clean Maritime Research Hub