Model-based assessment of marine fuel GHG intensity regulation with flexible compliance mechanism

Decarbonization of shipping is one of the biggest challenges facing the maritime industry. This study assesses the impact of regulating greenhouse gas (GHG) intensity in marine fuels called GHG Fuel Standard (GFS) and its flexible compliance mechanisms − pooling, which allows ships to share emission reductions. A computational model was developed to analyze future fleet transformations, fuel consumption, and costs under GFS scenarios with and without pooling. A scenario study using the model indicates that pooling reduces short-term costs by enabling flexible fuel usage. However, pooling delays the phase-out of heavy fuel oil (HFO)-fueled ships, leading to increased costs in 2050 due to reliance on expensive biofuels. The impact of pooling may vary due to uncertainties in transportation demand and fuel prices. By using Monte Carlo simulations considering the uncertainties, the findings were validated, and it was also found that pooling can reduce cost variability for short-term compliance.