Monetizing shipping emission reduction: Environmental benefit analysis of domestic emission control areas policy 2.0 in China.

ABSTRACT

Shipping is a major contributor to anthropogenic emissions, exerting complex effects on both the environment and climate. To improve the air quality of coastal areas, China adopted an upgraded policy on domestic emission control areas (DECA 2.0) for shipping in December 2018, which expanded the geographical scope of ECAs from three designated heavy-traffic coastal regions to the entire 12 nautical mile-territorial seas and also introduced more stringent ship emission requirements. Based on data from the Automatic Identification System, this study first evaluates the environmental effects of ship emissions' reduction brought by DECA policy 2.0. Results reveal that implementation of DECA policy 2.0 has resulted in a cumulative reduction (2019-2021) of 8.43 × 105 tons, 1.3 × 105 tons, and 1.49 × 105 tons of sulfur dioxide (SO2), particulate matter <2.5 µm diameter (PM2.5) and PM <10 µm (PM10) emissions, respectively. Based on the external cost method, we further monetize the environmental benefits arising from reduction of air pollution emissions, averaging $3.6 billion USD per year. This number equates to ca. 4 % of the total output value of China's marine transportation industry over the three-year period. Finally, we calculate the fuel replacement cost arising from the implementation of DECA policy 2.0, which is on average $1.23 billion USD. This indicates that the net environmental benefits of DECA policy 2.0 equate nearly double the associated costs.