Costs and benefits of LNG economic development in the Baltic and Arctic Regions

01/25/2017 - 12:15-01/25/2017 - 13:30


Fabio Ballini
(World Maritime University)
Aykut Olcer
(World Maritime University)


Economics of Energy Efficiency

Michele Acciaro

Global warming is becoming increasingly evident. However, rising temperatures also offer new economic opportunities, such as new maritime routes in previously ice-locked waters. Valuable minerals in the Arctic region are also becoming more accessible.  Maritime stakeholders are therefore seeking to operate in this remote region safely and efficiently. Accommodating these developments from a regulatory standpoint, IMO has amended the International Convention for the Prevention of Pollution from Ships (MARPOL) to include Chapter 9 of Annex I, prohibiting the use of heavy-grade marine fuels as well as heavy-duty oils as cargo carriage in the seas beyond 60th parallel south. In addition, IMO recently adopted the International Code for Ships Operating in Polar Waters (PCD).

This paper seeks to analyse the economic impact of the use of liquefied natural gas (LNG) as an alternative marine fuel to reduce exhaust emissions and the risk of oil spill in the Arctic habitats. The paper focuses on the macroeconomic benefits of using LNG in Arctic shipping, including those related to supply security, external health benefits and environmental impacts.  The paper offers a cost benefit analyse and a set of recommendations in relation to the use of LNG in the Arctic shipping.