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Source: Journal Citation ReportsTM from ClarivateTM 2022

Entrepreneurship and Sustainability Issues Open access
Journal Impact FactorTM (2022) 1.7
Journal Citation IndicatorTM (2022) 0.42
Received: 2018-10-20  |  Accepted: 2019-02-25  |  Published: 2019-03-30

Title

Real options analysis of abatement investments for sulphur emission control compliance


Abstract

Since the introduction of the Sulphur Emission Control Areas (SECA) regulations in the Baltic Sea Region (BSR) in 2015, the BSR has witnessed high compliance rate. However, a closer look to the situation reveals that the currently preferred compliance strategies depend on low oil price where ship owners shun investments in abatement technologies which may lead into an economic trap in the event of the oil price increase. The research considers incentive provisions for maritime investors who make investment decisions related to clean shipping and maritime fuel management. Traditionally, the financial assessments of these decisions are based on capital budgeting methods comprising cash flow analyses and net present value calculations. The findings reveal that the Real-Option approach represents a more realistic, reliable and promising method for the evaluation of abatement projects, especially under uncertainty and high volatility in material resource markets. The results can be applied to the evaluation of all projects in the maritime industry that depends on the price variation of the underlying asset during a specific period.


Keywords

SECA regulations, maritime investments, Real-Options, Monte Carlo simulation, clean shipping


JEL classifications

G31 , G32 , L26 , L98 , M10


URI

http://jssidoi.org/jesi/article/270


DOI


Pages

1062-1087


Funding

This work is in principle linked to the EnviSuM – Environmental Impact of Low Emission Shipping: Measurements and Modelling Strategies project sponsored by the European Regional Development Fund.

This is an open access issue and all published articles are licensed under a
Creative Commons Attribution 4.0 International License

Authors

Atari, Sina
Tallinn University of Technology, Tallinn, Estonia http://ttu.ee
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Bakkar, Yassine
Tallinn University of Technology, Tallinn, Estonia http://ttu.ee
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Olaniyi, Eunice Omolola
Tallinn University of Technology, Tallinn, Estonia http://ttu.ee
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Prause, Gunnar
Tallinn University of Technology, Tallinn, Estonia http://ttu.ee
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Journal title

Entrepreneurship and Sustainability Issues

Volume

6


Number

3


Issue date

March 2019


Issue DOI


ISSN

ISSN 2345-0282 (online)


Publisher

VšĮ Entrepreneurship and Sustainability Center, Vilnius, Lithuania

Cited

Google Scholar

Article views & downloads

HTML views: 6160  |  PDF downloads: 2387

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