Shipping network under emissions trading system

The European Union (EU) announced the inclusion of shipping emissions in the Emissions Trading System (ETS) in 2023. This new policy has a positive impact on reducing environmental pollution caused by shipping. On one hand, it generates revenue through the ETS for environmental remediation; on the other hand, it potentially encourages shipping companies to use cleaner and lower-emission energy sources. This study focuses on the EU ETS policy and investigates the potential impacts of the EU ETS on shipping networks. Utilizing optimization techniques and graph theory, this study first develops models to obtain the optimal shipping network under the EU ETS policy. Then, we analyze the types of shipping routes that will be influenced by the EU ETS policy, which in turn can provide insights for policymakers. When shipping companies can avoid high emission charges by altering routes, the EU ETS helps reduce maritime pollution in the EU. If shipping companies cannot avoid these charges, the policymaker can impose higher fees to generate more revenue for environmental remediation or encourage the use of cleaner energy sources.