Estimation of Air Emissions Externalities Due to Shipping: Analytical Methodological Framework

The main objective of this paper is to present an analytical methodological framework for the estimation of the external costs of air emissions from passenger ships. We used as a case study the two main ports of Crete (Souda and Heraklion) and studied all passenger ferries and cruise vessels that visited these ports in the last 5 years (2017-2021). A detailed inventory was created containing all technical details for 10 passenger ferries (owned by three different shipping companies) operating every day, following various itineraries all year around, and 88 different cruise vessels (which approached both ports mainly during the summer period). The estimated external costs due to air emissions cover health effects, materials and building damages, biodiversity and crop losses. Two levels of calculations for the total external costs per pollutant were implemented. At the first level, a bottom-up approach was applied to accurately calculate the total annual air emissions (CO2, SOX, NOX, PM2.5, PM10), while for the second level, the cost factors per pollutant were used as input values to estimate the annual total external costs. One of the most important findings is that externalities comprise a significant amount of shipping companies' revenues (about 25-35%), thus, implying a substantial revenue loss in the case that they would be asked to bear these costs. Assuming that ship owners will pass these costs on to ticket fares, an attempt is made to allocate the "externalities surcharge" (i.e., the burden of external costs) to ticket fares per transportation category.