Allocation and reallocation of ship emission permits for liner shipping

The Maritime Emission Trading System (METS) is an efficient market based measure to reduce ship emissions. The research issue on how to determine ship emission permit allocation for (liner) shipping companies has not been addressed in the previous studies on the METS. For this purpose, this paper investigates the allocation of initial ship CO2 emission permits for any liner shipping company, by making use of the index allocation method. Furthermore, this paper addresses the reallocation of ship CO2 emission permits to various ship routes. To deal with the ship CO2 emission permit reallocation problem, we propose a joint optimization of fleet size, sailing paths, ship speeds and the reallocation of ship CO2 emission permits. To formulate this joint optimization problem, we proposed a mixed-integer linear programming (MILP) model, which can be solved by using CPLEX efficiently. Numerical experiments are carried out to account for the effectiveness of our proposed model.