Question

In: Economics

ead the following: “From 2020, ship-owners must clean up their act as part of sweeping plans...

  1. ead the following: “From 2020, ship-owners must clean up their act as part of sweeping plans designed to reduce the industry’s greenhouse gas emissions by at least 50 per cent by 2050 compared with 2008. In January a sulphur cap will be adopted and later carbon emissions will be tackled. While industries such as road transport, power and even aviation have made environmental progress, shipping is one of the last bastions of the old fossil-fuel world order… S&P Global Platts analysts say the rule change could cost the global economy $1tn over five years….[] Most ship-owners will switch to lower-sulphur fuel oil while others, such as Mr. Norton’s company, are installing exhaust scrubbers to strip out the sulphur from their vessels’ emissions. While some systems store the waste on board until it can be treated on land, others discharge it into the ocean.” (Pollution: the race to clean up the shipping industry, Anjli Raval, Josh Spero and Chris Campbell, London, May 30 2019)

Answer the following based on the article extract above:

  1. (3pts) Which link in the market mechanism will be impacted first by what you read above (i.e. supply, demand or freight rate)? Supply will be impacted first
  1. (3pts each) What will happen to the following shipping industry stakeholders as a result of the Sulphur cap implementation?
    1. Supply
    2. Demand
    3. Ports
    4. Canals (like the Suez and Panama)
    5. Regulators like IMO
    6. World Fleet
    7. Shipping investors
    8. viii.Freight Rate

Solutions

Expert Solution

What will happen to the following shipping industry stakeholders as a result of the Sulphur cap implementation?

  1. Supply
  2. Demand
  3. Ports
  4. Canals (like the Suez and Panama)
  5. Regulators like IMO
  6. World Fleet
  7. Shipping investors
  8. Freight Rate

1. SUPPLY - The supply will reduce as the cost of production goes up due to installing scrubbers, waste processing, or using low sulfur oil which would cost more. You can visualize the supply curve shifting up.

2.DEMAND - The demand in the shipping industry will be impacted.

3.PORTS - With the increase in the cost of carrying out shipping activities the demand for ports will be reduced and their use would reduce.

4.CANALS - The canals will be cleaner and less congested.

5.REGULATORS LIKE IMO - The IMO's primary purpose is to develop and maintain a comprehensive regulatory framework for shipping and its remit today includes safety, environmental concerns, legal matters, technical co-operation, maritime security, and the efficiency of shipping. With sulphur capping, the work of IMO will be facilitated.

6.WORLD FLEET - The world fleet of ships will reduce as only those ships that will remain viable after accounting for the increased cost, will operate.

7.SHIPPING INVESTORS - With a reduction in profit due to an increase in cost, the investment flowing to the shipping industry will be hampered and reduced due to a reduction in expected profitability.

8.FREIGHT RATE - The freight rates will rise as the cost of fuel increases. Low sulphur oil will cost more, the installation of scrubbers and waste storage on board will increase the cost of operating ships per unit of fuel.


Related Solutions

As a part of the federal Clean Air Act Amendments Congress established a national goal of...
As a part of the federal Clean Air Act Amendments Congress established a national goal of preventing future and resolving existing regional haze in national parks and wilderness areas when the visibility impairment results from manmade air pollution. The law requires states to submit implementation plans to the United States Environmental Protection Agency (EPA). The implementation plans must include identifying major industrial sources of air pollution that have caused or contributed to visibility impairment in national park and wilderness areas....
Part A: Bacteria and other microbes can be used to "clean up" an oil spill by...
Part A: Bacteria and other microbes can be used to "clean up" an oil spill by breaking down oil into carbon dioxide and water. Two samples isolated from the Deepwater Horizon leak in the Gulf of Mexico were labeled A and B. The DNA of each was isolated and the percent thymine measured in each sample. Sample A contains 21.5% thymine and sample B contains 27.5% thymine. Assume the organisms contain normal double stranded DNA and predict the composition of...
We discussed the Clean Air Act with respect to regulating Sulphur Dioxide emissions from coal fired...
We discussed the Clean Air Act with respect to regulating Sulphur Dioxide emissions from coal fired power plants (particulate matter etc). Use this as a case study to compare and contrast Quantity Regulation and Price Regulation. a. Describe both Q regulation and P regulation in terms of Sulphur Dioxide b. What are the advantages and disadvantages of Q regulation c. What are the advantages and disadvantages of P regulation d. How would you choose between Q regulation and P regulation....
Python Clean up the code Recall that once a subclass inherits from a parent class, it...
Python Clean up the code Recall that once a subclass inherits from a parent class, it automatically has access to all of the parents' methods. Sometimes, the subclass needs to do extra things within a method which the parent does not do. For example, both UserPlayer and BasicMonster have their specialized __init__ methods which override the one from Player. Discuss the following question with your partner: What are the other methods that are being overridden by a subclass in the...
- Under the Affordable Care Act (ACA, “ObamaCare”), all levels of all plans must contain certain...
- Under the Affordable Care Act (ACA, “ObamaCare”), all levels of all plans must contain certain benefits. How would you decide which level (Bronze, Silver, Gold, Platinum) is best for you? - What are the main characteristics of a health savings account (HSA)?
julie plans to take part in the office betting pool. Each participant must choose the first...
julie plans to take part in the office betting pool. Each participant must choose the first second and third place winners in a basketball tournament and write them on their ticket. If julie chooses correctly, she will win $1000. If there are 28 basketball teams to choose from in the tournament, how many different tickets are possible?
Question 1 Clean-It-Up manufactures industrial dryers and washers. The following information is available for February: Dryers...
Question 1 Clean-It-Up manufactures industrial dryers and washers. The following information is available for February: Dryers Washers Budgeted units sold 10,000 40,000 Actual sales (in units) 8,820 33,180 Actual selling price per unit $700 $900 Budgeted selling price per unit $710 $930 Budgeted market share 20% 25% Actual market share 25% 24% Budget cont. margin /unit $275 $375 REQUIRED: Determine the sales-mix and sales-quantity variances. Determine the market-share and market-size variances. Discuss the potential causes of variance.
Part A) With what minimum speed must you toss a 170 g ball straight up to...
Part A) With what minimum speed must you toss a 170 g ball straight up to just touch the 11-mm-high roof of the gymnasium if you release the ball 1.7 mm above the ground? Solve this problem using energy. Part B) With what speed does the ball hit the ground?
Under the Securities Act of 1933, which of the following securities must be registered? a. Bonds...
Under the Securities Act of 1933, which of the following securities must be registered? a. Bonds of a railroad corporation. b. Common stock of an insurance corporation. c. Preferred stock of a domestic bank corporation. d. Long-term notes of a charitable corporation.
Which of the following is NOT a part of Koch’s Postulates? a. That diseased organism must...
Which of the following is NOT a part of Koch’s Postulates? a. That diseased organism must be cured of symptoms and show no signs of the microorganism present b. The microorganism must be re-isolated from that animal. c. That cultured microorganism must cause disease when re-introduced into a healthy organism d. The microorganism must be isolated from the diseased individual and grown in pure culture e. The microorganism must be found in abundance in diseased individuals
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT