The Cost of Cruise: Estimating a Shadow Price of Carbon for the Port of Seattle's Shore Power Infrastructure

Abstract

The Port of Seattle outlined emissions reductions of 80% of 2050 levels for Ocean Going Vessels (OGVs). They are pursuing shore power infrastructure at Pier 66 to avoid at berth emissions. This research aimed to answer the following three questions: 1. What is the shadow price of carbon (SPC) as it relates to shore power infrastructure? (Establishing a MAC), 2. With the shadow price applied to ships using bunker fuel, is it more affordable for the cruise liner to burn bunker fuel or connect to shore power? 3. How long would it take to pay back shore power infrastructure using funds from SPC revenue, if applied. To do this, a model was created to calculate shore power marginal abatement cost to be applied as a shadow price of carbon per metric ton of CO2 avoided by carbon abating infrastructure, in this case, shore power specifically. The cost per metric ton of CO2 by connection rate ranged from $197/MTCO2 to $299/MTCO2. This research found that the cost of bunker fuel at berth was more than double the cost of electricity at berth through shore power when accounting for externalities with shadow pricing. Finally, the repayment timeline ranged from about 5.5 years to 12.5 years. The Port of Seattle should pursue a carbon pricing policy on cruise ships to incentivize shore power plug in and finance shore power.