The Arctic Ocean is experiencing considerable and adverse environmental change
driven by global warming. Global warming is inducing Arctic ice to melt and recede,
facilitating increased accessibility for ships to transit through. Arctic shipping routes
are shorter than their counterparts the Suez and Panama Canal routes. For the same
origin and destination, a shorter shipping route would enable lower transport costs and
an increased volume of trade. In this thesis, the principal contribution is to expand the
framing of Arctic shipping feasibility to include costs from emission externalities and
assess Arctic shipping feasibility on balance with these externalities.
Five scenarios which represent different societal choices and levels of global warming
were considered to see how they affect the development of Arctic shipping viability.
All ships are treated as newbuilds, alternative fuelled ships are assumed to have the
machinery retrofitted on top of the newbuild design. A dimensionless metric was
proposed to enable a comparison of Arctic shipping feasibility between the different
scenarios in the years 2020, 2035 and 2050. Including emission damages increased
the feasibility of Arctic shipping due to the lower damages associated with air pollution
in the Arctic and a lower intensity of emissions. However, only externalities from a
select number of emission species were considered which means that the considered
environmental costs are an underestimate. The veracity of increased feasibility is
discussed.
A deterministic analysis was complemented with a stochastic assessment to address
uncertainties and show that Arctic shipping probably becomes economically feasible
for container shipping and infeasible for dry bulkers across all scenarios. Mixed results
were returned for tankers. A sensitivity analysis found that the most significant
variables that determine Arctic shipping feasibility were the cost of carbon, engine load
and route lengths. This thesis concludes with a discussion on the implications of these
results.