Real options analysis of abatement investments for sulphur emission control compliance

Sina Atari, Yassine Bakkar, Eunice Omolola Olaniyi, Gunnar Prause

Research output: Contribution to journalArticlepeer-review

22 Citations (Scopus)
16 Downloads (Pure)


Since the introduction of the Sulphur Emission Control Areas (SECA) regulations in the Baltic Sea Region (BSR) in 2015, the BSR has witnessed high compliance rate. However, a closer look to the situation reveals that the currently preferred compliance strategies depend on low oil price where ship owners shun investments in abatement technologies which may lead into an economic trap in the event of the oil price increase. The research considers incentive provisions for maritime investors who make investment decisions related to clean shipping and maritime fuel management. Traditionally, the financial assessments of these decisions are based on capital budgeting methods comprising cash flow analyses and net present value calculations. The findings reveal that the Real-Option approach represents a more realistic, reliable and promising method for the evaluation of abatement projects, especially under uncertainty and high volatility in material resource markets. The results can be applied to the evaluation of all projects in the maritime industry that depends on the price variation of the underlying asset during a specific period.
Original languageEnglish
Pages (from-to)1062-1087
JournalEntrepreneurship and Sustainability Issues
Issue number3
Publication statusPublished - 30 Mar 2019
Externally publishedYes


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