The principal-agent problem in the inclusion of maritime transport into the EU ETS: Which kind of incentives are best?

Abstract

The maritime transport industry has been dramatically impacted by its inclusion into the European Union Emissions Trading System (EU ETS). The economic and environmental effectiveness of the system depends on maritime transport companies' rapidly adapting to EU ETS regulations. However, there may be a principal-agent problem between the main EU ETS bodies and the maritime transport industry. This study proposes an incentive system to enable shipping companies to rapidly adapt to the EU ETS and solve potential problems during the process. To develop the proposal, the study identified from the literature, and then qualitatively and quantitatively analyzed, potential incentives for shipping companies regarding the industry's position in the EU ETS, and collected data from experts working in shipping companies. The study was subjected to qualitative analysis based on literature using the MAXQDA 24 software, which enabled the visualization of relationships between incentives. Furthermore, the Best Worst method was employed to analyze the perceptions of experts on incentives quantitatively, with the objective of determining the most and worst favorable ones. The findings revealed various conflicts between the perceptions of researchers in the literature and selected experts working in shipping companies. Moreover, the analysis detected a principal-agent problem between shipowners and ship brokers regarding their expectations from incentives.