Fit for 55 legislation package, and its impact on the Cypriot economy: a case study for liquid and liquified cargo

Abstract

The recent adoption of directives and regulations as part of the Fit for 55 legislation package and the inclusion of shipping to the decarbonisation sphere will affect the Cypriot economy and the consumers. The Cypriot energy system is heavily dependent on fossil fuels, so the effect on the commodities of liquid and liquified petroleum products has been investigated. The thesis presents an enhanced top-down methodology, which estimates the new Operational Expenditure (OPEX) of vessels carrying those products and the new Unit Cost of the transported goods. The characteristics of the island and expert opinions have resulted in four scenarios for the projected bunkering fuel mix until 2030. The scenarios incorporated the recent provisions of the Fit for 55 legislative package. Key findings of the thesis are 1) the uptake of LNG as a primary source of bunkering fuel will always be vulnerable to global market price fluctuations, and 2) for island nations like Cyprus, implementing the legislative framework is expected to have a greater impact on their economies. The methodology estimates the additional OPEX and the new Unit Cost. This allows the investigation of the financial feasibility of alternative solutions or the estimation of their pricing policy.