Economic and environmental impacts of Arctic shipping: A probabilistic approach

Abstract Arctic shipping is controversial due to the trade-off between its positive economic impact and its negative environmental effects. As both effects are affected by the uncertainty related to sailing conditions encountered along the route, we develop a model that estimates how ice conditions change the probability of blockage along the route and play on the economic and environmental attractiveness of the Northern Sea Route. The model is applied to a business case that compares the performance of two ice-class oil tankers (1A and 1AS) that use Marine Gas or Low Sulfur Fuel, and considers historical data on daily ice thickness records (2006–2016) for the probability of blockage. Our main finding is that the probability of blockage affects the choice of the optimal vessel to deploy along the Arctic Route as well as the effectiveness of various environmental policy options.