How would government subsidize the port on shore side electricity usage improvement

Abstract Shore Side Electricity (SSE) is an effective means of energy that helps to reduce at-berth emissions of greenhouse gas (GHG) and atmospheric pollutants. However, due to the enormous initial investment and poor financial performance during daily operations, the usage of SSE faces certain dilemma. This paper focuses on the problem of government subsidy structure to ports. The aim of this research is to propose a framework of optimizing government subsidy structure to achieve the maximized subsidy efficiency of at-berth emission reduction per monetary unit. The problem is formulated as a mathematical model that 2 types of government subsidy to the port have been taken into consideration, that are the subsidy on SSE construction and subsidy on SSE operations. The port of Shanghai is selected for case study. Results show that the optimized government subsidy structure emerges when port’s SSE supply capacity and ships’ SSE demand meet an equilibrium, then the subsidy efficiency (g/USD) also could achieve the utmost level. It also indicates that in the beginning of SSE promotion, the government should subsidize more to the port on facility construction, then subsidize more on the SSE operations in later years for better usage of SSE and emission reduction.