## 4 Research Clusters: Content Analysis
### Cluster 4: Environmental Sustainability in Maritime Shipping
#### 4.4.1 Subcluster 1: Governance and Financial Decision Making for Environmental Compliance  
This subcluster gathers studies that examine the institutional, regulatory, and investment frameworks designed to achieve environmental compliance in maritime shipping.  
It includes two articles that use real options approaches to evaluate investment under uncertainty and one article exploring transnational environmental governance.  
[PERSON] (2014a) states that retrofitting vessels to use LNG requires significant upfront investment, and there is a high uncertainty regarding the price differential between LNG and conventional fuels, as well as the reliability and availability of LNG supply [48]. The critical decision for shipowners is whether to invest in LNG retrofitting immediately to benefit from lower fuel prices or to defer such investment until market uncertainties are resolved. The paper uses real options analysis (ROA) to evaluate LNG retrofitting investments, demonstrating that, while traditional discounted cash flow models might reject such investments, ROA reveals that deferring the decision can be a strategically valuable option. The model shows that deferral options are particularly beneficial when capital expenditure is high, as waiting allows shipowners to reduce risks by obtaining better insights into LNG price trends, technological advancements, and market developments.  
[PERSON] (2014b) states that advanced decision support tools, such as real options analysis, are essential to manage the increased complexity in managerial decision making due to evolving regulations [54]. The model presented in the paper demonstrates a trade-off between low LNG fuel prices and the high capital costs associated with retrofitting ships for LNG use, highlighting the strategic value of deferring the investment. In a case study on a Handymax vessel, the analysis indicates that, while an LNG retrofit is not economically justified under current conditions, it could become viable as early as 2015 if LNG-oil price differentials and capital costs become favorable. A comparison with exhaust gas cleaning systems (EGCSs) shows that, although EGCSs require lower capital expenditure, they do not enable shipowners to benefit from low LNG prices, thereby supporting the strategy of deferring LNG investments.  
[PERSON] et al. (2015a) stipulate that the shipping industry lags in environmental protection due to low public visibility of its impacts and misaligned industry and consumer interests, compounded by the limited and challenging orchestration efforts of the IMO [45]. The scholars develop the concept of \"orchestration\" as the use of both direct and indirect regulatory tools, as well as a mix of hard and soft power, to address global environmental challenges. Furthermore, the concept focuses on the following four key dimensions: (1) issue visibility, (2) interest alignment, (3) the scope of environmental issues, and (4) regulatory fragmentation and uncertainty, which all affect the effectiveness of environmental governance. The analysis reveals the challenges and opportunities for the IMO to lead and coordinate transnational efforts, suggesting that a more collaborative approach involving (1) non-state actors and (2) intermediaries is essential for advancing environmental progress in maritime shipping.  
Key considerations within this subcluster include the role of transnational policies in shaping environmental compliance regarding institutional coordination and how real option methodologies provide insights into managing investment risk under regulatory and market uncertainty.