Designing a climate change policy for the international maritime transport sector: Market-based measures and technological options for global and regional policy actions

The international maritime transport sector has a significant abatement potential and some technical improvements that reduce GHG emissions would already be profitable without any policy in place. This paper analyses in-depth the limits and opportunities of policy options currently under consideration at the international level to stimulate the sector to reduce its GHG emissions. In particular, in order for the maritime transport sector to become more environmentally friendly, the flexible nature of international market-based measures and the European Union Emission Trading Scheme provide a definite window of opportunity without placing unnecessary high burden on the sector. However, the development of a regional policy, such as at European level, for the international maritime transport sector faces several obstacles: allocation of emissions, carbon leakage, permit allocation, treatment of the great variety in ship type, size and usage, and transaction cost. Global market-based policies could overcome most of these challenges.This paper provides an in-depth analysis of the policy instruments currently under discussion to reduce the sectorʹs burden on the environment, and focuses on economic theory, legal principles, technological options, and the political framework that together make up the basis of decision-making regarding the international maritime transport sectorʹs climate change policies.