Moving Sustainable Shipping Forward: The Potential of Market-based Mechanisms to Reduce CO2 Emissions from Shipping

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The International Maritime Organization (IMO) is considering adopting marketbased mechanisms (MBMs) to reduce fuel consumption by commercial shipping. This paper explores the potential effectiveness of these MBMs. How companies respond to economic stimuli generated by MBMs depends on the kind of environmental strategy they employ. The four-stage model of environmental management used in this paper identifies four strategies: crisis-oriented, process-oriented, chainoriented or full environmental sustainability. Based on a literature review, we conclude that the shipping sector is mostly crisis-oriented, meaning that staying within compliance is the main ambition. The cost-inducing fee-based or cap-and-tradebased MBMs that are considered by IMO fit well with this crisis-oriented focus. The potential effectiveness of these MBMs, however, further depends on whether the implementation challenges of generating sufficient costs to influence ship owners and strict monitoring and enforcement are overcome. This potential will be much larger when the MBMs are able to support a change to a process-oriented strategy. The IMO's MBMs will support this shift by making budget resources available to implement environmental measures and technologies, and by registering fuel consumption data for individual ships, to inform the selection of environmental measures and technologies. But the four-stage model also indicates that more needs to be done by governmental actors, NGOs and cargo-owners to move ship owners to a process-oriented strategy, i.e. facilitating investments to develop preventive technologies, raising awareness of end-consumers and supporting information-based MBMs that improve corporate branding and market access.
Original languageEnglish
Pages (from-to)42-66
JournalThe Journal of Sustainable Mobility
Issue number2
Publication statusPublished - 2016


  • market-based mechanisms
  • environmental management strategies
  • four-stage model
  • crisis-oriented strategy
  • CO2 emissions of shipping


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