GHG Policies in Maritime Transport: A Comparative Analysis using Cost-Effectiveness and Multi-Criteria Analysis

Maritime transport accounts for approximately 3% of global greenhouse gas (GHG) emissions with the sector aiming to achieve net zero by or around i.e. close 2050. There has been intense debate on medium-term measures that combine regulatory frameworks with financial incentives or economic penalties. Among the main proposals under discussion are a GHG levy, two flexible mechanisms (FCMs) based on the GHG Fuel Intensity (GFI) and a feebate. Despite extensive discussions on carbon levies, there is a notable lack of studies comparing the cost-effectiveness of these different GHG reduction measures in the maritime sector. This study aims to fill this gap by developing a comprehensive methodology to evaluate and compare these GHG policies. Using cost-effectiveness and multi-criterion decision analysis (MCDA), the study assesses the technical feasibility, economic implications, and environmental benefits of the proposed measures. The main quantitative results reveal that a GHG levy starting at $100 per ton of CO2 doubles fuel costs, while new fuels become economically attractive only after 2040 under the feebate mechanism. Both original and revised FCM proposals show similar cost patterns, with the revised FCM leading to earlier adoption of new fuels. We find that the FCMs and the carbon levy are effective in achieving the IMO's final and intermediate targets. However, FCMs are the most cost-effective proposals, achieving targets with the lowest present value of costs and the cost per avoided GHG emissions. The proposed methodology provides a robust framework for facilitating objective and structured discussions with stakeholders, helping to balance economic and environmental goals in maritime policymaking.