Sustainable Shipping: Modeling Economical and GHG Impacts of Decarbonization Policies (Part II)

Maritime transport handles over 80% of global trade by volume and remains the most energyefficient mode for long-distance goods movement. However, the sector contributes approximately 3% of global greenhouse gas (GHG) emissions, a share projected to rise to 17% by 2050 if left unregulated. In response, the International Maritime Organization (IMO) has implemented initial and short-term measures to enhance energy efficiency and reduce emissions. The 2023 IMO Strategy further introduces medium-term measures, including market-based mechanisms (MBMs) such as a GHG levy and fuel intensity regulations. This study evaluates the economic, and environmental impacts of these measures using an integrated computational simulation model combining Ocean Engineering and Economics. Our results indicate that all proposed measures align with IMO’s emission reduction intermediate targets through 2035, reducing absolute emissions by more than 50%. However, economic impacts vary significantly across regions, with North Africa, Eastern Africa, Western Africa, and South Asia experiencing the most adverse effects on GDP and trade. Among the measures, the GHG levy has the strongest economic and food price impacts, whereas a revised fuel intensity mechanism imposes lower costs, especially in the short-term. Revenue redistribution mitigates GDP losses but with uneven regional benefits. This study contributes to IMO discussions by providing a comprehensive comparison of policy impacts, leveraging a general equilibrium model (GTAP) to capture indirect effects often overlooked in prior studies. The findings underscore the need for equitable and feasible decarbonization strategies in the maritime sector.