Course set for a cap? A case study among ship operators on a maritime ETS

• Implications of a maritime ETS on shipping companies are assessed in a case study.
• Additional costs for monitoring and reporting are expected to be minor.
• Compared to other operational costs, potential trading costs are likely to be small.
• Price volatility and limited supply of allowances may prove to be a challenge for operators.
• But with adequate provisions, there appears to be no major reason why maritime ETS should not work.

International shipping is an important emitter of greenhouse gases. The International Maritime Organization (IMO) is discussing different approaches to reduce maritime CO2 emissions, in particular market-based mechanisms. In this paper, we assess potential implications of a maritime emission trading scheme (ETS) on the organisation and operations of shipping companies, primarily on the basis of a case study involving ship operators. Our results suggest that there is no major reason why a cap-and-trade approach should not work in the shipping sector in practice. A maritime ETS has the potential to engage this sector into cost-efficient emission reduction if designed to account for the special characteristics of the international shipping industry.