Economic instruments, including “market-based” approaches, have become increasingly prominent over the last three decades as a means of achieving environmental targets at lower cost. Many recent major environmental policy initiatives in the US have included a market-based component, and market-based approaches are increasingly popular in Europe.

Reflecting this trend, the European Commission asked NERA to evaluate the feasibility of various market-based schemes to promote low emission marine shipping, including various emissions trading, taxation, and port dues alternatives. Authored by NERA Senior Vice President and Enviroment Group Head Dr. David Harrison and former NERA Senior Analyst James Patchett, the NERA report evaluates 14 specific schemes on the basis of a variety of criteria, including environmental effects, economic efficiency, impacts on ship owners, fuel suppliers, and other groups, and institutional ease.

Based upon these detailed assessments, the NERA report recommends three approaches that seem particularly promising at least in the near to medium term: a voluntary port dues differentiation scheme, a “consortia benchmarking” approach and a “rigorous” credit-based approach. The report notes that additional analyses would be required to develop specific proposals.