Shipping's Decarbonization and Border Carbon Adjustment Mechanisms: A Case for Regulatory Cooperation?

The European Union (EU) has extended the application of the EU emissions trading scheme to international shipping and the International Maritime Organization (IMO), and various countries are working on implementing instruments that put a price on greenhouse gas emissions (GHG) from this sector. Due to these policy developments, GHG emissions from shipping may become subject to multiple pricing instruments in the coming years. Stakeholders have raised concerns for the potential negative impacts on the shipping industry and international trade and called for multiple pricing to be avoided. Against this background, this article discusses the potential pros and cons of double pricing GHG emissions from shipping and identifies options to reduce its negative impacts. Overall, the article finds that the case to avoid double pricing rests on a balancing of competing interests. In case policymakers are willing to avoid double pricing, regulatory cooperation between policymakers working on shipping decarbonization and border carbon adjustment mechanisms can provide important lessons on how to do so.