Answer
Market-Based Measures are economic regulatory instruments designed by the IMO (as part of the 2023 Net-Zero GHG Strategy "Basket of Measures") and regional bodies (such as the EU ETS) to assign a direct price to maritime carbon emissions.
- Primary Purpose: To bridge the cost gap between cheap fossil fuels and expensive zero/near-zero GHG fuels, incentivizing shipowners to transition to green technologies.
- Key MBM Mechanisms:
- Global Carbon Levy / Tax: A fixed price charged per metric tonne of CO2 Eq emitted. Revenues collected feed into an IMO Climate Fund to support developing nations and subsidize green fuels.
- Emissions Trading System (Cap-and-Trade / ETS): Sets a total fleet emissions cap. Operators must buy and surrender emission allowances (e.g., EU Allowances) for every unit of CO2 emitted.
- Feebate / Revenue-Neutral Systems: High-emitting vessels pay a penalty ("fee"), which is directly redistributed as a financial reward ("bate") to vessels utilizing zero-emission fuels.
MBM means Market-Based Measure. It is an economic mechanism which puts a price on GHG emissions to incentivize shipowners to reduce fuel consumption, improve energy efficiency and adopt low- or zero-GHG fuels. Examples are carbon levy, emission trading and GHG fund mechanisms.”