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There is a long history of debate on which Market-based Mechanism (MBM) should international shipping adopt to reduce carbon dioxide (CO2) emissions. However, literature presents differing preferences for a suitable MBM for international shipping. There are those who support a carbon tax, those who support an ETS, and those who remain on the fence. Hence, this study aims to find out: which MBM is suitable to reduce CO2 emissions for international shipping?


The paper begins with an overview of the current state of the MBM around the world. Thereafter, we build a conceptual model based on a systems perspective to understand the relationship between CO2 reduction, Research & Development (R&D), adoption of existing technology and financial resources. For the purpose of comparative analysis, definitions of the two MBMs, bunker levy and ETS, and their possible sub-types are presented. To determine which MBM is more suitable, we follow a multi-criteria decision making approach where the criteria are derived from our systems perspective conceptual model and from literature. To reduce ambiguity, criteria with multiple meanings are further divided into unequivocal criteria and operationalised with a specific mechanism.

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Every year 62.7 trillion ton-miles of cargo are transported around the world, and looking to the future, the International Transport Workers’ Federation (ITF) and the World Maritime University (WMU) have released the first ever, independent and comprehensive assessment of how automation will affect the future of work in the transport industry. 

The forward-looking assessment, produced by WMU, investigates how the global transport industry will change as a result of automation and advanced technologies, forecasting and analyzing trends and developments in the major transport sectors - seaborne, road, rail and aviation - to 2040 with an emphasis on the implications for jobs and employment for transport workers.

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The Paris climate agreement committed the world to limit global warming to well below 2°C and keep it as close as possible to 1.5°C above preindustrial levels. The latest IPCC report has warned the world of the major negative impacts on humanity and the planet of a rise in global temperatures of 1.5°C, and the even more dramatic consequences of 2°C global warming. It therefore urges the world to aim for 1.5°C and recommends achieving netzero CO2 emissions globally by 2050.
The Energy Transitions Commission (ETC) – a coalition of business, finance and civil society leaders from across the spectrum of energy producing and using industries – supports the objective of limiting global warming ideally to 1.5°C and, at the very least, well below 2°C.

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The International Maritime Organization (IMO) announced in April 2018 a target of cutting greenhouse gas (GHG) emissions from the sector by 50 percent below 2008 levels by 2050 and subsequent meetings of the IMO will develop a strategy for making headway on this commitment. This paper seeks to inform dialogue about the possibility of a carbon tax as a key element of GHG mitigation policy for international maritime transport. The paper discusses the case for the tax over alternative mitigation instruments, options for the practical design issues, and then presents estimates of the impacts of carbon taxation and other instruments from an analytical model of the maritime sector.

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