Uneven carbon pricing signals in shipping: Regulatory overlap, abatement costs and fuel choice

Carbon pricing is increasingly positioned as a key instrument for decarbonizing international shipping. However, the coexistence of global and regional carbon pricing mechanisms is reshaping the economics of maritime decarbonization, while also raising concerns about overlapping compliance burdens and uneven transition incentives. This study develops a voyage-level framework to examine the combined impacts of the IMO net-zero framework, the European Union Emissions Trading System (EU ETS), and FuelEU Maritime on container shipping. Using high-resolution Automatic Identification System (AIS) data, TEU-level carbon pricing costs and alternative-fuel competitiveness are assessed across four representative shipping corridors with different levels of regulatory exposure. For conventional fuel operation, carbon pricing costs remain relatively limited compared with the overall market freight level. Substantial heterogeneity emerges across vessel sizes and routes. Corridors exposed to overlapping EU-related regulations experience significantly higher carbon costs, while vessel scale acts as the dominant moderating factor, with large vessels consistently diluting carbon liabilities more effectively than smaller vessels. For alternative fuel pathways, hydrogen exhibits the strongest cost competitiveness under uncertainty, with WinProb values reaching up to 45.1% by 2035, whereas methanol remains below 2.54% across most scenarios. The uncertainty structure also differs substantially across fuel pathways. Methanol and ammonia competitiveness is primarily driven by fuel-price uncertainty, whereas hydrogen depends more strongly on policy-support mechanisms. We further compare the e-fuel pathways with biofuel-blend scenarios to analyze short-term transition options. Waste/residue-based hydrotreated vegetable oil blends appear more readily deployable and cost competitive before 2035, but their emission-reduction potential remains limited. Overall, the findings suggest that current carbon pricing levels alone are unlikely to trigger large-scale fuel switching. Effective maritime decarbonization will require not only stronger and more coordinated carbon pricing signals, but also sustained reductions in green fuel costs and long-term policy support for alternative fuel deployment.