Also Published As: Climate Change and Ships: Increasing Energy EfficiencyThis paper examines the mitigation or marginal abatement costs for ship owners to reduce CO2 emissions or increase energy efficiency on vessels in their fleets, and the role of these costs in the pricing of a bunker levy, a ton of CO2 emissions, and energy efficiency credits in three different market-based mechanisms proposed to the International Maritime Organization. Effective pricing and structuring of market-based mechanisms can minimize costs and reduce emissions in the international maritime sector. A ten-point research plan is presented to develop a methodology for use by ship owners and policy makers that calculate the marginal abatement cost for a ship to reduce CO2 emissions or increase efficiency. A result of the research will include an assessment of the cost effectiveness of emissions’ reduction measures.