emissions for the entire journey of an incoming or outgoing cargo. The coverage of a _time-based measure_ is linked to the time taken by the voyage from/to a port to which carbon pricing applies. In principle, any of these measures could outperform the others in the scope of their respective coverage. A major difference between a _holistic route cargo measure_ and the other two measures is that the scope of the emissions covered by the former is closely linked to the share of global maritime trade of the implementing state. This is because, under the other two regimes _,_ coverage could be extended to emissions released while shipping cargoes not destined to the port of the implementing state, and a proportion of the emissions released in transporting cargoes to this port state would not be covered. The question concerning which of the three measures has the greater environmental effectiveness would therefore also depend on the share of the maritime trade of the implementing country. For countries whose market share is large, a _holistic cargo route measure_ could have a substantial environmental impact.

The environmental effectiveness of a measure is also dependent on its potential for tax avoidance. In this regard, since it is based on cargo, a _holistic cargo route measure_ is subject to a lower number of _forms_ of tax avoidance than _first/last vessel_ or _time-based measures_ .<sup>101</sup> _A first/last vessel measure_ charged per ship leaves room for tax avoidance in various ways. One evasion strategy is to under-report the distance covered from/to ports that impose carbon pricing<sup>102</sup> through transshipment<sup>103</sup> or the falsification of documents.<sup>104</sup> The effectiveness of this evasion strategy will therefore depend on the distance between ports that impose carbon pricing and the closest available<sup>105</sup> port that does not. A _first/last vessel measure_ thus creates incentives for nonparticipating ports to increase their capacity for transshipment and transit.<sup>106</sup> An alternative strategy to avoid carbon pricing is to make changes en route in port destinations for outbound voyages.<sup>107</sup> However, such changes of consignees are a viable strategy only if states that implement carbon pricing cannot obtain data regarding them. Thus, this evasion strategy could be made less effective if implementing states have access to AIS data to track the movements of outgoing vessels.<sup>108</sup> Note that this avoidance strategy could also be controlled by means of a top-down MRV system that requires vessels to report information about previous voyages. If such a system was effectively implemented, evasion could occur only after the cargo has been re-loaded (at sea) on to another vessel. In addition, carbon price avoidance could be put into practice by using the most fuel-efficient vessels to call at ports that implement carbon pricing and moving the less performing ones on to other routes.<sup>109</sup> However, this risk is limited because the fuel efficiency of vessels is linked to their size and capacity.<sup>110</sup> Lastly, another possibility for avoiding carbon pricing under a first/last vessel measure is to reduce speed in the period covered by the measure and increase it outside its scope.<sup>111</sup>

> 101 We stress that we do not have quantitative estimates of the size of the different types of avoidance strategy that would occur under any of these measures. Thus, our claim is not that tax avoidance is necessarily less problematic under a holistic cargo route measure. However, to the extent that the availability of more forms of tax avoidance yields greater avoidance, it is more plausible that a holistic cargo route measure would generate less avoidance than the other measures.

> 102 Bäuerle et al. (2010, p. 61).

> 103 Transshipment refers to the shipment of goods to an intermediate destination before reaching the final port of delivery. Note that tax avoidance through transshipment raises concerns that go beyond the environmental performance of the measure. This is because the costs of tax avoidance schemes in terms of potential extra transshipments would increase the cost of trade and, at the margin, distort trade patterns. See Heine et al., (2017, p 10); Heine and Gäde (2018).

> 104 Bäuerle et al. (2010, p. 61).

> 105 Availability refers to mere theoretical (and, maybe, credible) availability when avoidance is implemented by means of document falsification.

106 Miola et al. (2010, p. 5494).

107 Kollamthodi et al. (2013, p. 53).

108 Kollamthodi et al. (2013, p. 53).

109 Bäuerle et al. (2010, p. 59).

> 110 Bäuerle et al. (2010, p. 59).

> 111 Kollamthodi, (2013 p. 52). Notice that fuel consumption is strongly correlated with speed.

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