In this chapter we examine, from a tramp ship operator's point of view, how potential CO 2 emission reduction measures impact the operational decisions and their economic and environmental consequences. Two market-based measures (MBMs) are discussed, the bunker levy scheme and the emission trading scheme, and we show that both can be incorporated in a similar way into a typical tramp ship routing and scheduling model. We also demonstrate with a computational study the environmental benefits of these CO 2 reduction schemes. Abbreviations: CO 2 Carbon dioxide CO 2 e Carbon dioxide equivalent COA Contract of affreightment dwt Deadweight tonnes ETS Emission trading scheme EU European Union EU ETS European Union Emissions Trading Scheme GHG Greenhouse gas IMO International Maritime Organization LNG Liquefied natural gas M Nautical mile MBM Market-based measure OR Operations research t tonnes 1 IntroductionTraditionally for ship operators, the reduction of maritime greenhouse gas (GHG) emissions might just be a "happy side-effect" of the increasing global competition in the shipping industry. While the thin profit margin generates the need to reduce bunker fuel consumption, through, e.g., better design of ship hulls, energy-saving engines, "slow steaming"(significantly reducing ship speed in response to depressed market conditions and/or high fuel prices, see Maersk, 2011) and more efficient deployment and operation of the fleet; it also contributes to less GHG produced, especially carbon dioxide (CO 2 ) emissions since they are directly proportional to fuel consumed.However, as we marched into the second decade of the new millennium there had been much discussion of stricter and more direct regulations on CO 2 emissions in the shipping sector (Buhaug et al., 2009;Shi, 2016), due to the urgency of combating global warming and meeting the "two-degrees goal" (Rajamani, 2011). Among those proposed regulations are the so-called market-based measures (MBMs), including bunker levy, emission trading and a variety of other schemes. We refer the readers to Chapter 11 for a discussion of MBMs in the shipping sector. A bunker levy scheme collects revenue from the sector in the form of a tax on fuel use, which may then be used to establish an international fund that invests in environmental causes. An emission trading scheme (ETS) sets a maximum quantity (cap) on emissions from the shipping sector, and employs a trading mechanism to facilitate emission reductions. Although the effectiveness of any of these schemes has been controversial and the assessment and comparison of different MBMs are far from completion (Psaraftis, 2012), it is useful to study how ship operators may react to different types of CO 2 emission reduction schemes.In this chapter we examine, from a tramp ship operator's point of view, how potential CO 2 emission reduction schemes impact the operational decisions and their economic and environmental consequences. To the best of our knowledge, this is the first study in the literature that approaches this issue fr...