Abstract Neither international treaties nor domestic policies control carbon dioxide (CO₂) emissions from international shipping. To enhance mitigation, a new multilateral mechanism could allocate these emissions to national carbon budgets, where different options could be used based on the location of industry actors and ships. We analyze five allocation options, showing that a clear majority of CO₂ emissions would be distributed to ten countries under each option; however, the top ten countries vary across allocation options and the amount of CO₂ emissions allotted to individual countries could increase their carbon budgets thousand-fold or more. We further examine how the different objectives, principles for decision-making, and geographical coverage of the United Nations Framework Convention on Climate Change (UNFCCC) and the International Maritime Organization influence the design and implementation of an allocation mechanism under each of these two bodies. We find that the allocation mechanism that best meets criteria related to effectiveness and equity would be one in which emissions are assigned to countries of ship owners, and which operates under the UNFCCC.