Organisations representing industry, commerce, shipping companies and ports in Europe have appealed to the European Commission to intervene in the decision taken by the International Maritime Organization (IMO) to introduce new sulphur limits for shipping in the Baltic Sea, North Sea and English Channel.
In October 2008 the IMO set new quality requirements for maritime fuels. In practice the decision would mean replacing heavy fuel oil with diesel in Northern European waters in 2015.
The main requirement is that the sulphur content of maritime fuels be reduced in so-called Emission Control Areas (ECAs), which include the Baltic Sea, North Sea and English Channel. In these regions the sulphur cap is currently 1.5%. This limit would be gradually lowered to just 0.1% by the start of 2015.
On the global level the reduction in the sulphur cap would be from the current 4.5% to 3.5% in the beginning of 2012, lowering further to 0.5% by 2025.
Decision taken without sufficient impact assessments
The decision was made in 2008 without sufficient information about the cost impacts or even the potential benefits of such stringent emissions requirements. Certain Member States and organisations have since then carried out impact assessments that suggest that the effects would dramatically weaken the competitiveness of industry and shipping, especially in Northern Europe.
The European Commission is now carrying out assessments on the availability of suitable fuels, the benefits and costs, and the impacts on logistics. The first published assessment studied the availability of maritime fuels in Europe. According to this assessment, producing the set quality of maritime fuel would require additional investments in oil refineries amounting to EUR 13 billion. The cost of maritime fuel in Northern waters would increase by 60–70%.
Sea freight charges would increase significantly
If the IMO’s decision is implemented in its current form, sea freight charges would increase by around 30–50%. The decision could lead to a modal back-shift from sea to road, as the rise in costs would reduce the competitiveness of sea freight. Shipping is an efficient form of transport in terms of both the environment and the climate.
The cost impacts on Finland’s export industries and import transports would amount to EUR 200–1200 million a year depending on the oil price fluctuations.
Logistics costs in Finland are already higher than in competing countries due to the long distances inland and by sea. Finnish foreign trade is completely dependent on maritime transport.
No impact on climate change
Sulphur emissions do not cause eutrophication in the Baltic Sea, and they do not have an impact on the climate warming. The reason for reducing sulphur emissions is that they cause particulates that can be carried to residential areas and have an effect on human health. Shipping is currently responsible for 10–20% of the sulphur emissions in European coastal areas.
Solutions required this year and next
The more than 50 signatories of the letter to the European Commission proposed that the Commission take into consideration the latest impact assessments. The European Commission will review the Sulphur Directive in 2010–2011. Since the IMO’s sulphur decision is due to be implemented within the EU by means of the directive, the review should take into consideration the results of these impact assessments.
The signatories of this letter believe that both the shipping industry and the users should take on a responsibility to proactively invest in reducing emissions. At the same time an acceptable balance has to be achieved between commercial realities and environmental policy.
The signatories are seeking to explore different options for an alternative solution together with the European Commission.