Reducing emissions in the maritime sector will bring challenges and opportunities for Finland

Elsi Katainen,
Member of European Parliament (the Centre Party of Finland, Renew Europe),
Renew Europe’s negotiator of FuelEU Maritime regulation in the Committee on Transport and Tourism

Finland’s northern location, the Russian border and 1100 kilometers of shoreline on the Baltic Sea make us, in practice, an island nation within the European Union. Functioning maritime transport is vital for Finland’s economy and competitiveness, since 90 % of our exports and 80 % of imports are transported by sea. At the same time, currently around 98% of the fuels used in vessels are fossil fuels, which underscores the necessity of a green transformation in the sector.

The EU’s Fit for 55 -legislative package includes 12 ambitious proposals to reduce emissions to reach climate neutrality in 2050. Many of these proposals affect the maritime sector, the most impactful being the expansion of the EU Emission Trading Scheme (ETS), the FuelEU Maritime proposal and the Alternative Fuel Infrastructure Regulation (AFIR). The ETS aims to steer the sector toward a low-carbon path by putting a price on carbon, whereas the FuelEU Maritime seeks to increase the demand for alternative fuels and decrease emissions by 75% by 2050. AFIR’s objective is to ensure adequate infrastructure for alternative fuels. All of these legislations intertwine and therefore it is of utmost importance to have a holistic approach ensuring that their objectives align. An impact assessment of the cumulative impacts on the maritime sector is necessary to understand the overall consequences.

The upcoming policy shift includes both challenges and opportunities for export-driven Finland. As the negotiator of Renew Europe group in the Committee on Transport and Tourism, my priority is to create a stable legal framework for companies to operate in as well as a future-proof legislation, which will encourage investments and innovations in the energy and infrastructure sectors. It is crucial to safeguard Europe’s global competitiveness and key position in global trade to avoid carbon leakage. To facilitate this, technological neutrality should be ensured in both FuelEU Maritime proposal and AFIR. Furthermore, to unlock the full potential of the biofuel sector, the raw material feedstock base should be broad enough to ensure a sufficient supply of biofuels to meet the increasing demand created by the FuelEU Maritime proposal. When considering the obligations for vessels to use shore-side electricity while at berth, the legislation should ensure infrastructure compatibility between vessels and ports as well as adequate grid capacity.

Maritime shipping is a highly competitive sector and the green energy transition will pose some challenges and raise costs at least in the short run. It must be ensured that the maritime sector in the remote northern parts of Europe maintain their competitiveness at both EU and global levels. It has been estimated that in Finland, the FuelEU Maritime proposal would increase the cost of maritime transport sector around 100-300 million and the ETS extension around 210 million euros, which is alarming. Moreover, the remote location, harsh winters and arctic conditions of, for example Finland, Sweden and Estonia, pose extra challenges not felt in other parts of the EU. Vessels must navigate through ice many months of the year, which increases fuel consumption anywhere from 20% to 60%. The vessels must be ice-strengthened for safety reasons and these structures will inevitably make them heavier than other vessels. This will also increase fuel consumption not only when sailing through ice but also on the open seas all year long. If ice navigation is not properly taken into account, extending the ETS to shipping can create a considerable competitive disadvantages and will pose barriers to the functioning of the single market.

Due to its huge transport capacity, maritime transport is the least emitting mode of transport per product, even though total emissions are high. There is a danger that rising costs will shift transport from the seas to the roads, leading to an increase in transport emissions. This should be avoided by creating a balanced and coherent legislative package to ensure cost-effective greenhouse gas emission reductions from the maritime sector without hurting its competitiveness. On the other hand, this transition will also create opportunities for Finland, as we are a pioneer in the production of sustainable biofuels and renewable hydrogen. Demand for these will rise sharply with the FuelEU Maritime regulation as the target level for emission reductions gradually increases. This can also bring about new jobs in the field of renewable fuels and pave the way for a global energy transition towards a sustainable world for next generations. The ambitious target set in the Green Deal needs reasonable steps done together with stakeholders and industry. New innovations need to be at the centre of the transition while no one should be left behind. That is the way EU should reach the world’s most aspiring climate targets.

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