Tallinn University of Technology,
In 2012, the European Parliament established the Sulphur Emission Control Areas (SECA) in Northern Europe comprising the North Sea, the Baltic Sea and the English Channel where from 2015 ships are obliged to use bunker fuel with a sulphur content not exceeding 0.1%. Even though only about 0.3% of the world’s water surface represents the SECA, the implementation of the regulations has spurred discussions on the impact on maritime economy and logistics. These discussions gained global interest and momentum in October 2016 after the decision of the Marine Environment Protection Committee of the International Maritime Organisation (IMO) to establish a global cap that limits the sulphur content in maritime bunker fuel to 0.5% on non-SECA waters from 2020.
Before the implementation of the SECA regulations in 2015, experts intensively discussed the tentative impact for maritime stakeholders and estimated the economic disadvantages for the BSR to be approximately €11 billion by 2020 because of the high additional compliance costs that would ensue. A large number of experts also forecasted that shipping companies and ports would lose handling volumes and income due to a possible disproportionally high increase of maritime transport costs with a possible cargo shift from sea to land transport as a significant consequence. Other discussions argued that the SECA regulations would weaken the competitiveness of the whole Northern European logistics sector with a shift of cargo flows away from SECA ports toward the Mediterranean ports and other transport routes.
Consequently, the EU commissioned a project – “EnviSuM – Environmental Impact of Low Emission Shipping: Measurements and Modelling Strategies” which started in 2016 with 12 project partners and 12 associated partners from all over the Baltic Sea Region (BSR) to investigate the different impacts of the SECA regulations. The project ended in April 2016 with quite several insightful results, one of which is that as opposed to the predictions, there were no significant economic changes in the SECA after 2015.
First, a BSR-wide survey among the maritime stakeholders at the beginning of the EnviSuM project showed only a neglectable impact of SECA regulations on BSR logistics sector and a later statistical analysis of foreign trade flows and maritime transport revealed no evidence for modal shifts or changes in transport patterns in BSR. Besides this, no significant logistics pricing issues were observed since most vessels that operate in the Baltic Sea now use low sulphur maritime fuel that has been less expensive than the formerly used heavy fuel oil since 2015. Most importantly, there has been an impressively high level of compliance of the SECA regulations (ca. 95%) within the BSR.
Following results on the estimations of the administrative burden of SECA regulations and a real option based evaluation of abatement technology investments also showed a neglectable impact on the maritime industry. Hence, the SECA regulation has not met the expectation of the maritime sceptics post-2015 SECA implementation.
Furthermore, the results of the “EnviSuM” project detected several benefits linked to the enforcement of the SECA regulations for the BSR. One crucial advantage represents the increase of the air quality within BSR together with a reduction of annual emissions of sulphur into the half with the consequence of about 1000 less premature deaths per year. Another beneficial outcome of the law is a push of the blue growth innovation activities in BSR, i.e. the SECA regulations seem to have created more innovative technological awareness among the ship owners and unleashed innovations towards clean shipping technologies for BSR companies.
After over three years of the SECA regulations implementation in the BSR, there is a renewed focus on the global Sulphur limit starting in 2020, a law which affects a broader audience and culture than the SECA regulations. Going forward, the findings of the “EnviSuM” project would surely have important policy implications that would help to provide and design effective future implementation strategies of regulatory instruments and ensures sustainability in the shipping industry. The BSR economy has not suffered until now from the SECA regulations, and the vanguard position of the Baltic Sea in clean shipping bears the opportunity that from 2020, the BSR may become an important export region for clean shipping products to other parts of the world.
Expert article 2561