EnviSuM: First results on Sulphur reduced shipping in Baltic Sea region
TTÜ is represented in the EnviSuM consortium by the Department of Business Administration, and is the work package leader for the assessment of the “economic impacts of the SECA regulations”. The first year of the project was dedicated to empiric activities to gather current data on SECA related developments and to conduct a survey and expert interviews from all countries in the BSR. The assessments of the impact of SECA regulations is highly relevant for Estonia in particular due to the high level of maritime logistics activities and ferry business and the economic role of Estonian oil shale industry in the country. At the end of its first year, TTÜ EnviSuM project representative presents its first results.
In several studies launched before 2015, most experts from different maritime sectors predicted significant changes in logistics costs and a drastic change in the modal split from maritime transport towards land-based transportation as a consequence of SECA regulations. However, “the estimations of negative impact on the maritime sector in BSR seem not to be right” disclosed Gunnar Prause, a professor at the department of business administration and the EnviSuM project representative at TTÜ. “The first results of our research shows that we have a compliance rate of more than 95% with the SECA regulations in BSR and until now there has been no significant price changes in maritime logistics neither has there been any important modal shifts in the logistics patterns around BSR” continues Prause. One important reason for that is related to the low fuel oil price, which has made it easier for ship operators to switch from the cheap high Sulphur fuel (HFO) to a relatively more expensive SECA compliant fuel without the need to raise costs of logistics.
On the other hand, that which seems good for the logistics sector generates heavy “headaches” for the Estonian oil shale industry. The revenues from oil products dropped and brought negative consequences on profits and maritime fuel products. SECA regulations furthermore put additional pressure on the Estonian oil companies as a result of the Sulphur content in the Estonian shale oil fuel which exceeds the 2020 global Sulphur limit for maritime fuel making the development of new concepts linked to change in business models and high investments imperative for the industry. This implies that increasing oil prices would help the restructure of the Estonian oil shale industry but at the same time put a heavy pressure on the other sector of the maritime industry.
Since the period for low oil prices is assumed to be limited, the EnviSuM project also investigates and assesses the activities of the shipping sector regarding the technical solutions for SECA regulations compliance such as the installation of the scrubbers, the use of LNG and other alternative fuels. There are around 2,000 sizable ships that ply the Baltic waters at any time and currently from those ships that are permanently operating in Baltic Sea only 73 are retrofitted with a scrubber and 28 vessels are LNG-powered - 25 are newly built and 3 retrofitted. These solutions are not only related to high investments on the part of the shipping companies but also entail major financial implications for maritime infrastructure development in the ports. For the next two years, these topics will dominate the research agenda for the TTÜ EnviSuM team consisting of Sina Atari, Merle Küttim, Eunice Olaniyi, Merli Reidolf, Marti Viirmäe and Professor Gunnar Prause.
From left to right: Sina Atari, Merli Reidolf, Gunnar Prause, Eunice Olaniyi, Marti Viirmäe