Analysis of the Finnish impact assessments of the 2015 sulphur regulations of marine fuels

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School of Business | Master's thesis
Ask about the availability of the thesis by sending email to the Aalto University Learning Centre oppimiskeskus@aalto.fi

Date

2014

Major/Subject

Logistics
Logistiikka

Mcode

Degree programme

Language

en

Pages

106

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Abstract

Under the new regulations effective 1st January 2015, the sulphur content of marine fuels will be restricted from the current 1.0 percent to 0.1 percent in the Sulphur Emission Control Area (SECA), which in Europe covers the Baltic Sea, the North Sea and the English Canal. The most commonly discussed alternatives to comply with the regulations, the use of a low-sulphur fuel (typically marine gas oil, MGO) and the use of sulphur scrubbers, cause signifi-cant additional costs for the maritime traffic, since the MGO is more expensive fuel and the investment costs of the scrubbers are substantial. The maritime transportation is extremely important for the Finnish foreign trade accounting for over 80 % of the transportation of the foreign trade. Moreover, Finland is geographically located in the furthermost bottom of the Baltic Sea, which means that all of the Finnish maritime traffic to and from overseas covers the whole distance of the regulated area. The additional costs arising from the new regula-tions have been assessed in three major Finnish impact assessments conducted in 2009, 2012 and 2013. The differences in the estimates of additional costs are considerable. The identifica-tion of the factors that induce differences in the estimates of additional costs and their pro-gression over time in these impact assessments is the subject of this study. The aim of the identification is to provide a basis for viewing the different estimates. The literature and previous research regarding regulatory impact assessments was discussed to develop the theoretical framework of this study and to position the Finnish impact assess-ments in the framework. The literature was also utilized in identifying the factors that may have effect on the estimates of the additional costs. Based on the identification of the possible factors, an analytic model to analyze, compare and view impact assessments was developed. The model was used to analyze the data of the study, which consists of the three Finnish im-pact assessments. The main results of the study are that the most significant factors to induce differences in the estimates are the alternatives of technological execution, the definition of baseline and the sources of information. The first factor concerns the consideration of scrubber technology in the calculations. The definition of baseline refers to different fuel qualities and shares of fuels used in the baseline scenario. The third factor is mostly related to the prices of the fuels, to which the estimates are highly sensitive. Also the progression over time was the most signifi-cant in the case of these three factors. The main theoretical contribution of this study is the developed analytic model to analyze, compare and view impact assessments. The model can be applied to analyze also other similar impact assessments.

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sulphur regulations, sulphur directive, impact assessment, maritime transportation, sulphur content of marine fuels

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