Browsing by Author "Antturi, Jim"

The International Maritime Organization's sulfur emissions regulations for shipping were implemented in the European Union with the so called Sulfur Directive. According to the International Convention for the Prevention of Pollution from Ships (MARPOL), as of January 1, 2015, in Sulfur Emission Control Areas (SECAs) the maximum sulfur content in maritime fuel is lowered to 0.1%. In Europe the Baltic Sea, the English Channel and the North Sea are declared SECAs, where the standard was previously 1.0%. The current worldwide non-SECA standard is 3.5% which will be lowered to 0.5% by 2020. This study examines the net benefits of reducing shipping-based sulfur emissions and the effect on industrial competitiveness for Finland. In order to do this, abatement costs as well as monetized health benefits related to improved air quality are calculated. The effect on competitiveness is defined by comparing the figures obtained with the hypothetical case in which the Baltic Sea had not been declared SECA and 0.5% regulation had been imposed. In this study, shipowners adapt to the regulation by switching to low-sulfur fuel or by installing a sulfur scrubber. A net present value comparison between low sulfur fuel and a sulfur scrubber is conducted individually for each ship visiting Finland and then individual costs are aggregated to industry-wide costs. Health benefits for Finland are calculated for emissions reductions applied to Baltic Sea shipping as whole. Reduced sulfur emissions lead to lowered ambient concentrations of fine particulate matter (PM2.5) which has a positive impact on human health. The analysis conducted takes into account the effect PM2.5 has on the incidences of cardiovascular disease, lung cancer, chronic obstructive pulmonary disease and restricted activity days. These effects are measured in one figure in Disability Adjusted Life Years (DALYs) and monetized by multiplying by the Value of a Life Year (VOLY). The results suggest that the annual benefits of emissions reduction are expected to be circa 246 saved DALYs or monetized €12 million. The average annual abatement cost for Finland is approximately €228 million which indicates negative net benefits for the policy. Assuming that Finland will bear 100% of the costs, the same figure also represents the effect on competitiveness. When the global 0.5% cap comes into effect the impact on competitiveness decreases to an annual €93 million. The results imply that the abatement costs are lower than previously thought and the effect on competitiveness is milder than expected. A partial sensitivity analysis does not change the ratio between the costs and the benefits.