SFIF replies to Airclim

Christer Ågren argues that there are many environmental benefits with the IMO sulphur decision and that my claim, that the decision is not sustainable, is therefore not correct. Mr Ågren y, bases his view strictly on environmental basis. Environmental benefits are not the same thing as sustainability. I base my claim on the definition of sustainability of the UN Brundtland Commission which requires the reconciliation of environmental, social and economic demands. The IMO decision was never assessed properly. Environmental assessment was far away from complete and the impacts from an economic point of view and the effects on the shippers were totally lacking. Effects as modal back-shift, trade barriers, trade flows, reduced competitiveness and fewer investments were never analysed. Then add the environmental trade-off effects such as increased CO2- emissions or sulphur leakage, and Mr Ågren´s clear environmental benefits do p g, not look so clear.

Furthermore, Mr Ågren raises the question of particles in the debate. But what is the purpose of IMO´s new sulphur standard? To reduce sulphur emissions and acid rain, or to reduce particle emissions to improve the health of people? If you want to reduce particles, forming a particle-ECA would be the best suited way ahead. Also looking at maps of particle emissions it is easily concluded that the Baltic Sea is not the particle hot spot of Europe. These costs, that Mr Ågren agues are relevant for particles, are questionable, since the science is not completely understood and more research is still needed. Only a few months ago, the Danish Ministry of the Environment presented a study called” Ship emissions and air pollution in Denmark”. The new emission inventory is more refined than the old one, which overnight reduced shipping’s share of sulphur deposition in Denmark by 50%, simply by more accurate modelling. For particulate matter, the report quotes much lower contribution from shipping than previous assessments whilst it also concludes that “a considerable amount of fine particles (PM2.5) is of unknown origin” and in maps over Denmark with calculated emissions form particles “pollution from ships is not visible”. Proper decision making calls for proper scientific basis.

Mr Ågren and I would not disagree on p this subject if there would have been a proper impact assessment prior to the decision in IMO. Mr Ågren is arguing that fuel prices in the study by the Swedish Maritime Administration (that was conducted after the IMO decision was confirmed) are not relevant and therefore the study is not either. The only thing we say for sure about future fuel prices is that we do not know what they will be. That is why all scenarios are relevant. I do agree with Mr Ågren that a sensitivity analysis was lacking, which we both commented on as experts in the expert group linked to the study. But then there is also the Finnish impact assessment, which concludes similar effects as the Swedish study, even though other fuel prices are used. These are two separate studies, one from a government agency and the other one from a well known university. The two studies conclude the same thing: we will see a modal back-shift and the impact on the exporting industry will be immense. Other studies are on the way, such as studies by ECSA and the EU Commission, and I am sure that after seeing these studies, the result that high costs for marine fuel will lead to modal back-shift will be obvious for Mr Ågren as well.

Fuel prices in different scenarios are too high, according to Mr Ågren, especially the p Swedish study using a price of MGO of 662 USD/ton. The price of MGO in Rotterdam in January 2010 shows prices around 610 USD/ton - not a large difference to me. Analysing historic prices from 2004 to 2008 clearly shows that price difference between bunker oil and MGO varies around 250- 300 USD/ton. The Swedish study assumed 297 USD/ton, which is in the high end of the interval but still within the span of historic prices. As we know little of the future, historic prices are usually the best bet available. Mr Ågren also argues that, p y the lower prices used in the US study proves that too high prices are used in the European studies. Different oil prices in different parts of the world are no news and in case Mr Ågren does not know, there is p a diesel shortage in Europe. A future price can therefore be lower in North America since increase in demand of MGO is relevant and will lead to an even higher diesel shortage in Europe, hence higher prices. This is the basis of economics.

In the last point of criticisms of the Swedish study, Mr Ågren refers to price p difference between modes when calculating modal shift. Mr Ågren refers to the fact that g for all three scenarios in the study, significant increases in fuel costs were assumed for ships, but no increase at all in costs for the competing transport sectors. This may sound strange, but it isn´t. First of all, since almost all of Sweden’s rail system is electrified and the price of electricity does not correspond to the price of bunker/MGO, the relation is irrelevant. Secondly, the study does not make any calculations of air transport, so that is not relevant either. Lastly, road transport is a relevant comparison. For a non expert, raising the price of shipping but not the price of road transport would, as Mr Ågren writes, “not surprisingly show a modal back-shift”. Since both Mr Ågren and I were members of the expert g y group associated with the Swedish study, he should know better. It has been proven for a long time in research that there is a negative correlation between price of fuel in road transport and transport work. Also, as a member of the expert group Mr Ågren should know that the Swedish Maritime Administration first did calculations where they did raise the price of diesel fuel for road transport. Because of the negative correlation between diesel price and transport work, including it or not did not make any difference to the modal back-shift and the result of the study. They therefore decided to keep raised diesel prices for road transport out of the report in order to avoid discussion on how much the diesel price will increase or not. This was done in order to not lose focus of what the study actually was saying and because the difference in price had no relevance to the actual findings and conclusions.

Since November both Finland and Estonia has sent a notification to the IMO that they cannot implement the IMO decision in national legislation. This based on the huge negative effects on industry, on trade and modal back-shift. These actions speak for themselves.

The Swedish forest industry has since 1997 used low sulphur marine fuel of 1% on a voluntary basis in our Time Chartered vessels. For about 14 years we will have used low sulphur fuel before it being mandatory, which has lead to large sulphur emission reductions and we have received several environmental awards for this voluntary action! We want to lower the sulphur emissions even more, but what we don’t want is to be put out of business. We want to reach as far as possible at a reasonable price. That is why we want to lower the sulphur emissions from 1.5 % to 0.5%.

If a study is presented that proves that there is an environmental benefit between 0.1 % and 0.5 % outweighs all tradeoff effects, such as sulphur leakage and increased CO2-emission, I will have no problem altering my position since I always base it on facts. At present there is no such study. That is the core problem. It all boils down to one thing; no impact assessment was conducted prior to the decision in IMO. Since there were no impact assessments, nobody can claim that the decision was based on the three pillars of sustainability; environmental, social and economic. Hence, the decision is not sustainable.