Finnish business and trade unions: The competitive disadvantage of arctic shipping must be compensated
22. February 2022
It is necessary that all industry sectors across the EU commit to achieving EU’s new CO2 emission reduction targets. However, emission reductions must be implemented in such a way that companies or employees don’t suffer from a competitive disadvantage due to their geographical location, such as northern location and winter conditions. The business community and trade unions together call for the full reimbursement of additional winter navigation costs.
The co-legislators are currently negotiating measures to reduce emissions from maritime transport by 2030. Emissions trading in maritime transport, the introduction of renewable and alternative fuels and the taxation of marine fuels have been proposed as such measures.
The financial impact is more severe in Finland than in other EU countries
The financial impact of the new EU maritime transport measures is particularly severe in Finland due to long distances and winter conditions. Due to the winter conditions, there is need to use of ice-strengthened vessels around the year. Use of these vessels increases costs more compared to other EU-member states.
The Commission’s proposals would increase the annual costs of maritime transport to and from Finland by hundreds of millions of euros by 2030. According to in-depth studies by the Finnish Ministry of Transport and Communications, the cost surcharge would multiply in the coming decades.
The impact studies are updated if needed. The price of CO2 emission allowances is already higher than the price used by the Ministry of Transport and Communications and the European Commission in their calculations. Demand for renewable fuels will be growing due to the expanding demand in all modes of transport and increasing production would require regulation that allows for a broad raw material base. Technological and market developments are also challenging to predict.
In practice, Finland is an island. Around 85% of Finland’s freight is transported by sea. The cost-effectiveness of maritime transport is important from the perspective of Finland’s positive climate handprint, as low-carbon products are typically transported to the international market by sea.
The future maritime transport regulation is currently negotiated at the European Parliament and the Council. The business community and trade unions call on the decision makers to do their utmost to compensate for the extra costs winter navigation causes in order to have a playing field within the single market.
The Finnish business community and trade unions propose the following measures.
- Additional costs due to the ships’ ice strengthening and sailing in ice conditions must be fully reimbursed under the Emissions Trading and Fuel EU Maritime Directives.
- Measures to prevent carbon leakage need to be put in place.
- The broad use and availability of different raw materials for the renewable fuels must be ensured.
- The availability and price of alternative fuels for shipping need to be reviewed regularly and well in advance before introducing new requirements.
- The development of marine technologies and zero-emission energy sources must be accelerated by increasing incentives. For example, electricity used to produce hydrogen could be tax-free.
- Revenues from maritime emissions trading should be fully returned to the maritime industry in order to ensure innovation and investment. The Ocean Fund or a similar fund proposed by the European Parliament could be used here. Ice classed ships should be given special consideration in the fund.
- The marine fuels must remain tax-free in the EU. Tax issues should continue to be addressed in international agreements.
- When the global market-based emission reduction scheme enters into force, EU regional emissions trading must be phased out.
Industry and trade unions support the EU’s 55% emission reduction target by 2030 and carbon neutrality by 2050. The needs of the climate, the national economies and employment must be taken into account. It is essential that the competitiveness of Finnish companies and employees is maintained and that investment conditions are safeguarded. Emission targets must be achieved in a cost-effective, technology-neutral and market-based manner.
Sourced via The Finnish Shipowners’ Association
