Cost shock for base industries

Comment |  Costs will skyrocket for Sweden’s base industries with a new environmental demand on maritime transport. While Finland has chosen not to follow the new regulations, the Swedish government is ducking the issue.

The International Maritime Organisation, IMO, has decided on far-reaching measures to reduce sulphur content in ship fuel used in northern Europe but without analyzing the consequences. For southern Europe, the demands are lighter, which means that competitiveness will be skewed.

Finland has taken a pragmatic course, informing the IMO that the new rules will not be applied there. But Sweden is not taking that route.

Minister of Communications Åsa Torstensson told the Riksdag in December that it was extremely unfortunate that demands on northern European shipping will differ from those applied in southern Europe and called for a “uniform European approach” to the issue.

But she has so far not answered a written query about what course the Swedish government will take.

Interestingly, the government participated in the IMO talks that preceded the decision to impose restrictions on fuel use, but without analyzing the full consequences. That came later, courtesy of Sweden’s Maritime Administration (Sjöfartsverket), and the results show that the proposed limits for sulphur content in ship’s fuel will dramatically increase shipping transport costs for Sweden’s base industries — by an estimated 30-45 percent.

Swedish Enterprise has found that calculated on value added, this represents an increase of 4-9 percent in industry’s costs. This will bring higher product prices and weaker competitive power for businesses active on the global market and subject to global competition.

Swedish Enterprise applauds the IMO for tackling the sulphur issue. But the figure of 0.1% implies unreasonable consequences for Swedish industry. Besides, higher costs for shipping will contribute to increased road transports, nullifying the environmental gains.

It is extremely unfortunate that the Swedish government has chosen not to follow Finland’s lead (as even Estonia has). Swedish Enterprise would like answers to the following questions:

• What does the government intend to do to protect Sweden’s base industries?
• Will the government conduct a legal study to find out if it is possible to postpone the implementation of the rule allowing a maximum of 0.1 sulphur in marine fuel until 2015?
• Does the government believe that the IMO regulation applies whatever the EU decides when it reviews its Low Sulphur Directive? Does the global IMO agreement trump all others?

Inger Strömdahl