industry's perspective on the compliance … · pulp and paper industries' views and...
TRANSCRIPT
Bernard Lombard, Trade & Competitiveness DirectorBrussels – Wednesday, 1 June 2011
INDUSTRY'S PERSPECTIVE ON THE COMPLIANCE WITH THE LOW SULPHUR REQUIREMENTS
Pulp and paper industries' views and assessment
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About CEPI and the European Paper industryAbout CEPI and the European Paper industry
• 89 Mt of Paper & Board and 12 Mt of MarketPulp produced in 2009 - 95% of the Europeanproduction, 25% of the World production
• 700 companies, 1,000 mills
• Eur 72 Bn turnover, Eur 15 Bn added value
• 230,000 jobs, 60% of direct & indirect jobs in rural areas, 1.8 million indirect jobs (excl. distribution)
• CEPI: the Confederation of European Paper Industries
• 19 national associations as members
• CEPI goals: improve industry’s competitiveness in EU Policy making, contribute to a good business climate, address image and reputation challenges
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Paper industry and transportPaper industry and transport
• What do we expect from transport?
- flexibility and co-modality- speed and reliability- cost-efficiency AND sustainability
• Why transport is important for paper industry?
- paper has to be handled with care- total logistics costs average 10% of turnover- a wide spread of plants throughout Europe- large amounts of raw materials used- a global player on commodities markets- … and customers with high expectations!!
• CEPI is a member of the European Shippers’ Council
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Paper industry and transportPaper industry and transport
• Paper industry’s objective: be theleading example of how competitivenessand sustainability can go hand in hand
• 2007: Carbon footprint guidelines
• 2009: Transport carbon footprintguidelines
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Marine fuel and sulphur contentMarine fuel and sulphur contentThe IMO decisionThe IMO decision
0,0
1,0
2,0
3,0
4,0
5,0
2008
2010
2012
2014
2016
2018
2020
2022
2024
2026
International (and the rest of EU)If feasibleEnglish channel, North Sea & Baltic Sea
1.0% today
0.1% from2015
4.5% today
3.5% from 2012
0.5% from 2020 or 2025
USA & Canada will become ECAs in 2012
In EU, 0.1% Sulphur for ships at berth effective on 1 January 2010
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The Sulphur Emission Control Area (SECA)Countries with water only in SECACountries with part of the coast in SECACountries without coast in SECAHas recently ratified the Marpol convention
Geographical Area of the IMO Sulphur Regulation for the SECA
Marine fuel and sulphur contentMarine fuel and sulphur contentThe IMO decisionThe IMO decision
13 countries fully or partly covered: about 1/3 of the European paper deliveries affected
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IMO decision impactIMO decision impactMany impact assessment studiesMany impact assessment studies• ”Consequences of the IMO’s new marine fuel sulphur regulations”, VTT for
Swedish Maritime Administration, May 2009• ”Sulphur content in ships bunker fuel in 2015 - a study on the impacts of the new
IMO regulations on transportation costs”, the Centre of Maritime Studies for the Ministry of Transport and Communications, April 2009
• Cost Benefit Analysis to Support the Impact Assessment accompanying the revision of Directive 1999/32/EC on the Sulphur Content of certain Liquid Fuels, TNO & IVL for EU Commission, Dec. 2009
• Analysis of the Consequences of Low Sulphur Fuel Requirements, Transport & Mobility Leuven for ECSA, January 2010
• Institut für Seeverkehrswirtschaft and Logistik Institute of Shipping Economics and Logistics, Bremen, September 2010
• “Impacts on the EU Refining industry & Markets of IMO specification changes & Other measures to reduce the sulphur content of certain fuels”, Purvin & Gertz inc. for EU Commission
• “Report on Impact Study of the future requirements of Annex VI of the MARPOL Convention on Short Sea Shipping”, NECL for EU Commission
• … and many others!
Mainly about availability of lowsulphur fuel, modal shift and
environmental & economic impact
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IMO decision impactIMO decision impactAvailability and cost of low sulphur fuelAvailability and cost of low sulphur fuel
• There are real concerns about 0.1% sulphur fuel availability by 2012 but also about global 0.5% sulphur fuel by 2020/2025 for the oil industry
• If the shipping industry opts for low sulphur fuel, the oil industry would not be in position to meet the demand, because of the lack of production capacities
Low sulphur fuel
Regular bunker oil
Even though price varies over time the price difference between low sulphur fuel and bunker oil is almost always around 250-300 USD/tonne
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IMO decision impactIMO decision impactSweden: a Paper Company caseSweden: a Paper Company case
Supply chain: from Sundsvallto central Europe
• Substitution of departure port: Trondheim to Sundsvall
• New arrival port instead of Hamburg
• 140 EMS lorries (60 ton) each day (51 000 lorries/year)
• 3 million tonnes a year
• Increased CO2 emissions
• High sulphur fuel from Trondheim and onwards
Hamburg
TrondheimSundsvall
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IMO decision impactIMO decision impactSweden: Modal shift from Sea to RoadSweden: Modal shift from Sea to Road
Sea transports Road transports
Reduced transports
Increase transports
Modal back-shift of Swedish products: the effect will be much larger when all countries are included in the calculations.
Source: Swedish Maritime Administration
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Finnish forest industry’s maritime transport volumes:- around 15 million tonnes/year, over 40 000 tonnes/day
If shifted from vessels to land transports when exporting to Europe (=articulated vehicles to Sweden, further transportation to Europe by rail):- 1200 articulated vehicles per day- 20 big freight vessels per day from ports in south-west Finland to Sweden- 50 additional freight trains per day on the Swedish rail network
Transporting similar volumes by road and rail via Baltic countries would increase the number of vehicles and trains by an additional 50%, due to the infrastructure capacity constraints and weight limitations
% of forest industry of Finnish exports by maritime transport
Source: Finnish National Transport Agency
IMO decision impactIMO decision impactFinland: Modal shift from Sea to RoadFinland: Modal shift from Sea to Road
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IMO decision impactIMO decision impactInternational competition and sulphur LeakageInternational competition and sulphur Leakage
Compare freight transport of pulp: Santos - Rotterdam and Sundsvall - Rotterdam:
• Santos (Sao Paolo) - Rotterdam- Sulphur limit of 3.5 % (from 2012)- Last day max 0.1 % sulphur (in SECA)
- 1.500g of sulphur per tonne of pulp
• Sundsvall - Rotterdam- Sulphur limit of 0.1 % (all in SECA)
- 11g of sulphur per tonne of pulp
• No emission cuts, rather sulphur leakage!• Cheaper to go by boat 15-20 days
compared to 2-3 days from Sweden/Finland to EU market?!
Sundsvall
Rotterdam
Santos
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IMO decision impactIMO decision impactSummarySummary
• Modal back-shift from sea to road will increase CO2 emissions and congestion (against EU White Paper on Transport*)
• Minor environmental benefit of 0.1 % fuel compared to 0.5 % fuel* A shift of 30% of road freight to other modes, such as rail or inland waterway transport, by 2030 for distances over 300 kilometres
• Substantial cost increase: marine fuel + 50-80 % / sea transport cost + 30-45 % / up to +10 €/tonne of paper
• Disturbing logistics flow / supply chain in EU to ports not included in SECA (Trondheim? Marseille?), distorting internal market
• Serious effect on companies’ competitiveness, competition distortion, negative impact on future investments
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• CEPI welcomed the global IMO decision to go for lower sulphur limits -part of our commitment to sustainability
• Let’s first ensure realistic technological options are available before implementing strict and costly changes to fuel requirements
• A boost should be given to low sulphur supply production and technologies leading to reduction of sulphur emissions
• Member States and EU Commission should support environmental technology investments for retrofitting / new building
• Reaching the requirements solely with new technologies is highlycomplex and costly and requires time
• Uncertainty in legislation and technical requirements will prevent companies from investing before 2015
• Compensatory measures raises serious questions (feasibility, cost-effectiveness, compliance with EU competition rules) - with the risk shippers supporting ultimately the whole cost increase!!
IMO decision impactIMO decision impactCEPI’sCEPI’s viewsviews
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• The Commission should reconsider carefully the various impact assessments and better involved the various stakeholders…
• … to identify the most cost-efficient ways to improve the environmental performance of shipping while maintaining its competitiveness
• Implementation of the 0,1% sulphur content between 2020 and 2025 is a must, if a change to 0.5 % by 2015 is not achievable
• It would give industry time to develop and exploit technologies that lead to more cost-efficient sulphur emissions cuts and a better environmental outcome for the whole transport chain
• The revision of the Sulphur directive should be carried out in a waythat allows future amendments to the 2008 IMO decision
IMO decision impactIMO decision impactCEPI’sCEPI’s views views -- ConclusionsConclusions
