15.11.2021 11:13:33 //
Juha Peltonen
Eemeli Sarka

Shipping emission reductions are a global decision

Finland is not preparing its own separate legislation for reducing shipping emissions. Its policy is that large-scale measures must be decided on internationally.

The City of Helsinki recently brought its own target for carbon neutrality forward to 2030.

The Government’s goal is for Finland to be carbon neutral by 2035 – and even that is 15 years earlier than the European Union’s target for carbon neutrality.

“This is the framework we’re starting from and within which the transport sector must do its part,” says Minna Kivimäki.

Kivimäki was appointed Permanent Secretary of the Ministry of Transport and Communications at the beginning of June after spending five years in Brussels as part of the Permanent Representation of Finland to the EU. She has previously held several other positions at the Ministry, including Director General of the Transport Policy Department.

Finland’s national target for transport is to halve emissions by 2030 (compared to 2005 levels). In the spring, the Ministry approved a fossil-free transport roadmap that the working group had completed in October 2020. In practice, Finland’s national target does not cover maritime transport, as last May the Government made a separate decision in principle on how to reduce greenhouse gas emissions from maritime and inland waterway transport.

According to the Permanent Secretary, this was done deliberately.

“We see shipping as an international and global mode of transport, which is why large-scale measures must be decided on in international arenas."

Implementing Finnish policy therefore means influencing global measures to reduce emissions, and also at an EU level.” It’s also a question of competitiveness.

“Global and EU regulations are important for Finland, as relative competitiveness arises through everyone working together towards ambitious targets,” says the Permanent Secretary.

New fuels are the next step

The Minister of Transport and Communications, Timo Harakka (SDP), has said that transport emission reduction measures should be assessed on the basis of the three As: They should be advantageous, achievable and actioned at once. The Permanent Secretary says that, with regard to shipping,  this principle means transitioning from
fossil fuels to new propulsion methods.

“The energy efficiency of vessels has been improved quite a lot. We could probably further enhance their performance, but as we need to reduce emissions fairly quickly, new fuels and propulsion methods are the next step,” says Kivimäki.

When compared to the relatively long lives of shipping fleets, 2030 is not that far in the future. The Permanent Secretary estimates that energy and propulsion issues will soon be reflected in the daily lives of industry operators.

“It’s a question of transitioning from fossil fuels to other forms of propulsion – that will be the big issue.”

For example, Wärtsilä is already manufacturing marine engines that run or can be converted to run on mixtures of hydrogen or ammonia. The company has announced that it will be launching a completely ammonia-powered engine in 2023, and a fully hydrogen-powered engine in 2025. As ammonia and hydrogen do not contain carbon, their combustion does not produce carbon dioxide. For shipping companies, the main question surrounding new fuels is their availability and price.

Digitalisation also helps to reduce emissions

The Ministry sees opportunities for Finnish companies to export technology to global markets.

“Once we’ve set the targets and created a regulatory framework, companies should begin coming up with solutions. I believe that will happen on a commercial basis. There will be great global demand for pioneers in the future,” says Kivimäki.

She also sees the rapidly advancing digitalisation of the sector as a way of influencing climate issues.

“I’ve noticed that ports have been very keen to boost the efficiency of their operations through digitalisation and data utilisation. This helps to organise services for ships in a timely manner. These two revolutions are working in tandem, and digitalisation will help us to achieve our emission reduction targets.”

Many port projects also have an impact far inland via the logistics chain. Kivimäki says that Finland has plenty of expertise for generating solutions that can be exported to the rest of the world.

EU speaks with one voice in the IMO

The International Maritime Organization (IMO) is responsible for global regulation in the sector. Although the organisation only holds a ministerial conference every other year, its work is always ongoing. In practice, one of its five committees or their numerous subcommittees will meet at the IMO’s headquarters in London every week. These committees also include Finnish representatives, either from the Ministry or the Finnish Transport and Communications Agency. When amendments that will be binding to member states are on the table, this representative will be from the Ministry. Although the IMO has its own secretariat, most of the preparatory work is carried out by teams of experts from member countries.

“There have been a lot of remote meetings during the coronavirus pandemic, and it can be quite convenient not to have to travel for a half-day meeting. However, when you really have to negotiate on important issues, it’s much easier to do that in person. The pandemic reduced that kind of interaction. A combination of remote and in-person meetings will probably work well in the future,” says Kivimäki.

She says that the European Union speaks with one voice in the IMO, even though it is the EU countries who are individual members of the organisation rather than the Union as a whole.

“The opinions we take to the IMO are coordinated in Brussels. We discuss and reconcile them on a weekly basis. We’ve seen that we have more impact when we work as a team.”

Winter shipping is easier to demonstrate than explain

In its July proposal on climate action, the EU Commission proposed that shipping be included in the emissions trading scheme. Finland’s decisions in principle are part of this package. Emissions trading is a key driver in the transition to new fuels, and the Commission has drawn up a separate legislative proposal for it. This proposal covers the entire energy sector and will impact more than just maritime transport. In Finland, matters related to the Renewable Energy Directive and energy taxation are prepared by the Ministry of Economic Affairs and Employment and the Ministry of Finance.

It is the task of the Ministry of Transport and Communications to increase other EU countries’ understanding of one special feature of Finnish shipping – winter shipping.

“Logistics to Finland must function all year round. Ice-class vessels play a major role in this, and their energy consumption is higher than that of ordinary vessels. We’re working with the Commission to find ways of taking this into account, so that the costs will not become unreasonable for us,” says Kivimäki.

Winter shipping can still remain quite a mystery.

The Commission didn’t want to take special national conditions into account in its original proposal, but said they would be the subject of further negotiations. That phase has only just begun. However, the Commission has acknowledged that the special nature of shipping in Finland is an objective problem that must be taken into consideration. Finland has some natural partners in this issue.

“We’ve engaged in a lot of cooperation with Estonia on this issue, as well
as other Baltic Sea countries. It is, however, Finland that faces the most challenging conditions,” says Kivimäki.

She knows that it is usually easier to demonstrate special national conditions on location.

“When explained in the conference room, winter shipping can still remain quite a mystery. But everything becomes clear when you see it in action. Now, we’ll most likely be able to start inviting people here again to see it for themselves.”

It is usually easier for countries with their own specific issues to understand the specific issues of other countries. For example, in countries like Greece and Malta the relative importance of shipping is far higher than in many other EU countries.

“In the EU, it’s generally accepted that there will be no unreasonable results. However, it must be made clear that by 2030 all emissions should be reduced by 55 per cent at EU level,” says Kivimäki.

Major powers quickly stepping in line

Kivimäki estimates that the EU will reach a mutual understanding on how to go about reducing shipping emissions in about two years.

“The chosen solutions must be genuinely achievable by trade and commerce. There is a lot of pressure to act quickly. The EU has maintained its climate leadership in recent years, and kicked other countries into action, but major powers have now woken up to the issue as well.”

“The current US administration has very clearly taken the same path. They’re aiming to be climate neutral by 2050, just like the EU, while China’s target is 2060.”

Kivimäki says that the EU is still in the lead, as its ambitious targets have already been legislated, and concrete means of achieving them are also on the table. The US has only just set its political objectives.

“It remains to be seen what kind of message they will bring to the UN Climate Change Conference in Glasgow this autumn. The EU is maybe a few steps ahead, but the rest are closing fast.”