Discussion on studying Impacts of SECA regulation on emission abatement innovation in the Baltic Sea region

1. The impacts of the sulphur emission regulation on
emission abatement innovation in the Baltic Sea
region
FEK Higher Seminar
Södertörn University | March 7th , 2018
Johanna Yliskylä-Peuralahti

2. The structure of the presentation
- Introduction to maritime air emissions and sulphur emission
regulation
- The theoretical starting point
- Research questions
- Methods and data
- Preliminary results and conclusions

3. Maritime air emissions
• Ships are mobile power plants: fuel
consumption 1000 – 3000 kg/h, large
container vessels 6000 kg/hour
• Traditional maritime fuel (bunker, HFO) is
crude oil refinery waste
• High sulphur, nitrogen and ash content, PM,
CO & CO2 and black carbon emissions
• Maritime air emissions contribute to negative
environmental and health impacts
- Resulted a need to reduce the emissions
with regulation
• Shipping is lagging behind other industries in
emissions reduction

5. Sulphur emission regulation in shipping
MARPOL 73/78 Annex VI regulation 14
limits for sulphur content in maritime fuels:
- Emission control areas (ECAs): from 1 % to 0,1% since 2015
- Global regulation 2020: from 3,5 to 0,5%

6. Global maritime air emission hotspots
Source: Nature 2016
https://www.nature.com/news/pollution-three-steps-to-a-green-shipping-industry-1.19369

7. Ways to reduce vessel air emissions
• Adoption of ‘cleaner’ fuels and renewable energy sources:
- low-sulphur (fossil) fuels & LNG
- use of methanol and biofuels
- batteries and fuel cells
- solar & wind propulsion
• Energy efficient vessel design
• Installation of exhaust gas cleaning devices or “scrubbers”
• Monitoring of fuel consumption
• Optimising the capacity of the main engine
• Lowering speed: ’slow steaming’ or eco-speeding, weather routing
• Frequent cleaning of hull and propulsion systems
• Educating the crew

9. The theory
- The Porter hypothesis: environmental regulation induces
(environmental) innovation because it
- reduces uncertainty for investments
- signals about inefficiencies and better technologies
- creates pressure and motivates action
- levels the playing fields and helps overcome coordination
problems
- helps overcome managerial biases
- Innovation is connected to the competitiveness of
a firm, an industry, and a nation
- Companies must innovate to adapt to changes in their
environment

10. Our big research question
- What has been the impact of the SECA rules on business eco-
innovation in the Baltic Sea Region
= What type(s) of innovation, by which companies, where, when and why
- Product, process, organizational, business model
- From incremental to radical (including systemic)
- Also eco-innovation that is not about lowering sulfur emissions
- Innovation as something new to the company
- Theoretical contribution: How and why environmental regulation
produces a new set of market assortments and behaviour within
different sectors operating in different regions and places

11. Our research methods for studying innovation
- Database studies:
Community Innovation Survey (Eurostat): the amount of BSR companies in
different sectors that see environmental regulation as a highly important driver for
eco-innovation (new question, only one set of data from 2012-2014)
R&D Investments (Eurostat) of different BSR business sectors (2006-2015?)
New BSR companies related to sulfur emissions (2007?-2017)
Patents: applied products and process patents by the most important BSR
companies related to sulfur emissions (2007 – 2017)
+ Qualitative interviews with cleantech, maritime and related companies for
- explaining the statistical data
- finding innovative companies
- recognizing other innovation that sulfur-related

12. Preliminary results I
• The implementation of sulphur emission regulation has increased demand for
emission abatement technologies and motivated investments
• On a short term increase in incremental innovations:
- cleaner fuels that can be used on existing vessels
- emission abatement technology offered for ships already in use in other
industries on land, esp. energy production (e.g. exhaust gas cleaning systems)
• SECA has resulted in only few new companies in the BSR
• Most companies offering emission abatement technologies in the BSR are
established, and have simply expanded their product/service portfolio.
• Companies serve global markets; BSR SECA area too small market area?
• High investment costs & long life-time of the vessels hinder adoption of
(radically) new technologies in shipping

13. Preliminary results II
• Implementation of the sulphur emission regulation has made shipowners re-
think their operations, put emphasis fuel cost reduction – needs to be
confirmed by interviews
• Adoption of radical innovations, e.g. alternative energy sources, has been
slow and requires a ‘systemic’ change
- some signs on change already visible
- multiple technologies to replace fossil fuels – hybrid energy systems on
future ships?
• Patents indicate countries and companies with high R&D resources – not all
inventions end up marketable products
• Collection of empirical material still on-going – suggestions are welcome 

14. EnviSuM
Environmental Impact of Low Emission Shipping:
Measurements and Modelling Strategies
More information about the project:
https://blogit.utu.fi/envisum/envisum-project-2/
• Presentation video:
https://www.youtube.com/channel/UCvUmGhGY_8XKGHeDqQQPVYA

15. Thank you for listening
Questions and
comments?