Inclusion of maritime transportation in the European Union Emission Trading System - A study investing the effects on the Swedish forest industry

Abstract

Shipping has a leading role in our globalised world and accounts for 90 % of the global trade volume transported over the world. International Maritime Organization (IMO) forecasts that the demand for shipping will increase in the future, hence leading to a rise in emissions. By tackling the increased emissions from the maritime sector, the European Commission will in June 2021 present a suggestion regarding the review of the Emission Trading System Directive and an inclusion of the emissions from the maritime sector. The inclusion of maritime transport will lead to higher cost for transport buyers to use shipping as a mode of transport. The purpose of this report has been to investigate how Swedish forest companies may be impacted by the inclusion of maritime transports in the EU ETS. The forest industry is the large transport buyer in Sweden and is the fifth largest exporter, thus an important industry for Sweden. Still, we know little of how forest companies may be impacted by the inclusion of maritime transports in the EU ETS. In order to answer the research question of the thesis, seven interviews with representatives from the Swedish forest industry where conducted, as well as an interview with a representative from a shipping line and one representative from the whole forest industry. Two scenarios where calculated to concretise the potential impact for the forest companies in increased costs. The main conclusions and findings from this study is that the implications for a forest company are highly dependent on geographical location, infrastructure investments, product segment, markets and nearness to sea transportation, which in the following step affects how the company could be affected by the inclusion of maritime transport in EU ETS. The potential effects on the Swedish forest industry have been found to be potential losses in export due to the need to decline deals as a result of too low margins in a certain market. This relates to the decreased competitiveness the Swedish forest industry may face as competitors outside Europe, mainly in America, does not have the disadvantage of extra cost for transportation at sea. The possibilities for a modal shift for the companies is largely dependent on the investments in current infrastructure rather than the production itself but a modal shift to road haulage at certain markets due to competitive transportation cost to close markets in Europe where road haulage is a competitor. With the additional costs, the structural transformation of the industry may appear in a faster pace than seen at the moment.