Abstract
In 2012, the European Parliament (EP) established Sulphur Emission Control Areas (SECA) in Northern Europe comprising the North Sea, the Baltic Sea and the English Channel where from 2015 ships are obliged to use bunker fuel with a sulphur content not exceeding 0.1%. Estonia is a maritime fuel producer due to its oil shale reserves in the North-Eastern parts of the country (Ida-Virumaa County). A large part of oil shale is used for the production of maritime bunker oil. Unfortunately, the sulphur content of oil shale is higher than it is allowed by the SECA regulations. The Estonian oil shale industry represents up to 5% of the national economy and plays an important role in a weakly developed Ida-Virumaa County, which shares a common border with Russia and hosts the majority of Russian-speaking Estonians. Approximately half of this regional workforce is employed directly or indirectly in this industry giving the oil shale industry an important role in the county's economic well-being. In addition, periods of low oil prices are putting extra pressure on the oil sector, which endangers the traditional business model of the Estonian oil shale industry. The research investigates the impact of the environmental regulations in the shipping sector on the socio-economic situation in North-Eastern Estonia and discusses political consequences for the region. The paper highlights possible regional development strategies for Ida-Virumaa County and their impact on sustainability, social cohesion and security issues in the context of the integration of Russian speaking Estonians into the Estonian society. Methodically, the research is based on expert interviews, a survey, a case study, and a further exploration of potential political options to improve the social coherence in North-Eastern Estonia.
Highlights
Around 90% of the world's cargo is transported by ships and are related to a high magnitude of harmful emissions comprising CO2, SOx, ODS, VOC and NOx (Unctad, 2015; Jiang, L., Kronbak, J., & Christensen, L.P., 2014)
In order to meet the demand of the new regulations and to persist in a highly competitive market, going forward, Viru Keemia Grupp AS (VKG) must make tough and strategic business decisions linked to high investments and serious financial risks in the maritime fuel market
VKG initially started as a oil shale producer but have in over the years expanded and diversified its value chain to about 10 enterprises: oil, heat and power generation, heat distribution, electricity distribution, power system construction, oil shale mining, cinder blocks production, metal structures, pipelines and pressure equipment production, logistics, assemble and repair companies
Summary
Around 90% of the world's cargo is transported by ships and are related to a high magnitude of harmful emissions comprising CO2, SOx, ODS, VOC and NOx (Unctad, 2015; Jiang, L., Kronbak, J., & Christensen, L.P., 2014). Despite the fact that only about 0.3% of the world’s water surface represents SECA currently, the implementation of the regulations has spurred discussions on if or/and how they affect maritime stakeholders as well as the economy in the Baltic Sea Region (BSR). These discussions gained global interest because the Marine Environment Protection Committee (MEPC) of the IMO decided in October 2016 to reduce SOx content in bunker fuel worldwide to include both SECA and non-SECA to 0.5 % (5,000 ppm) from 2020 (IMO, 2016)
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