Finland Plans to Offset Costs to Industry From EU Sulfur Rules

Finland’s government will compensate the country’s industry for higher transportation costs caused by a European Union law cutting sulfur emissions, Economy Minister Jyri Haekaemies said.

“We’ll go through different available instruments to respond to the increased costs,” Haekaemies said in an interview in Helsinki today. “The forest industry is the most concerned and considers it a major cost increase. These messages will be taken seriously and we’ll see in March how far the government is prepared to go.”

The new rules requiring a reduction of sulfur used in marine fuel will cost Finnish industry about 600 million euros ($775 million) each year, the equivalent of about 12,000 jobs, the Federation of Finnish Technology Industries said Sept. 11.

Exports account for about 40 percent of the Nordic nation’s economy, including paper sold by Stora Enso Oyj and UPM-Kymmene Oyj, as well as steel delivered by Rautaruukki Oyj. More than 80 percent of Finnish foreign trade is transported on ships and affected by the new sulfur rule.

The forest industry said Sept. 11 its costs will increase by 200 million euros each year and UPM Chief Executive Officer Jussi Pesonen said the papermaker will shift about 300,000 tons of paper production to Central Europe to escape the higher cost, newspaper Maaseudun Tulevaisuus reported on Sept. 7.

The first part of the regulations will affect vessels in the Baltic Sea, the North Sea and the English Channel, limiting sulfur in fuel to 0.1 percent in 2015 compared with 1 percent now. The sulfur limit in other EU waters will drop to 0.5 percent in 2020 from as much as 3.5 percent now.

No amount is yet set for the compensation, Haekaemies said. The government negotiates its spending framework for four years until 2017 next March. The talks are “the target date by which we aim to specify the amount and who gets the compensation, so that it goes to those most affected.”

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