Sulfur directive and IPR

To be populistic: we pay now, but our industry has a payback time in 2020 and gets the money back from Greek merchant shipping.

[Local subjects for a change. Heavier IPR material moved to // Paikallisia asioita vaihteeksi. Raskaampi IPR-materiaali siirretty ylläolevaan linkkiin.] 

[Finnish version: here. All the links in the article point to Finnish-language sources, but similar material can be found easily.] 

The sulfur directive has been  accepted in the EU parliament. By 2015, ships in the Baltic sea need to drop their sulfur emissions from the current 1% to 0.1%.
Finland is strongly polarized on this. Environmentalists (of whom I am one) against industry. The environmentalists “won” this round, but this is not the place for anyone to gloat, at least not arrogantly. On the contrary, both sides have valid concerns. The directive is positive for environmental and health reasons; it is negative for the Finnish economy and employment statistics.

How positive or negative? One should be skeptical of everyone and everything since it is such a complicated issue, but approximately:

  • The directive saves lives. Whether or not one believes the exact figures of the environmentalists (50,000 extra deaths a year), it is clear that sulfur and particle emissions do have large-scale health effects.
  • Finland will suffer economically. Whether or not one believes the exact figures given by industry, (600 millions EUR per year or 12,000 jobs), common sense and a look at the map says that Finland will suffer more than most countries. We are effectively an island.
  • This is not just an EU decision. The International Maritime Organization IMO has itself approved the limits already in 2008. The EU directive adds very little. If this directive really came as a surprise, someone has been sleeping soundly.
  • In 2015, the limit only affects the so-called SECA-areas, meaning the Baltic Sea, North Sea, English channel and the coasts of Canada and the USA. In the rest of the world, the limit will not be applied until 2020 at the earliest, possibly as late as 2025. It is easy to find this unfair: the directive hurts those countries the most which have already done a fairly good job reducing emissions in general.

The Finnish government has proposed to give 30 million EUR in subsidies to quickly attach scrubbers to ships, but this most likely cannot happen due to the anti-subsidy laws  of the EU.

If Finland had been prepared for the directive, there could have been a win-win scenario. That 30 million, rather than being used (or not used) for subsidies, could have been used to kick-start a major R&D program to create ultra-cheap ultra-flexible plug-and-play scrubbers that could fit into even the shabbiest ships of the world.

There are fewer limits on R&D subsidies, and the 30 million really would not be a major dent in the national budget.

In fact, the 5-10 years’ extension for the rest of the world is precisely what could have given us an opportunity. In 2020 (or 2025), everyone will be just as “surprised” as Finland is now, for example the Mediterranean countries. In the current economic situation, the Mediterranean countries really cannot afford large public R&D investments, even if they are awake.

The possibility would arise from using the IPR system correctly. To those who don’t know much about IPR, and to those who do but are skeptics (myself included), the word “patent” sounds like a boogieman. But this is exactly the kind of situation which the IPR system is meant for: to enable large investments now, in the hopes of recouping those investments much later via licensing. Patents are valid for 20 years. In these R&D programs, it would make sense to patent everything that moves.

To be populistic: we pay now, but our industry has a payback time in 2020 and gets the money back from Greek merchant shipping.

Ugly and heartless? Yes. IPR is ugly.

Unethical? No. This is what the IPR system is meant for, whether one likes it or not. This is not unfair against small inventors (a common complaint), because no one can build large-scale scrubbers in his garage. This is large machinery, requiring large companies.

The proposal may sound vaguely nauseating to everyone. But this is what I would do. It may be too late for the sulfur directive, which is regrettable. But when the next environmental “surprise” arrives, it would make sense to be prepared.