The Economic Impact of Environmental Regulations on a Maritime Fuel Production Company

Abstract

The International Maritime Organization (IMO) and the European Parliament (EP) in 2005 and 2012 established Sulphur Emission Control Areas (SECA) in Northern Europe where from 2015 ships must use fuel with a sulphur content not exceeding 0.1% and 3.5% in non-SECAs. is has spurred active discussion that the regulation has created economic disadvantages for maritime stakeholders who must comply with strict regulations that competitors in other parts of the world are not subjected to. The rough a case study, this work investigates the impact of environmental regulations on the business model of the maritime supply company Viru Keemia Grupp (VKG), which is of national importance to the Estonian economy, especially in the eastern region. It explores the strategic entrepreneurial compliance options for VKG based on their return on investments and associated risk. The findings show that VKG is currently struggling to keep aoat under the weight of the consequences of changes in maritime consumer demand due to sulphur emission regulations and that the most viable compliance options are expensive and risky.