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International Shipping
US seeks to slow down IMO 2020 sulphur rule, annoying refiners
Date:2018-10-26 Readers:

THE Trump administration is seeking to slow the implementation of the International Maritime Organisation's January 2020 rule that ships switch to maritime fuel with a sulphur content no higher than 0.5 per cent.

The stricter sulphur cap rules are expected to push up the cost of moving everything from soybeans to Apple iPhones, with some of that cost potentially being passed on to consumers. 

The move risks alienating an industry that supported US President Donald Trump, and which stands to gain from the increase in demand for cleaner-burning diesel fuel. US refineries are more sophisticated than many competitors in other parts of the world, and American companies have invested billions in upgrading their facilities to produce fuel that meets the new rules, reported Bloomberg. 

"The US refining industry has been preparing for IMO 2020 for over a decade and has made substantial investments to ensure that we can timely supply US and global marine customers with compliant fuel," American Fuel and Petrochemical Manufacturers president Chet Thompson wrote in an email. 

"Altering the implementation schedule this late in the game - to the extent that this is even legally possible - is a bad idea and could undermine US investments."

Analysts have said IMO 2020 rules would raise demand for diesel fuel, sending prices higher. Bank of America Merrill Lynch analysts said in early October that demand for diesel may increase by as much as 1.4 million barrels a day. Shipping industry trade groups have pressed for a phased-in start to the new rules.

The International Maritime Organisation's Marine Environment Protection Committee is scheduled to hold meetings in London. The panel is expected to adopt a ban for ships to carry high-sulphur fuel, a move that may make the IMO's wider sulphur curbs more effective.

The US will attend the meeting to work on the "experience-building phase" proposed by a number of countries and industry groups and led by the Marshall Islands, according to Lisa Novak, a spokeswoman for the US Coast Guard. Such a move would "best facilitate the implementation of the 2020 sulphur cap," she said.

It's unclear how much the Trump administration would be able to slow or change the implementation of the rules, given their global adoption.

"The European Union is pushing to get greenhouse gas rules for bunker fuels," Kevin Book, managing director of Washington-based consultancy ClearView Energy Partners. "That means they are unlikely to support a policy of loosening sulphur standards, backtracking on a conventional pollutant as they are moving to pare down greenhouse gases."

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