The Trump administration has come out in support of a proposal to include an ‘experience building phase’ as part of IMO’s 2020 sulphur cap implementation
White House officials have indicated that the US is backing a paper being presented to IMO’s Marine Environment Protection Committee (MEPC) by several IMO member states and NGOs aiming to “facilitate a pragmatic approach” to regulating IMO’s forthcoming global cap on sulphur levels in marine fuel.
In an email exchange with The Wall Street Journal, an unnamed White House official said “The United States supports an experience building phase, which has been proposed by several other countries, in IMO 2020 in order to mitigate the impact of precipitous fuel cost increases on consumers … and the global economy.”
In August, the Bahamas, Liberia, Marshall Islands, Panama, Bimco, Intercargo and Intertanko cosponsored and submitted a paper entitled MEPC 73/5/14 to MEPC ahead of its 73rd meeting taking place in London 22-26 October 2018.
The document contains a proposal to establish an experience-building phase (EBP) to examine global compliance measures and availability of compliant fuel following the implementation of the 0.5% limit on sulphur in commercial shipping on 1 January 2020.
Responding to what it called ‘misconceptions’ regarding the document, the coalition published a clarification in early October saying “The paper seeks to facilitate a pragmatic approach… specifically in those instances where a ship is not able to achieve compliance due to fuel non-availability and fuel quality problems. This is relevant regardless of the means by which a shipowner chooses to comply with the standard and does not suggest a wholesale relaxation of enforcement regimes in all scenarios.”
News of the White House’s apparent backing of the approach led to speculation that the Trump administration is particularly concerned about tightened fuel demand and the projected rise in fuel costs during an election year.
Projections on fuel prices following the introduction of the IMO sulphur cap in 2020 have gone as high as a US$600 differential in the cost per tonne of low-sulphur and high-sulphur fuel.
The Trump administration statements prompted a 1% drop in Europe’s future fuel market spread between high sulphur fuel oil and low-sulphur fuel oil price projections in 2020. Platts quoted a broker as reading the statements to mean the US hopes to implement the sulphur cap in a “more gradual fashion”.
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