The International Maritime Organization rejected a proposal —
supported by both the U.S. and shipping groups — for a phased start to rules
that will limit the sulfur content of ship fuels starting in 2020.
The agency’s Marine Environment Protection Committee, meeting in
London, rebuffed the proposal for a so-called experience-building phase for the
rule change, noting that it was vague and needed further defining. Instead, the
panel invited separate proposals to enhance existing regulations.
It wasn’t initially clear whether the experience-building
proposal was killed for good or indefinitely delayed. IMO officials weren’t
immediately available for comment.
The IMO is
meeting this week to iron out the details of rules that take place in just 14
months and will have major implications across the transportation, shipping,
aviation and refining industries.
1, 2020, the world’s ships will have to burn fuel containing no more than 0.5
percent sulfur, down from 3.5 percent in most parts of the world today. Vessels
fitted with scrubbers to remove the pollutant can continue using existing
Fuel is the
shipping industry’s single-biggest expense.
trade groups, facing billions of dollars in increased costs, have warned that
the new rules could result in damage to vessels’ engines if fuels prove
incompatible among different suppliers. Oil analysts have predicted the upgrade
will add to the price of crude, and there have been warnings that world trade
could be undermined.
airlines are hedging prices forward to cover themselves.
shipping trade groups and four flag states — usually tiny countries where
thousands of the world’s merchant ships are registered — made a submission to
the IMO in late August requesting an experience-building phase. A U.S. official
said earlier this week that the Trump administration supports such a proposal,
following a Wall Street Journal report saying the U.S. was seeking to slow-walk
the rules due to the potential cost for consumers
While some analysts said the experience-building phase amounts
to a request for a delay to the IMO 2020 rules, that would be an incorrect
characterization, according to BIMCO, one of the shipping groups behind the
proposal. Instead the goal was to get clear guidance — and a pragmatic approach
— for when vessels either inadvertently fail to comply, or are unable to
purchase the correct fuels, Lars Robert Pedersen, BIMCO’s deputy secretary
general in charge of environmental matters, said in September.
The submission to the IMO didn’t say how long the
experience-building phase might last. It was made by BIMCO, Intertanko and
Intercargo, as well as the Bahamas, Liberia, Marshall Islands and Panama.
Officials from BIMCO, Panama and the Marshall Islands declined
to comment following the IMO’s decision.