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Trump Administration Seeks to Influence IMO Sulfur Rule Rollout

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By MarEx 2018-10-19 13:32:21

The Trump administration is expected to call for a gradual rollout for the IMO sulfur rule rather than the single-step implementation planned for Jaunary 1, 2020. The rule is expected to result in an increase in the cost of middle distillates, which would be an unwelcome development for any president in an election year. 

“Few things terrify an American president more than a spike in fuel prices,” said Bob McNally, former energy adviser to former President George W. Bush, speaking to the Wall Street Journal about the development. 

The Journal reports that the White House intends to "mitigate the impact of precipitous fuel-cost increases on consumers" by advocating for a phase-in period for the sulfur rule. This would not necessarily entail withdrawing the United States from the relevant treaty. 

IMO officials are reportedly "baffled" by the administration's position. IMO Secretary General Kitack Lim has insisted that the sulfur fuel rollout must go forward as planned, despite opposition from some shipowners over the price, availability, compatibility and quality of compliant fuels.

Some players still have reservations: Operators in tramp trades are especially concerned that the potential incompatibility of different fuels from different suppliers could interfere with their trading patterns, which do not always allow them to bunker in the same place twice. “Ships involved in bulk/tramp shipping will . . . have to bunker untested and diverse fuel blends from different sources around the world, which are especially problematic," warned the Union of Greek Shipowners on Thursday. 

To address this concern, the UGS, BIMCO, Intercargo and Intertanko support an "Experience-Building Phase" proposal, which would reduce penalties for non-compliance during a transition period. This proposed amendment will be discussed at the next MEPC meeting, which begins Monday.