The shale revolution has been a boon for Utah, creating good jobs, funding local schools and reducing America’s dependence on foreign energy. If policymakers in Washington stay the course, the International Maritime Organization’s 2020 sulfur standards will enhance Utah’s already thriving energy sector.
Over a decade ago, the United States approved the IMO 2020 standards, which reduce the amount of sulfur in nautical fuel from 3.5 percent to 0.5 percent. These standards — set to take effect on Jan. 1, 2020 — are a win-win for our country. IMO 2020 will reduce harmful sulfur pollution while promoting American energy dominance.
Last month, Energy and Environmental Research Associations released a study analyzing the economic benefits of IMO 2020. “U.S. industry is prepared to provide advanced fuels and technologies to achieve IMO 2020 standards, at a competitive advantage,” wrote Drs. James J. Corbett of the University of Delaware and Edward W. Carr.
American manufacturing workers are already benefitting from IMO 2020. A Delaware City refinery was on the verge of closing just years ago. Today, the refinery is running near full capacity and employs nearly 600 well-paid manufacturing workers, largely because PBF Energy invested more than $100 million to upgrade the facility to blend the low-sulfur fuel required by the IMO standards.
Scores of refineries across the country have made similar investments to meet the growing demand for low-sulfur fuel. But many foreign producers have not made similar investments, giving American producers a significant competitive advantage in the global market. According to a senior research analyst at IHS Markit, “Russia’s oil segment appears to end up among the biggest losers financially,” with “no chance for them to be 100 percent prepared.”
The Utah Petroleum Association represents companies from every segment of the petroleum industry. Utah ranks 10th in the nation in terms of oil production, 13th in gas production, and 11 of Utah’s 29 countries produce oil or natural gas. In 2018, SITLA revenue totaled nearly $75 million, 45 percent of that (or more than $33 million) came from the oil and gas industry, the single largest contributor.
Our association is a member of the Coalition for American Energy Security — a diverse coalition of manufacturing workers, integrated energy companies, refiners, industry associations, shipping companies, and other groups pushing for timely implementation of IMO 2020. We joined the coalition because we know that IMO 2020 will provide continued support for well-paying jobs and schools in Utah.
Lawmakers in Washington are beginning to grasp the massive opportunity that IMO 2020 presents to the American energy sector. Back in April, 14 senators sent a letter urging the Trump administration to stay the course and avoid delaying implementation of the standards: “Any attempt by the United States to reverse course on IMO 2020 could create market uncertainty, cause harm to the U.S. energy industry and potentially backfire on consumer.”
According to Columbia University’s Center on Global Energy Policy, “delay would harm those shippers and refiners that have been ahead of the curve preparing to comply, which disproportionately include American businesses.” Delaying the implementation of IMO 2020 would only hurt American energy workers and producers who have prepared for the last decade, while rewarding countries that haven’t made the necessary investments.
The United States already enforces sulfur standards that are five times more stringent than those required by IMO 2020, positioning us to be ready by Jan. 1. In fact, U.S. Coast Guard Admiral John Nadeau has stated that the U.S. is more than ready for IMO 2020.
President Trump has done much to promote American energy dominance by approving pipelines and reducing regulatory burdens. If his administration stays the course on IMO 2020, the American energy industry and energy-producing states like Utah will take advantage of this significant opportunity to dominate the global market for low sulfur fuel.