Todd Staples: Mandate for cleaner shipping fuel benefits Texas

The shale revolution has been an economic boon for Texas, creating middle-class jobs across the state, providing consumers with affordable, reliable energy, and reducing America’s dependence on foreign oil. Texas is perfectly positioned to continue to benefit from America’s renewed energy dominance for many reasons, one being if the International Maritime Organization’s 2020 standards — commonly called “IMO 2020” – are allowed to go into effect.

More than a decade ago, the IMO established new standards to reduce the sulfur content in shipping fuel from 3.5 percent to 0.5 percent by weight. These standards will go into effect in January, bringing the world in line with maritime pollution standards that America set years ago.

This will not only reduce harmful shipping emissions but also will reinforce America’s growing energy dominance — a major goal of the Trump administration. President Donald Trump has showed his support for the oil and natural gas industry in America by approving pipelines and unleashing America’s energy across the globe. The president can continue America’s energy dominance by supporting full, timely implementation of IMO 2020.

The Texas Oil & Gas Association represents every facet of the oil and gas industry in the state, including both small independents and major producers. Collectively, our membership produces 90 percent of Texas’ crude oil and natural gas, operates over 80 percent of the state’s refining capacity and supports more than 300,000 Texas-based jobs. We joined the Coalition for American Energy Security — a group of refiners, union workers, shippers, manufacturers, oil and natural gas producers, and LNG exporters — because we know that the IMO 2020 standards are a win-win for Texas.

Both public and private research has found that industry is ready for IMO 2020 and that the new standards will benefit America. Last month, Energy and Environmental Research Associates released a white paper, co-authored by James Corbett and Edward Carr, that concluded that “the global shift to cleaner fuels serves U.S. interests, both economic and environmental.” Moreover, the Permian Basin and Eagle Ford Shale in Texas have an abundance of light, sweet crude oil — exactly the type that can be used to make IMO 2020-compliant fuel. The Permian and Eagle Ford provided over 5.5 million barrels of oil a day in May, enough oil to be the third-largest oil producer in the world outside of the United States.

IMO 2020 standards place the U.S. refining sector at a distinct advantage over many of foreign competitors that have not invested in the infrastructure to produce compliant fuel. According to IHS Markit, “Russia’s oil segment appears to end up among the biggest losers financially,” but European refiners have also struggled to keep pace. The U.S. refining industry has invested more than $100 billion over the past decade to provide cleaner fuels, including ultra-low sulfur diesel and IMO 2020-compliant marine fuels, and many of these facilities are based in Texas.

We have experience with these next-generation fuels, because since 2015, American ports have required all oceangoing vessels to burn cleaner fuel as part of standards that are five times more stringent than IMO 2020. Much of that fuel is sourced from U.S. refineries, which employ hundreds of thousands of workers across the country in high-paying jobs.

To reap these benefits, we must keep the implementation schedule on track. According to the Center on Global Energy Policy at Columbia University, “delay would harm those shippers and refiners that have been ahead of the curve preparing to comply, which disproportionately include American businesses.”

Lawmakers in Washington know that IMO 2020 provides a massive geopolitical and economic advantage for the United States. In April, a group of U.S. senators sent a letter to the White House in support of IMO 2020’s timely implementation, writing “the U.S. is well-positioned to benefit from these new standards, because we are already the world’s leading producer of low-sulfur fuels.”

I couldn’t agree more. These standards are poised to strengthen the local economies of so many communities throughout Texas and across the United States. Implementing IMO 2020 on time is a win-win for our workers, our environment and our energy security.

Todd Staples is the president of the Texas Oil & Gas Association.


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