UPDATE 2-U.N. agency tightens use of high sulfur fuel on ships from 2020

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LONDON, Oct 26 (Reuters) - The U.N.'s shipping agency on Friday adopted a ban on ships carrying high sulfur marine fuel unless they have special equipment on board, further tightening regulations that will come into force in 2020.

The International Maritime Organization (IMO) will prohibit ships from using fuels with a sulfur content above 0.5 percent from Jan. 1 2020, compared with 3.5 percent today, unless they are equipped with so-called scrubbers to clean up sulfur emissions.

Ships found in breach of the new rules will face fines or the risk of impoundment by IMO member states.

The ban on the carriage of high sulfur fuels, used or carried for use by ships, will come into force on March 1, 2020 and aims to ensure greater enforcement of the regulations.

"The amendment does not change in any way the entry into force date of the 0.50 percent limit from Jan 1, 2020. It is intended as an additional measure to support consistent implementation and compliance and provide a means for effective enforcement by states, particularly port state control," the IMO said.

The shipping and oil-refining industries are scrambling to prepare for the shift and have made large investments to comply with the new standards since they were set in 2016.

Oil companies expect a jump in demand for cleaner distillates, mainly diesel, at the expense of fuel oil that would become largely redundant.

FULL IMPLEMENTATION

The IMO has reiterated that there will be no delay in implementing the rules.

Roger Strevens, chair of the Trident Alliance -- a coalition of shipping companies that has pushed for enforcement of the sulfur rules -- said Friday's adoption was "an unmistakable signal" of the IMO's commitment to "full and effective implementation."

"The focus now shifts to preparation, both on the part of the industry and of the enforcement authorities," Strevens said.

Last week, Washington said it backed a phase-in of the 2020 rules to protect consumers from any price spikes in heating and trucking fuels, although it did not seek a delay.

Some shipping associations together with the Bahamas, Liberia, Panama and the Marshall Islands had proposed an "experience-building phase," which gained support from Washington, leading to widespread market speculation in recent days about a possible review of the regulatory time frame.

A discussion of their proposal in London this week at the IMO's Marine Environment Protection Committee, MEPC 73, did not advance after the chair of the session said it was too vague.

The paper's backers were told they could submit more concrete proposals at the next MEPC in May 2019. That would, however, leave little time realistically before the regulations kick in for any potential review.

A U.S. Coast Guard official said on Thursday that Washington sought a "pragmatic" approach and would seek to develop proposals with like-minded countries for the May 2019 meeting.

"Many saw MEPC 73 as the last chance to delay or soften implementation," Vienna-based consultancy JBC Energy said in a note on Friday. (Additional reporting by Roslan Khasawneh in Singapore Editing by David Evans and Helen Popper)