The case of LNG as a marine fuel

12 May The case of LNG as a marine fuel

Despite that some voices have recently and in the past try to present a limited use of LNG in the future alternative fuel mix, noting that its benefits are not enough to support carbon reduction goals, the reality is much different.  LNG is becoming a much more attractive option and maybe the first step to the shipping decarbonization path, while BioLNG, synthetic LNG, carbon capture are all viable solutions with an already matured technology for reducing emissions.

Key advantages of LNG include:

  • LNG is commercially competitive; is cheaper than other marine fuels, so the investment case is compelling;
  • Immediate GHG reductions, meets IMO 2030 targets with EEDI and operational measures;
  • Long-term, ships using LNG may meet IMO 2050 targets through use of bioLNG and synthetic LNG as drop-in fuels;
  • It offers a lower risk decarbonization pathway than other options discussed.

The advantages of bioLNG and synthetic LNG according to SEA LNG analysis:

  • BioLNG is scalable;
  • Sustainable biomass feedstocks are globally available;
  • BioLNG is commercially available now through a number of suppliers;
  • Synthetic LNG availability depends on build-out of renewable electricity capacity;
  • BioLNG and synthetic LNG are likely to be commercially competitive: They do not require additional investment in bunkering infrastructure; they can use the existing one for LNG.

Three key factors building the competitiveness of LNG as a fuel, according to Panos Mitrou, Global Gas Segment Manager for Lloyd’s Register:

  • LNG bunker price savings (and what can be further saved by the increase and the uptake of the bunkering supply chain)
  • Interim carbon savings/benefit (and what will derive from EEDI and CII compliance of LNG)
  • LNG longevity prospects (bioLNG, carbon capture solutions, synthetic LNG etc.)

A recent ABS survey indicated the industry has solid confidence in LNG’s potential, with almost nine out of ten respondents agreeing that it has a key role to play in reaching IMO 2050.  Among six proposed marine fuel types, LNG landed the clear majority of the votes as having the most potential for meeting IMO 2050 decarbonisation goals.

In a DNV webinar the figures presented LNG bunker consumption to quadruple by 2024.  In the first four months of this year, the figure has shifted up to 18% of all newbuildings contracted. DNV expects LNG-fuelled vessels numbers to more than double in the next two to three years.

Christos Chryssakis, DNV business development manager says more LNG bunkerings are occurring on a spot basis, reflecting the greater certainty of the availability of LNG bunkers.  LNG fuelled vessels are now operating worldwide on most of the main shipping routes, creating a need for bunkering infrastructure.  The rise in uptake of LNG as a marine fuel is due to a combination of its environmental benefits, which can amount to a 23% reduction in greenhouse gas emissions for large two-stroke engines, but also what he said is a “significant cost advantage” for larger vessels.  LNG makes “an attractive business case” for large vessels with high fuel consumption which, depending on the ship type, can achieve payback on the additional $10m to $15m of capital expenditure on building an LNG-fuelled vessel in five to seven years. An LNG-fuelled vessel delivering in 2023 might be able to sail until almost 2040 without needing modifications