Author: Joseph Murphy, Natural Gas World  |  24 March, 2023

The shipping industry has been undergoing radical change in recent years. Heavy fuel oil is finally giving way to cleaner alternatives, as shipowners rush to reduce their emissions in response to tightening regulations, and increased customer and investor pressure. And LNG remains by far the most popular of those alternatives.

Among the 275 newbuild ships able to run on alternative fuels that were ordered last year, 222 or 81%, are LNG-fuelled, according to Norwegian classification society DNV. This is not significantly down from the record 240 ordered in 2021, indicating that currently high global LNG prices have not dented demand.

Ships capable of LNG propulsion still represent only a fraction of the global shipping fleet by tonnage – 4.6% according to London-based shipping services firm Clarksons. But momentum is building, with LNG-capable vessels accounting for 17.8% of the ships currently on order, or 39.5% in terms of gross tonnage. Bunkering infrastructure has also been expanded – there were 185 ports able to bunker vessels with LNG as of January this year, up from 141 a year earlier, according to Clarksons. And a further 50 ports are expected to join them by 2025.

DNV forecasts that the number of LNG-capable ships will reach 876 by the end of this decade – but the LNG bunkering industry is more bullish on growth prospects. Based on the current growth trajectory, industry association SEA-LNG projects that the number will reach 2,000-4,000 vessels in operation by 2030.

“LNG is the only scalable fuel available today for deep-sea shipping that addresses both climate and health challenges,” SEA-LNG said. “Shipowners are investing in the LNG-fuelled fleet with the confidence that LNG infrastructure is already established in key bunkering locations and growing rapidly around the world.”

After the adoption of the 2015 Paris Agreement, the International Maritime Organisation (IMO) introduced a goal to reduce total annual greenhouse gas emissions from shipping by 50% by 2050, versus the level in 2008. However, many IMO members, and shipping industry bodies, are pushing for a new-zero target for 2050. Doing so would require far more ambitious interim targets for 2030 and 2040, putting pressure on the industry to clean up its operations fast.

When it comes down to shipping emissions, the three main considerations are CO2, methane (CH4) and nitrous oxide (N20). A 2021 analysis by ESG lifecycle specialist Sphera estimates that LNG-fuelled engines can reduce overall greenhouse gas emissions on a well-to-wake basis versus oil-based engines by 20-30% for two-stroke slow-speed engines, and 11-21% for four-stroke medium-speed engines.

A lot of criticism has been levelled against LNG-fuelled shipping because of the problem of methane slip, when methane passes through a ship’s engine without being combusted. However, the industry argues that significant progress has been made in tackling this problem. LNG-fuelled engines available today have only minimal levels of slip, while there has been a fourfold decrease in slip since the early 2000s for older engine types where it is still an issue.

One of the key industry initiatives striving to better measure and manage methane emissions from shipping is the Methane Abatement in Maritime Innovation Initiative (MAMII), set up in September last year to identify, accelerate and advocate technology solutions towards this end. Led by Safetytech Accelerator, its 14 members include a number of shipping industry firms as well as Lloyd’s Register and Shell.

Another is Green Ray – a five-year project launched in June 2022 that aims to develop three solutions to reduce methane slips from LNG in new and existing vessels. Green Ray has received financial support from the European Commission and is being coordinated by the VTT Technical Research Centre of Finland and includes partners from across the shipping value chain.
 

A future-proof pathway

Proponents of LNG-fuelled shipping argue that even though the fuel is not emissions-free, shipowners are nevertheless future-proofing their operations by adopting it. The same vessels and infrastructure can be used for cleaner bio-LNG and synthetic LNG in the future at no extra investment cost. In other words, those assets will not be left stranded when regulations are so strict that the use of only conventional LNG is no longer possible.

A recent study released in October last year by the Maritime Energy and Sustainable Development Centre of Excellent (MESD CoE) at Nanyang Technology University (NTU), Singapore, projected that pure bio-LNG could cover up to 3% of total shipping fuel demand by 2030, rising to 13% in 2050. The study took into consideration fuel availability, cost, lifecycle emissions and logistics. If blended with conventional LNG, it could account for 16% and 63% of demand respectively, assuming a 20% blending ratio.

“Our research concludes that bio-LNG, produced from sustainable biomass resources, has the potential to meet a significant proportion of future shipping energy demand,” associate professor Jasmine Lam at MESD CoE commented. “The findings show that bio-LNG is among the cheapest sustainable biofuels and can potentially offer significant cost advantages over electrofuels by 2050.”

The availability of synthetic e-LNG, meanwhile, will depend on how quickly renewable electricity generation is expanded, though the same will also be true for other electrofuels like e-methanol and e-ammonia. Given that the majority of the cost of these fuels relates to renewable hydrogen production, cost differentials between the various options are expected to be minimal.

Essentially, supporters of LNG-fuelled shipping say the fuel’s adoption can deliver reduced emissions today, and a clear pathway to net-zero emissions in the future.

Author: Joseph Murphy, Natural Gas World  |  24 March, 2023

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