An excellent transition fuel on the road to producing clean energy is liquefied natural gas (LNG). The fact that it is reliable and already far cleaner than other fossil fuels make it an excellent companion for variable renewable energy sources. The future appears even cleaner with an LNG infrastructure in place since you will be prepared for CO2-neutral synthetic natural gas (e LNG). The fuel for change is LNG.
The use of LNG as a marine fuel can reduce carbon emissions by up to 21% compared to current oil-based marine fuels over the entire lifecycle. In 2022, 104 new LNG-fueled ships entered operation, representing a 41% growth within the on-water fleet. LNG-fueled vessels currently amount to approximately 13% of the current newbuild order book and estimates for 2022 and beyond show continuing growth in many classes of vessels.
The gradual introduction of bio-LNG and synthetic LNG will incrementally decarbonize shipping towards the International Maritime Organization’s (IMO) 2050 targets. The shipping industry is seeking to reduce its reliance on oil as it tries to meet carbon emission reduction targets set out by the IMO, including cutting carbon emissions by 40% from 2008 levels by 2030 and overall greenhouse gas emissions by 50% by 2050.
LNG bunkering is a method of LNG supply as liquid form to an LNG fueled ship directly.
The origin of the expression is the combination of two words, “LNG,” which is the abbreviation of liquefied natural gas, and “bunkering,” which means the supply of fuel to a berthing ship by a specialized ship called “bunker ship.” LNG bunkering is one of the noted methods required for responding to the global environmental initiatives of marine fuels.
LNG bunkering has several supply methods, such as Truck-to-Ship, which supplies by connecting LNG tank trucks on shore, and Ship-to-Ship, which supplies LNG fuel by a supply ship called “bunkering ship.” It has been recognized as a cleaner-burning fuel than traditional marine fuels, emitting significantly less sulfur dioxide (SO2), nitrogen oxides (NOx), and particulate matter (PM). Moreover, compared with conventional marine bunker fuels, LNG has the potential to reduce carbon dioxide emissions by 10% to 20%, nitrogen oxide emissions by up to 80% or 90%, and particulate matter emission by 98% to 100%.
Bio LNG and Synthetic LNG:
LNG is predicted to see a tripling of demand between 2019 and 2030 as marine fuel.
Bio-LNG is a sustainable option that can be blended with LNG without any changes required on board the ship whereas synthetic LNG is more energy-dense than other fuels, allowing ships to have smaller bunker tanks and more space for cargo.
Bio LNG is produced from existing agricultural, forestry, and human waste streams, and depending on the production process, it can capture methane that would otherwise be vented into the atmosphere. It is chemically identical to LNG, which means that it can be introduced without the major additional supply chain investments needed for other alternative fuels. It is a known sustainable option that can be dropped in and blended with LNG, and it uses existing LNG bunkering infrastructure.
Synthetic LNG is a type of marine fuel that is chemically the same as LNG and Bio-LNG, but is created by the combination of hydrogen and carbon. It is more energy-dense than other fuels, such as green ammonia. However, the creation of large volumes of hydrogen in a sustainable manner is a requirement that synthetic LNG shares with competing future fuels like green ammonia. As it is chemically same, it makes the existing engines and infrastructure viable over a much longer term.
Both Bio and Synthetic LNG are increasingly recognized as a pathway to future-proof newbuilding vessel investments as they can transition to net-zero.
LNG bunkering services can be delivered to vessels in some 96 ports, including most of the main bunkering ports, with a further 55 ports in the process of facilitating LNG bunkering investments and operations. Europe is leading the way with LNG bunkering infrastructure, with the majority of its top ports offering the service, including those in the Netherlands, Germany, and Norway, followed by major ports in Asia and the Americas.
Ports around the world are ramping up their efforts to develop LNG bunkering infrastructure as demand for LNG-fuelled ships hits new highs. Over the past year, 44 global ports have joined the club of global ports able to provide LNG bunkering. Some of the major ports that offer LNG bunkering services include the Port of Antwerp, Rotterdam, Singapore, and Montreal.
The current percentage of LNG-fueled vessels in the global fleet:
According to recent articles, the current percentage of LNG-fueled vessels in the global fleet at the start of 2020, there were 175 LNG-fueled ships in operation, excluding the 600 strong LNG carrier fleet, the majority of which are LNG-fueled, and over 200 ships on order. An estimated 10%-20% of the new order book is LNG-fueled. In addition, the articles state that LNG-fueled ships have been growing consistently by between 20% and 40% per annum since 2010.
A more recent report by DNV states that LNG-fueled ships in service and on order now account for nearly 10% of the global fleet, with an additional three percent being LNG-ready. DNV reports that there are 251 LNG-fueled vessels in operation, up from 189 a year ago. While the largest number of LNG-fueled vessels are containerships, the number is growing in segments including crude oil and chemical tankers and bulkers.
Therefore, it can be inferred that the current percentage of LNG-fueled vessels in the global fleet is around 10%, with an additional three percent being LNG-ready. However, it is important to note that these figures are likely to have changed since the reports were published and may continue to change as the shipping industry seeks to reduce its carbon footprint.
The major segments of shipping that are adopting LNG as their fuel:
According to Natural Gas World, LNG makes up the biggest segment of the global shipping fleet that has adopted alternative shipping fuels, at 0.34%. However, the share of alternative fuel use in new ship orders is 13.6%, with LNG extending its leadership role substantially to 9.96%. In terms of segments of the shipping industry that are adopting LNG as their fuel, LNG is most attractive as a fuel for the approximately 550 LNG carriers currently operating worldwide. They expect to see a rapid rise in adoption of LNG as a fuel in this segment, potentially increasing demand by nine million tons per annum (mtpa), or 3.0% of annual demand, over the next two years.
LNG is being used as a fuel in other segments of the shipping industry, including container ships, bulk carriers, and offshore support vessels. However, the adoption of LNG as a marine fuel varies across segments of the shipping sector, and the value proposition of LNG may differ depending on the specific needs of each segment.
The current market value of LNG compared to other fuels for ships:
The present market value of LNG in commercially viable regions such as the US and Europe makes it an attractive option for ship operators. LNG could be offered at a competitive price when compared to heavy fuel oil (HFO) or low-sulfur gas oil as fuel on ships. In addition, the number of vessels using LNG as a marine fuel has grown consistently by between 20% and 40% per annum since 2010.
Globally, the number of LNG-fueled vessels has increased from 18 completed vessels in 2010 to 175 currently in service, with more than 200 on order in 2020. Most of the vessels in service are operated in Europe and it is expected that the shift from heavy oil to LNG or other alternative fuels will be further accelerated as a result of the strengthening of SOx regulations in January 2020.
However, there is no specific information on the current market value of LNG compared to other fuels for ships. It is important to note that the price of LNG can vary depending on factors such as location, supply and demand, and infrastructure availability. Nonetheless, the use of LNG as a marine fuel is expected to continue to grow in the coming years as the shipping industry seeks to reduce its carbon footprint and comply with environmental regulations.
The current state of LNG bunkering infrastructure globally:
The current state of LNG bunkering infrastructure globally is rapidly growing. There has been a dramatic scaling up of ship-to-ship bunkering. In early 2019, there were just six LNG bunkering vessels around the world.
As of January 2020, there are 12 in operation with a further 27 on order and/or undergoing commissioning, the majority due to come into service within the next two years. Several countries are investing in LNG bunkering infrastructure to support the growth of LNG as a marine fuel. For example, Japan is aiming to become an international bunkering hub through ports in Tokyo Bay and the Port of Yokohama. Singapore is also continuing its efforts to expand its bunkering infrastructure for liquefied natural gas as part of its efforts to maintain the port’s role as the leading global bunkering hub for the shipping industry.
Overall, the growth of LNG bunkering infrastructure is expected to continue in the coming years, as the shipping industry seeks to reduce its carbon footprint and comply with environmental regulations. The use of LNG bunkering infrastructure can also be used to supply zero-carbon fuels in the form of liquefied biomethane (LBM) or liquefied synthetic methane (LSM), with little or no modifications to the existing infrastructure.
The costs associated with converting ships to use LNG as a fuel:
The cost of retrofitting a ship to make it compatible with using LNG as a fuel varies, but as a rule of thumb, the larger the ship, the more uneconomical it gets to retrofit it. However, with the present market value of LNG in commercially viable regions such as the US and Europe, LNG could be offered at a competitive price when compared to heavy fuel oil or HFO and even more attractive when compared to the low-sulphur gas oil, as fuel on ships. The fuel costs compared to HFO can be reduced up to 50% depending on the fuel cost on the day. However, the adoption of LNG as a marine fuel also requires significant investment in infrastructure, such as LNG bunkering facilities, which can be a challenge for some ports and shipping companies.
The cost of retrofitting a ship to use LNG as a fuel varies, but it can be uneconomical for larger ships. However, with the present market value of LNG in commercially viable regions, LNG could be offered at a competitive price when compared to other fuels. The adoption of LNG as a marine fuel also requires significant investment in infrastructure, which can be a challenge for some ports and shipping companies. Despite these challenges, LNG is being considered as a fuel of the future, and it is expected to play a significant role in the shipping industry’s decarbonization efforts.
The environmental regulations that ships must comply with when using LNG:
Ships must comply with stringent environmental regulations enacted by the International Maritime Organisation (IMO), particularly in sulfur and NOx emissions, according to Port Economics, Management and Policy. The International Code of Safety for Ships using Gases or other Low-flashpoint Fuels (IGF Code) is applicable to vessels that use LNG as a fuel, according to the World Port Sustainability Program.
LNG emits nearly no sulfur oxide (SOx) or particulate matter (PM) emissions, 90 percent less nitrogen oxide (NOx), and 20-25 percent less carbon dioxide (CO2) than conventional ship fuels. However, LNG is still a fossil fuel, and it poses the challenge of methane slip. Caused by incomplete LNG combustion in the ship engine, methane – a potent greenhouse gas – is emitted into the atmosphere.
The ships must comply with stringent environmental regulations enacted by the IMO, particularly in sulfur and NOx emissions. The International Code of Safety for Ships using Gases or other Low-flashpoint Fuels (IGF Code) is applicable to vessels that use LNG as a fuel. While LNG emits significantly less emissions than conventional ship fuels, it still poses the challenge of methane slip.
The projection for the growth of LNG-fueled vessels in the future:
The use of LNG as a marine fuel is expected to continue to grow in the coming years. New vessel orders are increasingly focused on deep-sea vessels, including cruise ships, container vessels, crude and product tankers, and bulk carriers. The use of LNG as a marine fuel is expected to continue to grow due to its many advantages, including producing almost no sulfur oxide or particulate matter emissions, low nitrogen oxide emissions, and GHG emissions between 7% and 22% depending on engine type. In addition, the growth of LNG bunkering infrastructure and favourable operating expense conditions are making LNG increasingly competitive with heavy fuel oil. As a result, the use of LNG as a marine fuel is expected to continue to grow in the coming years, paving the way for bio-LNG and synthetic LNG in the future, offering a future-proof investment for ship owners.
LNG bunkering is an essential aspect of the growing trend towards the use of LNG as a ship fuel. As the world grapples with the need to reduce greenhouse gas emissions and mitigate climate change, shipping is increasingly being recognized as a significant contributor to the problem. As a result, the shipping industry has been working to reduce its environmental footprint, and LNG is one of the ways in which it hopes to do so.
In conclusion, the shipping industry is under increasing pressure to reduce its carbon footprint and comply with environmental regulations. LNG is a cleaner-burning fuel than traditional marine fuels and can be transported, stored, and bunkered using existing infrastructure. The adoption of LNG as a marine fuel is expected to increase in the coming years, and it is a step towards a more sustainable shipping industry.
However, the industry must continue to explore and invest in other alternative fuels to achieve its decarbonization goals.
– Saloni Ghelani