A World Bank report throws shade on the results of a new study that says LNG as a fuel offers significant GHG reduction benefits, as orders for LNG-fuelled ships surge
Two studies released on the same day express widely different opinions of the environmental benefits of LNG as a marine fuel, clouding an already murky decarbonisation picture for shipowners.
One study, 2nd Lifecycle GHG Emission Study on the use of LNG as a Marine Fuel from Sphera, backed by industry coalitions SEA/LNG and the Society for Gas as a Marine Fuel (SGMF), reports using LNG as a fuel can result in greenhouse gas (GHG) reductions of up to 23%.
A second study, Charting a course for decarbonising maritime transport, issued by the World Bank, says LNG will likely play a “limited role in decarbonising the shipping sector” and discourages continued government policies that support LNG as a bunker fuel and making investments in LNG bunkering infrastructure.
Instead of liquefying and supplying it as bunker fuel, contends the World Bank, natural gas should be paired with carbon capture and storage (CCS) technology to create a fuel feedstock to produce ‘blue’ hydrogen or ammonia. ‘Green’ versions of the fuels could be produced using electricity produced by renewables.
“In this manner,” notes the international finance provider, “natural gas could kickstart the production of zero-carbon hydrogen and ammonia in the long term and play a more significant role in the transition towards decarbonisation.”
Surge of LNG-fuelled newbuilds
Notably, the two studies were released amid a surge of LNG-fuelled newbuild ordering in early 2021, suggesting that more shipowners are gravitating towards LNG as a fuel as a cost-competitive solution to cut GHG emissions. Orders for at least 27 LNG-fuelled vessels have been placed in 2021, according to Gibson Shipbrokers. All of these newbuilds are for oceangoing tonnage – a more recent trend – composed of 14 tankers, nine container vessels, two general cargo ships and two pure car carriers, with deliveries to 2024.
“The company is now planning to skip straight to ammonia-powered vessels”
Overall, the current active fleet has 197 LNG-fuelled vessels, with another 271 under construction or on order, according to DNV’s Alternative Fuels Insight.
In its analysis in April, Gibson Shipbrokers did note that an Australian iron ore mining company had a change of heart regarding LNG as a fuel. “Fortescue Metal Group (FMG) announced it will cancel its tender for 10 LNG-fuelled, 209,000-dwt bulkers, which was only issued earlier this year. The company is now planning to skip straight to ammonia-powered vessels.”
Gibson said: “This got us thinking about what the impact, if any, might be on other companies and their LNG-fuelled orderbook.” It noted that the move by FMG was “very far-sighted,” meaning it would have to wait until at least 2025 before it would have an engine suitable to burn ammonia, “with actual delivery of a vessel maybe several years after that.”
Additionally, noted the UK shipbrokers, FMG’s plans could well have been swayed by its involvement in the development of a green ammonia production facility in the Australian state of Tasmania, which will provide it a ready source of the new fuel.
Fuel price, refuelling infrastructure and proven technology are all chief concerns for ship owners on the path to decarbonisation. Engine technology, bunkering infrastructure and the supply chain for blue or green ammonia or hydrogen do not exist today.
By contrast, there are 30 LNG bunker vessels in operation and another 21 under construction, with others planned and with ample supplies of LNG in major ports.
Concluded Gibson: “There are still a large number of companies planning to build LNG-fuelled vessels (and that don’t have an in-house renewable fuel supply). This highlights that there is still a significant appetite for the benefits of LNG as a fuel.”
|Greenhouse gas emissions reductions vs VLSFO use|
|Fuel/engine technology||Well-to-tank||Tank to Wake||Total||GHG|
|VLSFO (0.5%), two-stroke, slow speed DF||104||584||688|
|MGO (0.1%), two-stroke, slow speed DF||111||566||677||1.6%|
|LNG & pilot fuel, two-stroke, slow speed DF (Diesel cycle)||123||410||533||22.6%|
|LNG & pilot fuel, two-stroke, slow speed DF (Otto cycle)||127||467||594||13.7%|
|Source: 2nd Lifecycle GHG Emission Study on the use of LNG as a Marine Fuel/Sphera|
GHG emission study results
Those GHG emission reduction benefits are outlined in the Sphera report, released during a virtual press conference. Measured on a well-to-wake (WtW) basis, GHG emissions can be reduced by 23% using two-stroke, high-pressure, Diesel-cycle engines as compared with burning very-low sulphur fuel oil (VLSFO), says the study. Emission results with other dual-fuel engine technology yielded lower but still significant GHG reductions. Low-pressure, Otto-cycle, two-stroke, dual-fuel engines, for instance, reduce GHG emissions by 14% as compared with burning VLSFO.
Engine and emissions data for the study was supplied by major OEMs and energy suppliers.
Commenting on the updated study, SEA-LNG chairman Peter Keller said it was essential that detailed emissions analysis from WtW was available for LNG and other alternative fuels to enable “shipowners to make the right decisions for their fleets.”
An additional focus of the study noted SEA/LNG general manager Steve Esau was to address methane emissions and methane slip. Methane slip – unburnt methane released during the combustion process – is a bugbear for LNG propulsion as it is powerful greenhouse gas – 28 more times potent than CO2 on a 100-year scale.
Mr Esau said the report takes into account mitigation efforts planned by OEMs and industry to address methane emissions in the fuel supply chain over the next 10 years. As a result, methane slip is expected to virtually eliminated by 2030.
“There is still a significant appetite for the benefits of LNG as a fuel”
“One thing that we do know, and is abundantly clear is that LNG, and the future pathway with bio, and eventually synthetic products, provides benefits now,” said Mr Keller. “These are benefits we cannot afford to dismiss while we wait for solutions that may or may not prove viable for years or even decades from now.”
Others in the market agree. “LNG has a bright future as a transition fuel,” Bureau Veritas global leader of oil tankers and gas carriers Carlos Guerrero told Marine Propulsion. “Not only because it is widely available, cleaner than oil fuels and covered by safety regulations, but also it may become a real pathway to the future for a progressively decarbonising industry.” Noting that LNG use lowers CO2 ship emissions by 25%, Mr Guerrero said there were examples of LNG-fuelled ships in operation using synthetic methane and biogas to further lower their GHG emissions.
“The transition from sail to coal took over 50 years. From coal- to oil-fuelled motorships another 50. Change takes time,” he said. Mr Guerrero sees a much more rapid transition to cleaner fuels than past transitions because of regulation and societal pressure, but “LNG is likely to be in use for many years, not least because there are not yet any scalable alternatives that are ready.”
Mr Keller admitted that LNG was not the silver bullet solution: “While significant, 23% reductions [in GHG] do not get us to the ultimate goal. However, with the use of carbon-neutral bio and synthetic products, we see a clear pathway forward – a pathway that takes full advantage of an existing and growing infrastructure, while getting immediate benefits today with safe proven competitive and future-proof technology.”