An abiding question for tanker owners and operators is whether investing in LNG today allows for an easier zero carbon fuel transition in the future. And what of LPG, which has many of the advantages of LNG, but lower capex?
In the Riviera Maritime Media webinar, The case for LNG and LPG-fuelled tankers, Schulte Group independent first corporate director energy projects Angus Campbell, World LPG Association technical director Nikos Xydas, MAN Energy Solutions director new technologies, 2-stroke promotion Kjeld Aabo, and SEA-LNG general manager Steve Esau discussed the case for LNG and LPG as fuels for tankers.
The webinar was sponsored by the World LPG Association, with INTERTANKO the supporting organisation.
The aim of the webinar was to expand knowledge of LNG as a marine fuel for tankers. In a poll replying to the question: How familiar are you with the decarbonisation pathway offered by LNG through bio and synthetic LNG? 52% professed to having partial knowledge, 30% were confident they fully understood, and 18% were looking for the first time.
Mr Campbell started with a high-level overview, which he termed the “new reality for shipping. It doesn’t matter which side of the climate debate you sit on, but global industry, our customer, has committed to decarbonise rapidly,” he said. “That means ships are no longer over the horizon and out of sight. Ships are part of the value chain and ships are expected to contribute to the decarbonisation challenges that major corporations, companies and governments have set themselves.”
To what extent does the need to decarbonise come up in your conversations with your customers? Regularly, but short and constant 49%, a constant theme 35%, now and then 14%, hardly ever 1%, not at all 1%.
In another poll, 34% thought LNG would be the Betamax of the future fuels, followed by hydrogen (23%), ammonia (20%), methanol (11%), LPG (10%) and biofuels (2%).
Mr Esau detailed a report the agency had commissioned, which showed the investment case for an LNG-powered 300,000-dwt VLCC operating on the Middle East Gulf to China trade route. “What the investment case shows is that LNG provides the best return on a NPV basis over a conservative 10-year time horizon and a three to five-year payback compared with low sulphur fuel oil,” he said.
He added, “Given that LNG is a compelling investment case, what is stopping more tanker owners from investing in LNG as a marine fuel?”
How would delegates invest today (12 May 2021) in light of upcoming emissions regulations? 55% chose LNG, 19% LPG, 15% other, 7% HFSO and a scrubber and 4% VLSFO.
Presenting the case for LPG was Mr Xydas, who said it was very important for tanker operators to understand that LPG is not a cyrogenic fuel and does not require the capex of LNG, and that LPG is not a greenhouse gas. “It does not experience the methane slip issues and very much supports IMO greenhouse gas strategy,” he said.
Did webinar delegates agree that LPG is a viable fuel for a range of vessel types and not just gas carriers? Strongly agree 18%, agree 48%, unproven 33%, disagree 1%.
Renewable LPG has been developed. Mr Xydas said, “About 50% of the global market demand by 2050 will be covered by renewable LPG. In Europe, the estimate is that 100% of demand by 2050 will be met by renewable LPG.”
This led to the question: Does LPG and bioLPG have an important role to play as a future marine fuel? Strongly agree 14%, agree 44%, unproven 30%, disagree 8%, strongly disagree 4%.
So what is the single biggest barrier to adopting LPG as a marine fuel? 33% cited LPG not being a zero-carbon fuel was a barrier, with 30% nominating availability and bunkering locations, 23% availability of engines, 8% pricing and 6% safety.
Mr Aabo said that as an engine provider, the company has to prepare for the requirements of the market and has developed dual-fuel engines that can burn ethane, methane, methanol, LPG and soon, ammonia.
The right sort of electronically controlled engine can be retrofitted to burn an alternative fuel. Regarding the MAN Energy Solutions reference list, Mr Aabo said, “We have sold 249 engines sold for LNG, 23 for methanol, 23 for ethane and 79 for LPG.”
Ultimately, the portfolio of available future fuels may not be those favoured by shipping. Mr Campbell noted that shipping’s pull on fuel is actually quite small compared with global demand, which suggest that shipping will not be a driver of the future fuel portfolio, but a passenger.
In a poll, delegates were asked when they thought green, synthetic fuels such as e-LNG, ammonia and hydrogen will be available at scale for the shipping industry? 50% thought it would be in 10 to 20 years time, with 32% expecting the fuels in less than 10 years, and the remainder’s (18%) expectations were beyond 20 years.
But that is not necessarily a bad thing. “The critical factor that gives me confidence is that the energy transmission will continue, and renewable fuels, such as green hydrogen and green ammonia, once global scale is developed, are going to be extremely competitive. They are actually going to be cheaper than their hydrocarbon or fossil equivalent. When you roll all that together, the future for shipping is going to be very interesting indeed,” said Mr Campbell.
Is that future going to include green ammonia as a marine fuel? 52% said yes and 48% said no.
Will carbon pricing be the answer – what will the global carbon price be in 2030? US$100 per tonne 53%, US$200 per tonne 39%, US$300 per tonne 8%.
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