The transition from LNG to bioLNG offers an attractive business case for shipowners on the pathway to decarbonisation
A stronger business case for LNG as a fuel is emerging for shipowners motivated by attractive capex and opex and potential CO2 reductions, as shipping looks to transition towards decarbonisation.
“LNG as a fuel is increasing in the market, especially if you look at the order intake as compared with five years ago,” said WinGD general manager global sales Carmelo Cartalemi. Speaking at Riviera Maritime Media’s Bio-LNG and synthetic LNG: future fuels for maritime decarbonisation webinar in November, Mr Cartalemi observed that almost 10% of new ships – non-LNG carriers – have been ordered with LNG as a fuel. These 55 newbuilds are container ships, bulk carriers and tankers.
In his presentation, Mr Cartalemi showed a graph that indicated a ‘sweet spot’ for X fuels for shipping, covering the best choices for shipowners based on opex and capex. Based on fuel price US$/tonne and ship capex, heavy fuel oil (HFO) operation in combination with scrubbers was in the ‘optimal’ range, but LNG was extremely competitive, with the gap narrowing year-on-year as the technology matures.
But in order to meet IMO’s GHG reduction targets in 2030 and 2050, Mr Cartalemi said CO2 reduction and fuel availability must be considered when assessing X fuels. While LNG has the ability to reduce CO2 emissions by 20 to 25%, it will not enable operators to comply with IMO’s GHG targets.
“But what we see is that synthetic LNG, or bio LNG, can offer this opportunity,” said Mr Cartalemi, “as soon as the availability increases.”
While he thought ammonia, too, showed promise, it still faced the problems of technology development and availability.
“Shipowners will look at the technologies that offer the biggest bang for the buck”
“LNG is the best option available today,” said Mr Cartalemi. He said using 10 to 15% bioLNG when bunkering with LNG will further reduce CO2 emissions by 30 to 35%, as compared with a traditional diesel-powered vessel. “That’s remarkable,” he concluded.
Carbon taxation schemes will drive the further uptake of LNG, said fellow panellist Sebastiaan Bleuanus, Wärtsilä general manager, research, co-ordination and funding, but it will also drive the uptake of other technologies that will reduce ship emissions. As shipping has always been a cost-driven industry, Mr Bleuanus said shipowners will look at the technologies that “offer the biggest bang for the buck – the biggest emissions reduction for the amount of money spent.”
To hit IMO GHG gas targets, Mr Bleuanus emphasised that shipowners need to focus on the technologies that are available today and can be employed now.
“LNG is a really good starting point,” Mr Bleuanus said. He pointed to operational experience, mature technology and legislation around LNG as key elements, and the ability to transition to carbon-neutral and carbon-free fuel.
This view was supported in a presentation by ABS global sustainability director René Sejer Laursen that showed fuel pathways for the future. Highlighting the ‘light gas pathway,’ Mr Seijer Laursen illustrated the transition from LNG to bioLNG and electric methane to hydrogen.
In the mid to long term, fossil LNG will be replaced partly by synthetic LNG and by renewable LNG based on biogas produced from bio waste. He said this type of LNG will have similar properties as fossil LNG, meaning it can be used in dual-fuel and pure gas two-stroke and four-stroke engines currently available.
While the cost of producing hydrogen must be overcome, Mr Sejer Laursen said: “The benefit is you do not emit any CO2 emissions, as there is no carbon in the hydrogen molecule. Hydrogen can be produced from natural gas, and then using carbon capture, it becomes carbon neutral.”