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Availability and costs of liquefied bio- and synthetic methane - the maritime shipping perspective

The shipping industry faces unprecedented challenges if it is to meet the IMO’s decarbonisation targets. If we are to make effective, meaningful progress with emissions reductions, waiting for the ‘perfect’ solution is not an option; we must act today.

Decarbonisation of the shipping industry will require the use of zero or low carbon fuels. A potential decarbonisation pathway for shipping is to use liquefied biomethane, produced from biomass or liquefied synthetic methane, produced from renewable electricity, often referred to as ‘power-to-gas’.

SEA-LNG commissioned this study from CE Delft to explore the potential availability and cost of LBM and LSM produced from renewable electricity with the aim of providing industry-leading, timely, and proven analysis to support the growing case for LBM and LSM in driving forward LNG as a decarbonisation solution towards 2030, 2050, and beyond.

The findings conclude that both LBM and LSM are scalable solutions for the maritime sector, with estimated sustainable global supplies potentially exceeding the demands of shipping in the future, and likely to be commercially competitive relative to other low- and zero-carbon fuels. Further, the growing LNG-fuelled fleet could use LBM or LSM without requiring major modifications, and the existing supply infrastructure will remain fit for bunkering purposes with either fuel.

Please click here to read our summary of the key takeaways from the study.

The full report is available to download here.

LNG as a marine fuel - the investment opportunity

Liquefied Natural Gas (LNG) is a safe, mature, commercially viable marine fuel offering superior local emissions performance, significant Greenhouse Gas (GHG) reduction benefits and a pragmatic pathway to a zero-emissions shipping industry.

SEA-LNG has commissioned the fourth in its series of independent studies by simulation and analytics experts Opsiana, to support shipowners and operators in analysing options in an informed way, while simultaneously providing a deeper analysis of the assumptions that go into their investment decisions.

The VLOC investment case study explores the relative investment performance of LNG as a marine fuel for a newbuild 210DWT capesize ore carrier, sailing the major ore corridor between Australia and China, in comparison with other alternatives currently available and scalable to the shipping industry across three fuel pricing scenarios.

The study illustrates strong returns on investment for LNG as a marine fuel on a Net Present Value (NPV) basis over a conservative 10-year horizon, bolstered by compelling payback periods of two to four years.

For further information please see "LNG as marine fuel - the investment opportunity" for the full findings of the study.

LNG as a marine fuel - Our zero emissions future starts now

SEA-LNG's 'View from the Bridge' 2019-2020

Now that we have passed 1st January 2020, the much anticipated global sulphur cap is finally a reality. The importance of this clean air initiative for global health is widely agreed and should not be under emphasised. Likewise, the critical role that LNG can play in clean air and global health initiatives must not be forgotten or trivialised as these are still matters of real concern to the world’s citizens.

This time last year we said 2019 would be the year of acceleration for LNG, and it was! With increasing orders for LNG-fuelled vessels and LNG bunker vessels, together with expanding infrastructure shoreside to provide the critical last-mile delivery of LNG to ships; LNG as a marine fuel remains THE economic and environmental choice. Increasingly too, LNG is seen as THE transition fuel to a net-zero carbon future. While we anticipate LNG as marine fuel will evolve into bio or synthetic methane, the LNG safety and operational guidelines, as well as infrastructure, will act as best practice for the adoption of alternative fuels over the longer term.

For the full review of 2019 and SEA-LNG's outlook for 2020, "LNG as marine fuel - Our zero emissions future starts now".

LNG as a marine fuel - the investment opportunity

Liquefied Natural Gas (LNG) is a safe, mature, commercially viable marine fuel offering superior local emissions performance, significant Greenhouse Gas (GHG) reduction benefits and a pragmatic pathway to a zero-emissions shipping industry.

To support shipowners and operators in analysing options in an informed way, while simultaneously providing a deeper analysis of the assumptions that go into the 2020 decision process, SEA/LNG has commissioned the third in its series of independent studies by simulation and analytics experts Opsiana.

The VLCC investment case study explores the relative investment performance of LNG as a marine fuel for a newbuild 300K DWT VLCC on the Arabian Gulf to China trade route, in comparison with other alternatives currently available and scalable to the shipping industry across three fuel pricing scenarios.

This VLCC study clearly indicates that LNG as a marine fuel delivers a strong return on investment on a net present value (NPV) basis over a conservative 10-year horizon. The analysis is bolstered by compelling paybacks from three to five years.

 

 

Comparison of Alternative Marine Fuels

Environmental regulations controlling emissions of SOx, NOx and Greenhouse Gases (GHG) are transforming the global shipping industry. Carbon-intensive, polluting heavy fuel oil (HFO) can no longer remain the default option for ocean voyages.

To comply with the International Maritime Organization’s (IMO) 1st January 2020 SOx regulations and announced future environmental targets, ship owners and operators must change the ways in which they power and fuel their fleets. Choosing which marine fuel to adopt is now a significant investment decision to be made amidst a range of uncertainties.

To support the industry in its decision-making process, SEA\LNG commissioned DNV GL to conduct a comprehensive study to assess the commercial and operational viability of alternative marine fuels. Based on existing academic and industry literature, the study evaluates how well six of the main alternative fuels (hydrogen, ammonia, methanol, LPG, biofuel, specifically Hydrotreated Vegetable Oil, and full battery-electric systems), perform compared to LNG and legacy HFO.

The study finds that LNG is the most mature, scalable, and commercially viable alternative fuel currently available for the maritime industry. Please click here to read our summary of the key study findings (updated 02/10/2019).

For further information, please see “Comparison of Alternative Marine Fuels” for the full findings of the study.

LNG as marine fuel - the investment opportunity

Liquefied Natural Gas (LNG) is a safe, mature, commercially viable marine fuel offering superior local emissions performance, significant Greenhouse Gas (GHG) reduction benefits and a potential pathway to a zero-emissions shipping industry.

To support shipowners and operators in analysing options in an informed way, while simultaneously providing a deeper analysis of the assumptions that go into the 2020 decision process, SEA\LNG commissioned this second in a series of independent studies by simulation and analytics experts Opsiana. To ensure the best possible data was available to Opsiana, SEA\LNG members contributed maritime expertise and current, timely background information to ensure a high level of creditability in the study and results. The study considered two PCTC trading scenarios using a 6,500 Car Equivalent Unit (CEU) vessel on the Atlantic Trade and an 8,000 CEU vessel on the Pacific Trade.

This study clearly indicates that LNG as a marine fuel delivers the best return on investment on a net present value (NPV) basis over a conservative 10-year horizon. The analysis shows fast paybacks from one to three years for the Atlantic Trade and below two years for the Pacific Trade.

For further information please see "LNG as marine fuel -the investment opportunity" for the full findings of the study.

 

Life Cycle GHG Emissions Study on the Use of LNG as Marine Fuel

While the environmental benefits of Liquified Natural Gas (LNG as the most promising alternative marine fuel are clear in relation to local pollutants such as sulphur oxides (SOX), nitrogen oxide (NOX), and particulate matter (PM), various studies have demonstrated different GHG impacts from the use of LNG. These differences have resulted from the studies using different assumptions, methodologies and data.

SEA\LNG and SGMF commissioned this Well-to-Wake (WtW) Greenhouse Gas (GHG) Emissions Lifecycle Research Study on the use of LNG as a marine fuel. Conducted by independent specialist consultants thinkstep, and reviewed by a panel of academic experts, it is the most accurate study of the life cycle GHG emissions and local pollutants from LNG as a marine fuel compared with current and post-2020 conventional marine fuels as it is done on a complete WtW basis.

For further information please see "Life Cycle GHG Emissions Study on the Use of LNG as Marine Fuel" for the full findings of the study.

LNG as a marine fuel - the investment opportunity

Liquefied Natural Gas (LNG) is a superior marine fuel providing the best option to improve air quality and is the only scalable marine fuel that advances shipping’s greenhouse gas (GHG) reduction objectives. To support shipowners and operators in analysing options in an informed way, while simultaneously providing deeper analysis of the assumptions that go into the 2020 decision process, SEA\LNG commissioned an independent study by simulation and analytics experts Opsiana.

The study is based on a newbuild 14,000 TEU container vessel plying its trade on an Asia-US West Coast (USWC) liner routing. The findings clearly indicate that LNG as a marine fuel also delivers the best return on investment on a net present value (NPV) basis over a conservative 10-year horizon, with fast payback periods ranging from one to two years.

For further information please see "LNG as a marine fuel - the investment opportunity" for the full findings of the study.

SEA\LNG: If 2018 was the tipping point for LNG as a marine fuel, 2019 will be the year of acceleration

2018 saw a sea-change in attitudes and actions towards Liquefied Natural Gas (LNG) as a marine fuel. By March, of the 94 cruise ships on the global order-book, 18 under construction were LNG-powered. This represented 20% of all newbuildings for the cruise industry, but 25% of newbuilding capacity due to the size of the vessels ordered. The world’s first fully LNG-fuelled cruise ship, SEA\LNG member Carnival’s “AIDAnova” entered service in December with a further seven LNG-powered cruise ships ordered by Carnival to be operational by end 2022.

For further information please see "SEA\LNG: If 2018 was the tipping point for LNG as a marine fuel, 2019 will be the year of acceleration", which details the impressive journey of LNG as a marine fuel throughout 2018, and forecasts our expectations for the year ahead.

SEA\LNG: Why LNG represents a bridge of pragmatism on shipping's road to decarbonisation

Shipping in the invisible backbone of the global economy - accounting for approximately 90% of international trade -  and is the most energy efficient way of moving goods. However there is growing pressure on the industry from governments and regulators, as well as changing expectations from customers and society at large, to contribute to meeting the 2°C and 1.5°C goals of the Paris climate accord. The challenge the industry faces is making the right investment decisions now to enable it to comply both with short-term local emissions regulations e.g. the IMO 2020 sulphur cap, and the long-term climate legislation under consideration by the IMO, while remaining economically competitive.

For further information please see "SEA\LNG: Why LNG offers a bridge of pragmatism on shipping's road to decarbonisation”, which outlines in detail how LNG as a marine fuel offers unrivalled potential as a bridging solution for achieving shipping’s short and long-term energy transition goals, with immediate local and GHG emissions benefits, compared to existing alternatives and other unproven technologies.

SEA\LNG: One year on thoughts and reflections

For LNG to play a significant role as a marine fuel, it requires collaboration across the entire marine LNG value chain. We are proud that our members have been at the forefront of industry developments during 2017, which will continue through 2018 and the years ahead. As recognition of LNG as a viable, sustainable marine fuel gathers momentum, we anticipate the coalition will continue to expand with the addition of major shipping lines, bunkering companies, and ports from across the globe expected in the coming year.

For further information please see "SEA\LNG: One year on – thoughts and reflections,” which outlines in detail why LNG provides an essential solution for the long term, more detail on addressing the key barriers to uptake, and how SEA\LNG will work towards an effective global LNG value chain for cleaner maritime shipping.

SEA\LNG: Accelerating the adoption of LNG as a marine fuel

Ship owners, fuel suppliers, and other associated supply chain stakeholders will need to make major investments to comply with existing and forthcoming environmental regulations. By addressing the core issue; the fuel itself, LNG provides a viable solution for the long term. However, barriers need to be better understood and overcome if LNG is to reach its full potential.

These barriers include LNG infrastructure and market maturity; the lack of understanding of LNG’s benefits among end users, investors, governments and civil society; capital expenditure (capex) premiums for vessels and bunkering infrastructure; and fragmented and evolving regulations.

For further information please see "SEA\LNG: Accelerating the adoption of LNG as a marine fuel”.

For media enquiries, please contact our communications team at communications@sea-lng.org.