The need for cleaner marine fuel
The marine shipping industry transports over 80% of global trade and is crucial to the world economy. However, it also produces a large amount of greenhouse gas (GHG) and air pollutant emissions. Shipping fuelled by heavy fuel oil (HFO) accounted for around 2.2% of global carbon dioxide (CO2) emissions in 2018, according to the International Maritime Organization (IMO). It also emitted significant amounts of particulate matter (PM), nitrogen oxides (NOx), and sulfur oxides (SOx) which threaten human health and the environment.
To address this issue, the IMO introduced new regulations under its MARPOL Annex VI which came into effect from January 2020. Commonly known as IMO 2020, these regulations reduce the maximum sulfur content of marine fuel used outside designated emission control areas from 3.5% to 0.5%. This has prompted shipping companies to either install exhaust gas cleaning systems (scrubbers) or switch to lower sulfur fuels like marine gas oil or very low sulfur fuel oil to comply. However, a more permanent long-term solution is needed to transition shipping towards truly zero-emission fuels.
LNG emerges as a promising transition fuel
As a bridge to zero-emission shipping, liquefied natural gas (LNG) has emerged as one of the most viable options currently available at commercial scale. When combusted, LNG produces negligible sulfur oxides and particulate emissions compared to HFO or other residual fuels. It can also reduce NOx emissions by approximately 85% and CO2 emissions by up to 20% per unit of energy produced compared to HFO.
The global LNG Bunkering infrastructure is still developing but growing rapidly. Major vessel owners like ADNOC Logistics & Services, Shell, MOL, and CMA CGM are cooperating to develop LNG bunkering and retrofit vessels to run on LNG. Major ports like Rotterdam and Singapore have set up or are working to establish LNG bunkering facilities. This will make LNG readily available as a cleaner marine fuel, especially in busy international trade routes.
Challenges and opportunities of LNG bunkering infrastructure development
However, scaling up a global bunkering network also faces key challenges. Vessels require specialized cryogenic fuel tanks, pumps, and pipelines optimized for LNG's physical properties. Retrofitting existing ships or building new LNG-fueled vessels thus demands significant upfront investment. It facilities also require cryogenic infrastructure and specialized bunker vessels, representing high capital expenditure (capex).
Safety is another concern around handling and storing the ultra-cold liquefied fuel. Strict regulations and trained personnel are needed. Geographical limitations also exist for certain ports with limited space or draft restrictions for large LNG bunker vessels. Harmonizing bunkering standards and developing common procedures across different countries could help overcome some issues.
While the challenges are not insignificant, the opportunities are immense. Establishing a critical mass of LNG bunkering and vessel infrastructure creates a self-sustaining market. As more ships convert to LNG, the demand and supply momentum will grow steadily. This will aid cost reductions through economies of scale over time. Companies which invest early to establish LNG as a shipping fuel standard can gain significant first-mover advantages.
Governments also have a key role to play through strategic policies to support the development of LNG marine fuel corridors. For example, Singapore introduced an LNG bunkering pilot program and financial incentives in 2020 to spur wider LNG adoption in shipping. The European Union's Fit for 55 package also aims to ramp up production and distribution of renewable and low-carbon fuels including LNG. Well-coordinated global efforts between the industry and governments will be crucial for the energy transition in shipping.
The future of LNG as a cleaner marine fuel
While LNG may not be a zero-carbon solution, it offers large well-to-wake GHG benefits versus conventional marine fuels. It serves as an ideal transition fuel for the next decade or two as zero-emission technologies such as hydrogen fuel cells and ammonia gain maturity for deep-sea vessels. In the long run, LNG infrastructure can be retooled or blended with renewable bio-LNG or synthetic LNG produced from low-carbon hydrogen. This will help gradually decarbonize the marine fuel supply chain.
Major shipping fleets are clearly betting on LNG as the future fuel given its wide availability, proven technology, established global supply chain and sizable emission benefits. Over 300 LNG-fuelled vessels were in operation by 2020 according to DNV estimates, with over 1000 more on order, demonstrating the increasing pace of adoption. Sustained efforts to ramp up LNG bunkering infrastructure and streamline the technical and operational challenges will determine LNG's success as the marine industry's clean fuel transition strategy over the coming decades. Coordinated global cooperation between regulators, industry players, classification societies and fuel producers holds the key.
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About Author:
Money Singh is a seasoned content writer with over four years of experience in the market research sector. Her expertise spans various industries, including food and beverages, biotechnology, chemical and materials, defense and aerospace, consumer goods, etc. (https://www.linkedin.com/in/money-singh-590844163)
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