LNG as Ship Fuel- to reduce emissions!

Stringent environmental regulations, United Nations Framework Convention on Climate Change (UNFCCC), the need to reduce greenhouse gas emissions to reduce global warming, IMO’s MARPOL Annex VI for reduction in emissions of nitrous oxides (NOx), sulphur oxides (Sox), particulate matter (PM) and carbon dioxide (CO2), are all posing a challenge to the shipping industry to comply and improve.

Presently, the majority of the world fleet is using conventional oil-based fuels. With stricter environmental considerations, non-polluting renewable sources of energy not yet fully developed for ships, Liquefied Natural Gas (LNG) as a ship fuel, being less polluting than oil, seems to be a viable alternative in the medium term.

LNG will provide good environmental performance compared to conventional oil-based ship fuels. It emits; negligible sulphur oxides (SOx), negligible particulate matter (PM), 85% less nitrogen oxides (NOx), and at least 20% less carbon dioxide (CO2).

LNG carriers have been using cargo boil-off gas as fuel for over 50 years and their safety record has been good. Thus, we already have good experience of using LNG as fuel, although mainly on LNG carriers.

The number of ships using LNG as fuel is increasing (other than LNG ships) and more and more infrastructure projects (LNG bunkering ports) are coming up along the main shipping routes. About 100 LNG fuelled ships are in operation worldwide (other than LNG ships) and about 100 new building ships would be constructed in the near future.

Recently (October 2015) the world’s first container ships, 3100teu, LNG fuelled, were delivered in U.S. This ship is on Jones Act service linking the US mainland with Puerto Rico. A sister vessel will follow soon. These ships when running in gas mode will reduce SOx emissions by 97%, NOx by 98%, CO2 by 72% and PM by 60%, when compared with existing older ships on the same trade.

IMO’s MARPOL Annex VI Emission Control Area (ECA) regulation, which has come into force from 1st Jan, 2015, requires that sulphur content of fuel should not exceed 0.1% when operating in such areas. With oil fuel it is difficult to meet this requirement, but with LNG as fuel, this requirement does not pose a problem.

The decision to invest in LNG as a ship fuel is not an easy one. There can be substantial premiums to be paid; up to 30 per cent for certain ship types in the most expensive cases. This high cost, combined with the lack of confirmed LNG availability for bunkering, in particular for segments dominated by the tramp trade, goes a long way to explaining the hesitation of many ship owners and charterers to move toward LNG-fuelled propulsion for new builds.

A ship owner has two options when considering the use of LNG as fuel in a new building phase: -

1. Building a LNG Ready ship - a ship ready for future retrofit, and
2. Building a LNG-fuelled ship - a ship ready for LNG operations.

IMO’s MARPOL Annex VI regulation will require by 2020 to 2025(exact date will be known by 2018) reductions in sulphur content in ship’s fuel to 0.5% for worldwide operations. Thus, it would then become 0.5% for operating ships outside ECAs, and 0.1% within ECAs which is already in force.

Government initiatives and financial support has initiated the growing development of LNG fuelled ships in the Baltic Sea, North Sea, English Channel and the coasts of Canada and US (ECAs). Other areas including Asia are likely to follow soon.

Taking into account the foregoing, environmental and regulatory considerations, it seems that for new build ships that would operate in areas where LNG fuel is available or would be available, a LNG fuelled ships is a good option. For operating in other areas including worldwide, a dual fuel ship would be a good option. Even though the construction cost of such ships would be higher, this will be more than compensate by the benefits that would accrue in flexibility, ease of operations and compliance with strict emission criteria.