DNV – why LNG fuel makes sense


LNG fuel makes sense when you consider that it would enable a vessel built today to operate until 2040 under current and anticipated regulations, explained DNV


Many people question how worthwhile it is running ships on LNG fuel, if it only gives a 6-20 percent improvement on greenhouse gas emissions once methane slip is taken into account, and a zero carbon fuel may be available within a decade.

The answer looks clearer when you look at how IMO’s decarbonisation trajectory works, explained Christos Chryssakis, business development manager with DNV.

He was speaking at a webinar organised by DNV on May 11, “LNG as ship fuel – where are we and what comes next?”

Under IMO’s Carbon Intensity Indicator (CII), all ships, existing and new, will be graded according to their emissions per ton mile, and a grading model for that specific ship type. A score of A, B or C counts as a pass, and a score of D or E counts as a failure.

Failing ships will be required to make improvement plans. The grading model will be tightened every few years, so a ship which passes today may fail in the next tightening. The whole system is designed to ensure the maritime industry decarbonises at a rate to reach IMO’s target.

To maintain its A, B or C status, a ship can reduce speed, or make some other energy improving adjustment to its equipment, such as switching to a lower carbon fuel.

DNV assesses that half of VLCCs built before 2015 will be already on the failure line in 2023, if they operate at normal speeds. A VLCC built today running on conventional fuel will be sailable at normal speeds up to 2030. But a new-build VLCC with LNG as fuel will be sailable until 2040.

So despite LNG fuel only achieving a 14-23 per cent improvement in carbon emissions, it also means another 10 years of viable life.

Similar factors apply to bulk carriers, DNV calculates. As an example, for a conventional design of vessel that might fail by 2022, or pass up to 2026 with some optimising. But by using LNG fuel, it could be operated up to 2033.

The targets from 2030 to 2040 are not yet precisely set, DNV is using its estimate for this calculation.

DNV envisages low CO2 fuels coming onto the market in small volumes starting in 2025 or a few years after, and after that point LNG fuelled tankers could use something else such as bio-LNG to replace part of their fossil fuel.

But shipowners don’t have much choice today – they either order conventional vessels which they can only sail for a limited period, use LNG vessels, which can ensure compliance for another decade without needing special zero carbon fuels, or don’t order at all.

There are other commercial factors which may make LNG more viable. Consider that a vessel using LNG fuel will be able to go at a faster speed than a vessel with conventional fuel, but make the same emissions. A charterer needing cargo delivered more urgently may preferentially charter the LNG fuelled vessel. (This would of course negate the carbon benefit of using LNG.

There may be a need to pay carbon taxes in future for CO2 emitted. This would give an LNG fuelled vessel a small financial advantage.

In terms of overall economy, DNV calculates that the price of buying and running LNG fuelled vessels today is competitive with running high sulphur fuel vessels, based on both the capex and the fuel cost over 5-7 years.

Other environmental benefits are that LNG has a NOx reduction of 20-80 per cent, and no sulphur. The particulate matter is “significantly reduced”.


Methane slip

The CII calculations are based only on CO2 emissions. They do not consider methane slip (methane which passes through the engine un-combusted). This adds to the greenhouse gas emissions (GHG), because methane is a more potent greenhouse gas than CO2.

But DNV’s calculations show that LNG is still better than conventional fuel on a greenhouse gas emissions basis, taking methane slip into account.

A low pressure, 2-stroke engine can achieve a 14 per cent reduction in GHG by using LNG compared to conventional low sulphur fuels, over the full lifecycle, DNV calculates. A high pressure, 2-stroke engine can achieve at least a 20 per cent reduction, compared to conventional low sulphur fuels. A 4-stroke engine running on LNG will see a 6-14 per cent reduction.

How many LNG fuelled vessels?

As of May 2021 less than 1 per cent of the existing shipping fleet were using any kind of alternative fuels, and about 0. 16 per cent using LNG, according to DNV’s analysis.

But already by mid-2020, 9.52 per cent of the vessel order book (new builds at yards) were for LNG fuelled vessels. Over the whole of 2020, 16 per cent of the vessel order book had LNG as fuel. Over Jan- April 2021, 18.5 per cent of new build orders had LNG as fuel. Extrapolating this trend indicates that the vessel order book for the whole of 2021 may be above 20 per cent LNG.

This is a much bigger proportion of the fleet than many people believe. To illustrate this, the webinar audience was asked to share their views about how many newbuildings to be contracted in 2021 would have LNG as fuel. 33% of the audience said less than 10%; 35% of the audience said 10-20%; 19% of the audience said 20 to 30%; and 10% said more than 30%.

The audience was asked what percentage of the shipping fleet would use LNG as a marine fuel by 2030.

2 per cent of the audience said under 10%, 20% of the audience said 10-20%, 40% of the audience said 20-30%, and 37% of the audience said more than 30%.

These percentages are on the basis of number of vessels. But if the analysis was in terms of dwt of vessel, the LNG percentage would be higher, because LNG is more likely to be used on bigger vessels, Mr Chryssakis said.

DNV forecasts that LNG consumption by vessels will grow from 1m tonnes a year in 2020 to 4m tonnes a year by 2025. It anticipates particularly big interest for container vessels, bulk carriers, and very large tankers.


On a geographical basis, LNG fuelled vessels are now operating on most major shipping lines crossing the Atlantic and Pacific, Mr Chryssakis said. They are now being seen going around Africa.

The areas not yet covered well for supplies of LNG to ships are South America and South Africa. “For South Africa there are some projects in the next few years,” he said.

“The availability of LNG is one big barrier that has to come down for LNG to be selected as a fuel.”

There are LNG bunker vessels operating in Florida, Northwest Europe, Gibraltar, the Red Sea, Singapore, Korea and Japan.

The number of LNG bunker vessels and their capacity has increased very quickly. Roughly half vessels are under 5000m3, and half are 5,000 to 10,000 m3.

The LNG bunkering domain is also showing a trend towards shorter term contracts, he said. “There’s a lot changing.”

The price of LNG fuels in ports is becoming more even. A few years ago, North America was cheapest, Asia most expensive, and Europe somewhere in between.


Replacing with biogas

One option over the longer term is to start replacing LNG with liquefied biogas, for example from rotting organic matter (plants). In determining whether or not this is better, there is a complex lifecycle CO2 emission calculation to make.

The carbon which is emitted when combusting the methane would have originally come from the atmosphere when the plant was growing, so in this sense the cycle is carbon neutral. But there will have been emissions associated with growing the plants, such as for tractors and fertiliser manufacture, and in transporting them.

If the organic matter was not grown specially to make the biogas, there is an argument that using the biogas as fuel prevents methane entering the atmosphere, which would have happened as the organic matter rotted otherwise, such as in a landfill.

Depending on these factors, the biogas could be as bad as hydrocarbons, or close to carbon neutral, Mr Chryssakis said.

There is also a range of forecasts for how much biogas will be available for ships.

Despite this, DNV sees that biogas offers “real potential for vessels,” Mr Chryssakis said. “This is one way to make LNG engines sustainable into the long-term future.”

Replacing with zero carbon fuel 2025 could be “a bit optimistic” as a date for seeing low carbon fuels available for shipping, such as hydrogen and ammonia. “It could be a few years later,” he said.

Factors affecting availability include infrastructure and storage, the maturity of technology, energy density and the price.

“We’re trying to guess what is going to be the best zero carbon fuel option. This is a very difficult question.”
You can view the webinar online here




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