A report published by the Gas Exporting Countries Forum (GECF) touches upon the development of the LNG bunker fuel market, its expected growth and assesses the current state of LNG bunkering infrastructure. It also makes suggestions on how to promote LNG bunker fuel.
According to GECF GGM, in 2040 global consumption of bunker fuels will reach 319 mtoe, with global LNG bunker fuel consumption increasing to 41 mtoe (or 33 mtpa, or 45 bcm). Thus, in 2040 LNG bunker fuel share will reach 13% of the bunker fuel market, while its share in the global natural gas market will be at around 1%.
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However, according to the report, the successful LNG bunker fuel penetration in the global shipping industry depends on regulatory and economic driving forces. The key regulatory driver is the stricter environmental policy which aims to reduce air emissions.
With International Maritime Organization introducing the new sulphur cap of 0.5% from 2020, demand for LNG bunker fuel is expected to rise, since LNG enables almost complete reduction of sulphur oxide emissions and a very significant reduction of NOx and CO2 emissions
The most important regulatory challenge is to mitigate the negative impacts of LNG-fueled shipping, such as methane leakages and the overall greenhouse gas impact of LNG bunker fuel. As there is pressure on the shipping industry to improve its GHG footprint, ship owners may prefer to wait for new lower carbon options.
In the meantime, the key economic challenges are the costs of LNG bunkering infrastructure and costs of retrofitting conventional ships to use LNG bunker fuel. The fact is that LNG infrastructure, although expanding fast, still remains limited.
GECF also notes that currently, a few major shipping operators have committed to new build LNG-fueled ships. Many ship owners and operators do not want to risk significant investments in this climate and have adopted a wait-and see approach to see how technology and prices evolve. Nevertheless, developments such as the first LNG bunkering vessels in Europe and the first large order of 9 LNG-fueled container ships by CMA CGM could be the trigger.
For more information click on the following PDF