LR: Uptake of LNG is likely to increase further

LNG as a marine fuel: Orderbook resurgence and future viability

According to the report, LNG as a marine fuel is in the midst of an orderbook resurgence that highlights its credentials as the most mature of all alternative shipping energy sources. Technologies, supply infrastructure, and regulatory frameworks have developed across two decades of widespread usage, offering a viable option for operators looking to reduce the energy intensity of their fuel. The challenge for those investing in LNG today is to safeguard that status as other fuel options emerge.

Key ingredients for LNG’s long-term viability

Some key ingredients will be needed to secure LNG’s long-term viability as a shipping fuel. First, emissions of unburned methane, known as methane slip, will need to be significantly reduced from shipboard technologies. With a Global Warming Potential (GWP) of 28 times that of carbon dioxide over a 100-year timeframe, even low methane emissions significantly reduce the tank-to-wake advantages of LNG. As methane is the prime component of LNG, this applies however the fuel is produced.

Reducing greenhouse gas emissions across the LNG supply chain

There is room for further greenhouse gas emissions reductions across the LNG supply chain. This means improving current production and distribution, with less carbon-intensive processes and lower fugitive methane emissions. Already today, green liquefaction can reduce GHG emissions involved in LNG production by 10%. But in the longer term, cleaner LNG means developing the production and supply of methane from renewable sources, giving shipping access to far deeper GHG emissions reduction potential.

Regulatory considerations and certification

Crucially, regulators will need to acknowledge these supply chain improvements if they are to stimulate uptake of cleaner LNG. In current regulations at IMO and EU level, default well-to-tank emissions factors for LNG do not recognize upstream GHG improvements. Allowing for certification of LNG’s upstream emissions (through schemes that already exist) will have multiple benefits: encouraging cleaner production practices; facilitating cross-border trade in light of regional emissions requirements; and enabling shipowners to buy from and reap the full rewards of the cleanest sources.

Carbon capture and storage: Enhancing LNG’s decarbonization potential

LNG fuel users may be able to reap significant further benefits in GHG intensity from onboard carbon capture and storage. In many ways, LNG is the ideal fuel with which to apply carbon capture. It emits less carbon than conventional liquid fuels, burns more cleanly, and can harness precombustion technologies that produce hydrogen from methane, reducing the overall carbon content of the fuel mix further. All this leads to a significant discount in the cost of applying carbon capture.

LNG’s growing appeal to ship owners

Newbuild orders and announcements across the global merchant fleet suggest that LNG as a marine fuel is increasingly attractive to ship owners. As is often the case in shipping, pragmatism is a key rationale. As regulations emerge that place a real financial impact on greenhouse gas emissions, ship operators are realising that LNG is one of the few low-carbon fuels to be available immediately, widely, with established safety protocols and at relatively predictable cost.

LNG pathway: BioLNG and e-LNG competitiveness

The modelling in this report also illustrates how an LNG pathway that includes bioLNG and e-LNG can be competitive against similar routes for ammonia and methanol. As a result, the LNG-fuelled fleet can expect growth: Clarkson Research predicts that the segment (excluding gas carriers) will grow to represent around 24% of the merchant fleet by 2050.

Global LNG demand and fleet expansion

Meanwhile, the wider global demand for LNG continues to grow, while supply is increasing thanks to big new fields being activated in several regions, including Qatar and the US. The LNG carrier (LNGC) fleet is expanding to accommodate the growing trade, and for those vessels in particular, the ability to use their cargo as fuel—which is fundamental for LNG cargo temperature and pressure control—also makes unquestionable economic sense.

Opportunities for LNG’s long-term sustainability

There are several opportunities to improve the long-term sustainability of LNG. These are already being addressed, and the measures that are being worked on – from cleaner production and supply processes through to onboard methane abatement technologies, as well as regulatory acceptance of these improvements – are likely to increase uptake of LNG even further.