T&E examines the impacts of natural gas in transport

by The Editorial Team

March 2, 2016

in Fuels

T&E commissioned a study to assess the impacts of large-scale use of natural gas in the transport sector. Τhe study concludes that the increased use of natural gas in road transport is largely ineffective in reducing greenhouse gases or air pollution.

In February 2016, the European Commission released a proposal to guarantee its gas supply security and is preparing another one to implement the EU’s 2030 climate targets for the transport, buildings and agriculture sectors. It is also developing a communication to decarbonise the road transport sector, to be announced this summer. To understand what role natural gas could have in achieving these objectives, T&E commissioned a study from Ricardo Energy & Environment to assess the impacts of large-scale use of natural gas in the transport sector.

As T&E’s briefings explain, the study concludes that the increased use of natural gas in road transport is largely ineffective in reducing greenhouse gases or air pollution. The immediate benefits are small or non-existent; while the environmental costs, societal costs and costs to operators are negative for almost all vehicle categories.

While the study also finds clear air pollution advantages from using LNG in the shipping sector, its GHG emissions benefits are highly dependent on methane slip at the production, distribution and operational levels. LNG ships also incur higher infrastructure and capital costs.

Natural gas is not a ‘bridge fuel’, as claimed, but an expensive dead-end on the pathway to decarbonising transport.

Costs/benefits of LNG versus conventional fossil fuels

1. Impacts on greenhouse gas emissions

The study found that there is some potential for reducing GHG emissions from shipping through the use of natural gas, but reductions achieved can be counteracted by methane slip in the production, distribution and on board combustion phases. The Global Warming Potential (GWP) of methane is 30 times that of CO2 and there are large variations and uncertainties in emission.

The study looked at the environmental impacts of using LNG in shipping compared to conventional fossil fuels using combined “well to tank” (WTT) and “tank to wheel” (TTW) analysis i.e. well-to-wake (WTW) GHG emissions. Well-to-wake greenhouse gas emissions are highly dependent on methane slip. If 1.8% of the gas is assumed to slip, well-to-wake GHG emissions of LNG ships 1-10% lower than ships running on Heavy Fuel Oil (HFO) or Marine Gas Oil (MGO). However, under a 3.5% methane slip assumption, total well-to-wake emissions of LNG ships are 0.3-9% higher than those of MGO and HFO ships.

These findings indicate that LNG in shipping may currently not reduce GHG emission at all, or only marginally under positive assumptions on methane slip. But technically more is possible; if the sector would use best available technology to control methane slip, overall well-to-wake GHG emissions of LNG could be 12%-27% below that of HFO and MFO. Wider research has shown that the overall long-term impacts of a fleet-wide shift to LNG could be significant in terms of the length of time it might take for LNG vessels to achieve climate neutrality compared to conventional vessels powered by HFO and MGO. This research found that using LNG as a fuel for the shipping sector could achieve climate neutrality within 30 years for ships powered by compression ignition, dual-fuel LNG engines, but that for mono-fuel spark ignition LNG ships, it could take up to 190 years to achieve climate parity with conventional marine fuels. This is using the concept of Technology Warming Potential (TWP).

RelatedNews

ICCT: China’s new policy for coastal and inland ship renewal

Research finds need for extending whale protection areas

2. Infrastructure and capital costs

Widespread uptake of LNG fuelled ships would require the development of infrastructure, including terminals, and LNG storage facilities (with/without liquefaction capabilities). Currently, most production plants and LNG import terminals are designed to service full sized LNG carriers and are not equipped to serve smaller vessels, or to frequently receive ships. Existing LNG terminals would therefore require modification to refuel ships. LNG can also be supplied by trucks, provided the volumes required are relatively small. The costs of LNG terminals for ship refuelling can be high. Taking into account different scenarios, the study cites average infrastructure costs of €170 per tonne of LNG in the cost analysis compared to 10 €/tonne for existing HFO and MGO infrastructure. This is a very significant difference; if it is funded from the public purse it constitutes another fossil fuel subsidy.

3. Air pollution impacts

LNG burns significantly cleaner than MGO or HFO, producing negligible sulphur or particle emissions and drastically lower NOx emissions per unit of fuel. As such it is one of the options to comply with ECA requirements. Shifting to LNG-powered vessels from either HFO or MGO fuel types can reduce NOx over 80%, SOx by over 90%, and PM by over 95%. These large differences mean that even at today’s low oil prices, an LNG ship sailing in the North Sea (i.e. close to densely-populated shores) offers net benefits to society of €0.7-2.6m per year compared with ships using MGO. However, LNG vessels operating in the North East Atlantic do not offer benefits in terms of social costs at today’s fuel prices.

The study found that whilst LNG-fuelled ships have higher capital costs than HFO-fuelled ships equipped with scrubbers and MGO-fuelled ships, there can be economic benefits to operators but these benefits are very sensitive to shifts in fuel prices. In particular, at current fuel prices, for most vessel types there would not be any economic benefits to operators in shifting to LNG because the annual fuel costs for LNG ships would be higher than for HFO and MGO-fuelled vessels.

4. Arctic

The study does not quantify the use of LNG in the Arctic, but clearly a requirement to use LNG in the Arctic would go a long way in addressing two of the greatest environmental concerns related to using oil predicts in this region: spills and black carbon deposition on ice.

Find out more by reading the study