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LNG as Marine Fuel: Challenges to be Overcome

22-Oct-2014

Author: Pablo Semolinos, Gunnar Olsen, Alain Giacosa

Page Count:  20

Date:  March 1, 2013

Summary:

The purpose of this paper is to provide an overview of the challenges and possibilities ahead for the development of LNG as marine fuel. First a general overview of the subject is presented (section 1) including economic valuation of each solution for shipowners (section 2), description and costs of the supply chain (section 3). Then the main challenges to be overcome are presented as well as each time an evaluation of the best way to approach these issues (Section 4 and 5).

From the document:

International Marine Organization (IMO) has introduced restrictions on emissions that will come into force in 2015 in the Emission Control Areas and 2020 for the rest of the world. In order to be compliant with these restrictions, business as usual is no longer an option for the ship-owners. Several solutions are being evaluated, however, LNG has the possibility of remaining the leading candidate in order to retain a substantial share of the world bunker market: proven technology (around 40 ships running on LNG), more than meeting the new emissions requirements and less CO2 emissions. In addition, economics are in many cases in favor of LNG. However, several uncertainties need to be further evaluated and solutions found in order to have LNG become the preferred choice also in this segment. Investments have to be committed all along the value chain and the market faces the classical chicken-and-egg dilemma: Longer term volume commitment from both suppliers and ship-owners that can justify the investments required.