The world’s major boxship builders have booked record numbers of contracts in recent months and the scale of ordering shows no sign of slowing down. Prices continue to climb and the largest 24,000TEU vessels now command prices of more than $260 million. That’s less than four ships for a billion and potentially a fatal investment if the ship spec isn’t spot-on and suitable for an operating life spanning at least two decades.
Liner companies face a greater challenge than many others because container ships operate at higher speeds, burn more fuel, and emit more greenhouse gases (GHG). Choice of fuel today, therefore, is a fundamental issue because between now and mid-century – typically the lifespan of a new container ship ordered today – decarbonisation regulations will tighten dramatically and there is no single fuel available now or in the future that meets every requirement.
Already a popular choice
LNG, the cleanest fossil fuel, produces 24% fewer emissions than conventional fuel oil. Widely available at ports around the world, it has an established supply chain and is already a popular choice among owners of many ship types. They include some of the world’s largest liner companies.
While fossil LNG can only take us a small way on the decarbonisation pathway, there are views that the methane pathway may present the best odds as a fuel choice at present and prospects ahead could be seen to justify LNG’s character as a ‘fuel in transition’.
To be clear, I am not suggesting that this should impact the development and investment into other alternative marine fuels. However, LNG-as-fuel credentials could impact investment into the development of other fuels infrastructure and this calls for stakeholders and regulators to revisit their strategies and policies to expedite the options being put on the table for shipping.
When it comes to LNG as fuel, there are four factors that could influence container line executives in making the LNG choice.
Managing methane emissions
The first relates to LNG’s biggest drawback but a challenge that is already being tackled by leading experts with cross-sector support. LNG is fundamentally methane, a far more damaging GHG than carbon dioxide. This calls for the development of effective methane abatement technology along every link of the LNG supply chain.
This is an industry priority and work is already under way. The Methane Abatement in Maritime Innovation Initiative (MAMII), led by Safetytech Accelerator established by LR, has more than 20 prominent shipping members, including LNG Carrier owners, liner companies, cruise lines, energy majors, with the group engaging with technology innovators and wider stakeholders.
MAMII members are tackling the development of methane abatement at speed, addressing risk mitigation and best practice in the sector. Abatement technology is developing fast. There will soon be methane performance measurement systems at every stage of the supply chain, including the combustion process onboard ships where methane slip is a significant source of GHG emissions.
It is important to underline though that technology to ensure minimal, negligible methane emissions is readily available and that this technology exists in many forms, direct and indirect, high pressure diesel cycle engines, shaft generators, batteries, while catalysts and plasma reactors are gradually lining up for wider range applications.
The second factor worth considering is the rapidly developing availability of bio-LNG. One of its key benefits as a fuel is that it is feedstock agnostic. Produced from organic plant matter or waste, it is the result of natural bacterial activity.
It is the cleanest and cheapest type of biofuel and does not compete with food or land use. And what’s more, there’s no shortage of raw material – there are growing volumes of organic waste all around the world.
Sceptics may reference the fact that it still emits carbon dioxide when used as a fuel but the carbon biogas comes from plant matter that took carbon from the world’s atmosphere in the first place. Thus its cardon derives from what we call a carbon negating process which takes us towards carbon neutrality. Evidently only the applicable life cycle assessment (LCA) methodology will confirm its proximity to neutrality which also largely depends on the feedstock used.
A RFNBO available at scale
The third factor is e-methane, LNG’s own renewable fuel of non-biological origin (RFNBO). E-LNG can be produced at scale and experts believe that it offers the fastest and most efficient way of slashing harmful emissions in the global energy system. It is made by combining green hydrogen with recycled carbon dioxide.
Some experts point out that producing green ammonia is simpler and cheaper, and they’re right. But the point is that we need a marine fuel that has a supply chain and is available universally and quickly at scale without new infrastructure costing billions. E-LNG ticks all the right boxes on GHGs, climate, and decarbonisation.
There are various initiatives in progress to develop green hydrogen production in a process involving green ammonia. But ammonia doesn’t have a carbon atom. If you combine green hydrogen with captured carbon dioxide, you can produce e-LNG which can then be distributed at scale.
Switched-on shipowners have already identified this new trade in liquid carbon dioxide transport. The first ships are due for delivery later this year and there are now a number of larger LCO2 carriers, as they are known, being built at yards in China and South Korea.
CCS deals a winning hand
Now for my ace card! The fourth factor is the rapidly developing carbon capture and sequestration (CCS) sector or the carbon negative sector as it used to be referred to. A whole new space is being developed to negate part of the footprint of industries that cannot fully transition to zero carbon options.
They are planning large-scale CCS facilities in sectors including cement, chemicals, fertiliser and steel. These industries along with oil and gas will invest in CCS solutions and infrastructure and the synergy for maritime there can be tempting.
Today we witness new technologies developing at pace and project that the cost of CCS is likely to fall as more technology providers, infrastructure, storage solutions come online at major industrial hubs and ports around the world. We have seen and undertaken work on de-bunkering CO2 from ships and it is highly likely that over the next decade there will be huge advances in carbon sequestration. LNG is not simply compatible with onboard CCS, the LNG fuel option will come with 30-35% discount in CCS cost as it emits less carbon to that extent, it is cleaner to burn and therefore easier to handle in the capturing process, while it is also compatible with precombustion technologies cracking methane to hydrogen. These attributes make methane the best option for oboard CCS applications.
For years the availability and scale of LNG have been highlighted as its key differentiating attributes. Today we witness four distinct pathways gradually rolling out, methane abatement, bio-LNG, e-LNG and onboard CCS. This hand of cards makes LNG unique in terms of diversification against risk and it could be added, practically lead to the rebranding of LNG as a decarbonisation pathway.
