Shipping’s focus on carbon emissions to hasten pace of LNG bunkering
Increasing focus on carbon emissions and with the International Maritime Organization’s global sulfur cap set to kick in from 2020, shipowners are eyeing LNG dual fueled engines for newbuilds to stay flexible in an uncertain price environment, sources said at an industry event Thursday.
The looming 0.5% sulfur cap is the biggest issue for shipping right now because it covers the high seas too, Michihiko Nakano, general manager bunker business office, Mitsui O.S.K. Lines, said at the Gas Asia Summit & Exhibition, held as part of the Singapore International Energy Week.
The rule would affect more than 70,000 ships and required the industry to act swiftly, he said.
Several options exist to comply with this rule. This includes distillates, low sulfur fuels, scrubbers with HSFO, and other alternatives, mainly LNG.
“Improving logistics, development of engineering, rule making, and environmental consciousness make LNG a promising option as a marine fuel,” Nakano said. “We are ready to go into LNG fuel and LNG bunkering together with good partners.”
MOL is already undertaking several projects in this direction. In May, the company also said it was planning to build its first LNG-fueled tug boat, with deployment scheduled for April 2019.
“Besides sulfur restrictions, we can expect more environmental regulations in future. So, whatever fuel choice you make today has to be future proof,” said Deputy Director (Port Services) at the Maritime and Port Authority of Singapore Alan Lim.
According to a report released by the International Council on Clean Transportation this month, bunker fuel consumption rose from 291 million mt in 2013 to 298 million mt in 2015. CO2 emissions from global shipping — oceangoing vessels, domestic ships, and fishing vessels — increased from 910 million mt to 932 million mt over the same period, in line with marine fuel consumption, the data showed.
The EU MRV regulation, which requires any ship of over 5,000 gross tonnage calling at an EU port to record its CO2 emissions for the entire voyage, saw its first deadline on August 31, when such ships were required to submit a monitoring plan to a verifier for approval.
The second deadline is January 2018, from when shipping companies must record fuel consumption, carbon emissions and other relevant information for each ship on a per voyage and annual basis according to an approved monitoring plan.
The IMO, along with various countries, industry and non-governmental organization representatives, is also discussing a comprehensive GHG strategy for ships, which could include a cap on emissions. LNG not only curbs NOx, SOx pollution but also carbon emissions.
HURDLES CAN BE OVERCOME
“We need to help the members to kick-start the industry,” Walter P. Purio, CEO, LNG Marine Fuel Institute, said. In this regard, Pilbara Port Authority, Woodside, BHP, Mitsubishi, GE and MOL were already doing their bit, he added.
Singapore has been at the helm of LNG bunkering initiatives, spearheading the creation of a network of LNG ready ports that includes 11 globally now. “From early 2018 onwards, LNG-fueled harbor craft vessels built under MPA co-funding program will be delivered in Singapore,” MPA’s Lim said.
“Safety remains a priority in LNG bunkering and we will not take any chances on safety,” he added.
In April, Singapore launched its first technical reference — TR56 — for LNG bunkering. TR56 aims to provide a safe and efficient framework for LNG bunkering operations in Singapore. It has three parts: requirements for custody transfer, procedures and safety distances, and competency requirements for personnel.
Price remains another compelling consideration for shipowners to choose LNG over other options, sources said.
“If we just replace conventional engines with LNG-fueled engines, there is environmental compliance but very little return on the additional capex required for LNG propulsion. To justify this additional capex or return on investment, hybrid propulsion is the way forward,” said Sanjay Verma, director business development LNG-Asia, at Wartsila.
Presenting a case study on a 75 tonne LNG hybrid bollard pull tug, he added that the fuel savings could be as much as 25%.
“If you install less power, reduce running hours of engines, you automatically get a benefit in terms of opex and additional environmental benefits compared to just LNG powering,” he said, adding that the global market for hybrid propulsion was expected to grow fast.