Page 4 - GLNG Week 06

GLNG COMMENTARY GLNG
LNG and the post-IMO 2020 operating environment
The use of LNG of a marine fuel is on the rise in the wake of the IMO 2020 rules being implemented, but new questions have been raised about its environmental impact
POLICY
WHAT:
LNG is an increasingly popular option as a marine fuel, but there are new concerns over its impact.
WHY:
A new study claims using LNG as fuel leads to more lifecycle emissions than using marine gas oil.
WHAT NEXT:
The study’s findings have been questioned, and more LNG-fuelled ships are due to be built.
THE use of LNG as a marine fuel is on the rise, and is set to grow further still after International Maritime Organisation (IMO) regulations limit- ing the sulphur content in marine fuel took effect at the start of this year. Shortly after the IMO 2020 rules came into force, however, a new study claimed that LNG-fuelled ships may emit more lifecycle greenhouse gas (GHG) emissions than previously thought. But while the LNG industry is still assessing the study’s findings, the assump- tions and methodologies used have already been called into question. And in the meantime, the economics and other environmental benefits of using LNG will mean that the fuel still stands to become an increasingly popular option for the shipping industry.
All change
The IMO 2020 regulations call for limiting sul- phur in fuel oil to 0.5%, compared with 3.5% previously, in an attempt effectively to eliminate a major source of sulphur oxide (SOx) emissions. Vessels have a few options for complying with the new requirements – either by switching to a low-sulphur fuel or by deploying sulphur miti- gation techniques.
Fuel options include marine gas oil (MGO), very low sulphur fuel oil (VLSFO), ultra low sulphur fuel oil (ULSFO) and LNG, as well as a handful of alternative fuels that are still com- paratively new. Since the IMO 2020 rules came into force on January 1, prices for some of the low-sulphur fuel options have surged.
Vessels can opt to keep using high sulphur fuel oil (HSFO), but need to turn to sulphur mit- igation in order to be IMO 2020 compliant. This generally involves installing exhaust gas cleaning systems – known as scrubbers – to remove SOx from the exhaust gases generated by the ships. Those opting to install scrubbers benefit from reduced prices for HSFO. However, there is a high up-front capital cost involved in installing scrubber equipment, so it could be some time before such vessels start to see the benefits of lower fuel prices.
The fate of vessels turning to such equip- ment is complicated by the fact that a growing
number of ports are banning open loop scrub- bers. Indeed, concerns have previously been expressed that IMO rules could change again in the near future, resulting in open loop scrubbers being banned altogether. Closed loop scrubbers – which store the wastewater they produce on board a ship until it can be treated on land – pres- ent a way of circumventing such bans. However, closed loop scrubbers – and hybrid scrubbers that can switch between open and closed loop operations – are even more costly to install. Around 80% of the scrubber systems installed currently are open loop.
LNG to the rescue?
These challenges around the use of scrubbers have made LNG an increasingly attractive alter- native for a growing number of shippers. The ris- ing popularity of LNG is helped by the fact that a global supply glut, amid comparatively weak demand, has pushed spot prices for the super- chilled fuel to new lows.
In addition to this, LNG is widely considered
to be one of the best options as far as emissions
go. The fuel contains virtually no sulphur, and
using it has been found to result in lower emis- However, there sions of other gases, such as carbon dioxide
(CO2), compared to other types of fuel. How-
ever, a new draft study has questioned some of
these findings, suggesting that using LNG as a
marine fuel may actually result in higher GHG
emissions over the long term.
The study was carried out by the not-for- in installing
profit International Council on Clean Trans- portation (ICCT), and notably commissioned by an environmental organisation, Stand.earth, which is known for its opposition to oil and gas projects.
In the study, the ICCT found that although LNG contains less carbon than conventional marine fuels, its use might not reduce GHG emissions on a lifecycle basis. In particular, it expressed concern about methane leakage, not- ing that methane traps 86 times more heat than the same amount of CO2 over a 20-year period.
The study found that the maximum lifecy- cle GHG benefit of using LNG as a marine fuel
scrubber equipment.
is a high up- front capital cost involved
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w w w . N E W S B A S E . c o m Week 06 13•February•2020