European Commission study shows industry support for LNG as shipping fuel

Environmental advantages of liquid natural gas remain undisputed despite a lack of profitability, according to the commission.    Shipping industry stakeholders recognize the environmental advantages of liquid natural gas as a shipping fuel, but are still uncertain whether they offer a clear business case, according to the preliminary results of a European Commission study.
   The study examines the EU’s policies aimed at reducing emissions from shipping and finding alternative energy sources given growing constraints on the use of heavy fuels.
   A 2012 directive on sulfur content in marine fuels allowed the use of LNG as an alternative to comply with more stringent emission standards. More recently, a 2014 directive on deployment of alternative fuels infrastructure aimed at ensuring minimum coverage of LNG refuelling points deep water and inland ports across Europe by 2025 and 2030, respectively.
   According to the findings, the major motivation for stakeholders to engage in LNG as a shipping fuel is to be compliant with Emission Controlled Area (ECA) zone requirements and the related positive environmental effects. The most critical issue for further deployment of LNG, however, is the price tag.
   For many shipping companies LNG does not yet offer a profitable business model due to higher equipment costs for engines and tanks that are not offset by savings in fuel or operating expenses. Another barrier to implementation is the lack of existing bunkering infrastructure for LNG.
   “This study gives us a solid overview of the opportunities and remaining challenges for the use of LNG for shipping. More importantly: the outcome helps us to feed a public debate on LNG for shipping and provides arguments for a stakeholder debate at local level.” said Sandro Santamato, Head of Unit Maritime transport & Logistics, European Commission.
   The study, scheduled to become available in June 2015, is being conducted by the European Commission’s Directorate-General for Mobility and Transport, PwC and DNV-GL.