LNG or Liquefied Natural Gas could be the fuel for the energy transition in the ocean freight shipping industry. The maritime sector which moves around 90% of the goods across the world is still heavily reliant on fossil fuels. Therefore, making this sector environmentally sustainable is one of the major priorities of governments as well as the top shipping companies. The International Maritime Organization has clearly stated its objective of lowering the yearly greenhouse gas emissions by at least 50% by 2050. In this context, the use of LNG for powering container ships is becoming increasingly popular.
Both the governments and the carriers are resorting to the use of LNG as the most cost-effective way of energy transition that can lower the carbon footprint while saving money. South Korea, Japan, and the USA are the biggest importers of this fuel and the LNG market is all set to expand enormously in the coming years. Keep reading today’s post to find out about the importance of LNG as a fuel for the energy transition in the ocean freight shipping industry.
The use of LNG in the ocean freight shipping industry
The use of LNG in the maritime sector has greatly risen in the last few years. Presently, there are over 355 LNG-powered ships and 521 new LNG-powered ships are under construction. Moreover, in the last quarter of 2022, there was an additional 222 new orders for LNG-fueled ships. In this context, it needs to be remembered that the geopolitical importance of LNG is also rising because of Europe’s endeavours to reduce its dependence on Russian fuel.
LNG which predominantly consists of methane and is a colourless, odourless, non-corrosive and non-toxic substance that is easy to store and transport. As per several studies, the use of LNG eliminates the emission of sulphur oxide and fine particles and considerably lowers the emission of nitrogen oxide as well. Simply put this fuel help to lower the emission of greenhouse gasses by somewhere between 10% to 25%. It is a much more environmentally sustainable option than other conventional fuels. This is one important factor which makes it important for ports located near large cities. Additionally, the use of LNG is the first step towards the adoption of future fuels that come with near-zero emissions such as biomethanol, hydrogen, bio-LNG and synthetic LNG.
The largest European port, the Port of Rotterdam has created a third berth exclusively for the use of small LNG ships and tankers. The use of this fuel is a major step in the sustainability endeavours of the ocean freight industry since one of the major barriers to the use of sustainable fuels is the lack of infrastructure. The large-scale manufacture and distribution of Liquefied Natural Gas will become even more widespread when the biggest ports in the world start to adopt this fuel and encourage the global shipping sector to follow suit.
LNG as the path to decarbonization
LNG continues to be the most popular low-carbon fuel in spite of its high pricing which is not going down any time soon. Moreover, Asian carriers and shipping companies are also opting for LNG-powered ships in a bid to catch up with their counterparts in Europe. For instance, the Eastern Pacific Shipping Company based in Singapore recently celebrated their 50th LNG bunkering operation. They have also announced their plans of chartering four new LNG-powered vessels. Similarly, the Japanese shipping company, OSK Lines are acquiring six LNG-powered vessels. They are planning to form a fleet of 90 LNG-fueled vessels within the next seven years.
The Russia-Ukraine war has led to a steep rise in LNG prices. Nevertheless, in spite of the high fuel price, the orders for LNG-powered ships have not come down. Hapag Lloyd was the first container shipping company to convert a 15,000 TEU ship- The Brussels Express to run on LNG. The company is presently planning on lowering its environmental impact by 60% by 2030. To this end, they are retrofitting several of their ships to alternative fuels. Therefore, in the context of such developments, the uptake of LNG as the go-to fuel in the ocean freight shipping industry is expected to increase.
The problems of LNG as a fuel for the container shipping industry
One of the most talked about disadvantages of using Liquefied Natural Gas is the space problem. LNG weighs more and requires more space as compared to fossil fuels. Therefore, it takes up a considerable volume of storage space for long voyages. Until now the tanks are built in the cargo spaces of the vessels and the weight and volume of LNG can be a setback for the carriers in terms of money earned from the cargo space.
Presently, the ocean freight shipping industry is working on creating new systems that can store the fuel beneath the containers, above deck or in the superstructures. However, this would entail additional insulation, and more expenses in terms of vessel construction. Hyundai is the only shipbuilding company that can come up with a dedicated tank for LNG storage. Hopefully, other companies will soon follow suit and new innovations will emerge to smooth the path for the energy transition.