Challenges for LNG in shipping as sulphur deadline looms


The shipping industry will face numerous obstacles before the EU directive limiting the maximum sulphur content of marine fuels comes into force in January 2015, and is likely to continue to use non-compliant fuels until the eve of the new restrictions.

“Dictated by the large cost difference between heavy fuel and light distillates [such as LPG, LNG and gasoline], the shipping industry will continue to use residual fuels until they become non-compliant,” Gemma Wilkie, communications director at Baltic and International Maritime Council (BIMCO), told Interfax.

“The transition of fuels will thus, in practice, have to happen overnight,” she said.

Under the revised directive, the maximum sulphur content of maritime fuels used in sensitive areas such as the Baltic Sea, the North Sea and the English Channel will be reduced from the previous level of 1.5% to 0.1% from 1 January 2015. In other areas, including the Mediterranean and the Black Sea, the allowable sulphur content will be lowered incrementally from 4.5% until it reaches 0.5% in 2020.

While the shipping industry could use mineral oil with low sulphur content or fit scrubbers into exhaust gas systems, LNG as a shipping fuel is regarded as one of the most promising options to meet the new requirements.

LNG is lower in controlled pollutants, containing almost no sulphur oxides and 80% less nitrogen oxides (for Otto-Cycle engines) than conventional maritime fuels. LNG-fuelled ships also produce 20% less carbon dioxide, according to BIMCO.

The law is expected to boost demand for LNG in shipping, but many issues remain.

Competition between ship owners will be massively distorted if lack of enforcement allows some in the industry to avoid meeting the new requirements, according to BIMCO.

“The cost difference between distillate fuel and heavy fuel will be so large that compliant ships competing with non-compliant ships will not remain commercially viable,” Wilkie said.

Infrastructure issues

In addition, the limited availability of satellite terminals and bunker barges (floating refuelling stations for LNG) will make it difficult for most ships to switch from traditional liquid fuel to LNG.

EU governments failed to agree on concrete targets for LNG refuelling stations when adopting a directive for alternative fuels in May (see Member states block concrete targets for alternative fuels, 1 May 2014).

According to the new directive, member states must ”encourage infrastructure so that LNG-powered ships [are able] to travel between major sea ports by the end of 2025”.

The commission had previously proposed LNG refuelling stations be installed in all 139 of the EU’s maritime and inland ports.

EU legislation

“Maritime transport is a global concern, so it is crucial to have global standards. If the IMO [International Maritime Organisation] fails to take a decision [then] we will take a European decision [on stricter standards],” Miguel Arias Cañete, EU commissioner for climate action and energy, said in October.

The IMO controls marine emissions through the International Convention on the Prevention of Pollution from Ships, also known as MARPOL 73/78.

The requirements of the convention are divided between global standards and more stringent limits for ships in emission control areas (ECAs). While the ECA limit for sulphur content will be 0.1% by mass in 2015, the global limit for sulphur will be lowered from 3.5% to 0.5% by 2020.

“Failing to meet the demand for compliant fuel will cause massive disruption in global trade if the rules are enforced,” Wilkie added.

Maritime transport is crucial for the EU’s economic development, as 90% of its international trade and 40% of trade within the union is carried by water – around 3% by inland waterways.

Source from : Interfax Energy Global