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Fears that EU shipping fleets will be locked-in to LNG to cut emissions
23/2/2022
News
Forecasts that a quarter of Europe’s shipping will run on LNG has raised concerns by climate campaign group Transport & Environment (T&E) that EU shipping could be locked into fossil fuels for decades.
‘The old narrative of gas as a transitional fuel just doesn’t hold,’ argues Delphine Gozillon, Sustainable Shipping Officer at T&E. ‘We cannot afford to shift from one fossil fuel to another. It will not get us to zero emissions by 2050 and by putting more methane into the atmosphere may even fry the planet faster.’
The T&E study highlights a European Commission (EC) proposal last year (July 2021) which proposed a legislative initiative requiring ships to switch progressively to alternative marine fuels. As part of the EU’s Fit for 55 package, the FuelEU Maritime proposal aims to put the sector on track for decarbonisation by 2050.
The proposed legislation calls for a goal-based greenhouse gas (GHG) intensity target for shipping operators. The target increases with time to reduce the carbon footprint of fuel used onboard ships and squeeze out polluting, oil-powered ships. The goal is expressed in ‘well-to-wake’ (WTW) CO2 equivalent emissions to account for all lifecycle GHG emissions of carbon dioxide (CO2), methane (CH4), nitrogen oxide (NOx) and particulates of different fuels and engine technologies.
However, T&E warns that a goal-based approach may simply result in the acceleration of (fossil fuel) natural gas uptake as the cheapest alternative fuel eligible until 2040. The T&E analysis expresses concern that the EC proposal will bear high risk of ‘fossil fuel lock-in’, with LNG to be given a strong push in the market at the expense of more sustainable alternative fuels, such as green hydrogen-based fuels – also known as e-fuels and RFNBOs (renewable fuels of biological origin).
The T&E fears that if the FuelEU Maritime proposal is adopted, it could undermine the objective of EU climate law to achieve climate neutrality by 2050, as well as the objectives of the EU Smart and Sustainable Mobility Strategy to deploy ocean-going zero-emission vessels by 2030 and the EU Hydrogen Strategy aimed at the maritime sector.
The EU is aiming to cut emissions by 55% by 2030 below 1990 levels, with full decarbonisation by 2050. To achieve this target, the maritime sector would have to cut 90mn t/y CO2 in this decade, down from 140mn t/y CO2 today.
‘The FuelEU Maritime proposal aims for limited ambition in the first 15 years of its application,’ says T&E. The proposal requires shipping to reduce its energy GHG intensity by merely 2% by 2029, by 6% by 2034 and 13% by 2039, and also counts the contribution of shore-side electricity.’
LNG fuel and newbuild fleets
Meanwhile, leading maritime classification body DNV points out that less than 1% of current fleets run on alternative fuels today. But 22% of the newbuild order book (as of 2020) is targeted to run on alternative fuels, of which three quarters will be LNG-fuelled, according to DNV GL’s Maritime Forecast to 2050.
In a webinar on the role of LNG as a shipping fuel, Christos Chryssakis, DNV GL Business Development Manager, highlighted the environmental benefits of LNG. He noted that: ‘The maritime world is under pressure from all sides to improve sustainability.’ He explained that LNG offers up to 23% GHG reduction for large 2-stroke engines, up to 14% for 4-stroke engines, with further low carbon LNG improvements on the horizon. NOx reduction can range between 20–80% depending on the engine technology, with SOx (sulphur oxides) and particulate emissions reduction exceeding 90%.
‘There has been a real shift towards LNG-fuelled shipping since end-2020/2021,’ he said. The number of LNG -fuelled vessels is doubling every two to three years, moving from small passenger vessels to cruise ships, VLCCs (very large crude carriers) and bulk carriers. LNG fuelling is currently considered advantageous for large vessel newbuilds, with capex of $10–15mn offering payback within 5–7 years as well as environmental benefits.
The maritime fuel mix is changing dramatically given pressure from the EU, International Maritime Organisation (IMO) and other stakeholders like financiers pressing for more environmentally favourable vessels. New measures are being enforced, such as the incoming Energy Efficiency for Existing Ships (EEEXI-2023) regulation and the Enhanced Ship Energy Efficiency Management Plan (SEEMP), which features a mandatory carbon intensity indicator.
DNV GL notes that there is a significant difference between the ‘relatively poor’ environmental performance of very low sulphur fuel oil (VLSFO) today, compared with LNG and low carbon fuels. Chryssakis recognises that LNG and LPG will have to be replaced in the long-term, but admits: ‘It’s not easy to predict what fuel mix will win in the 2030s and 2040s.’
