The Rise of LNG in Shipping: A Sustainable Future
The shipping industry is undergoing a significant transformation as it seeks to meet stringent environmental regulations. Over the past few months, there has been a notable resurgence in investment in vessels powered by liquefied natural gas (LNG). The International Maritime Organization (IMO) has set ambitious targets for reducing greenhouse gas emissions by 2030 and 2050. This urgency has prompted the industry to explore viable alternatives to very low sulfur fuel oil (VLSFO), which has been the standard for marine fuel. LNG, along with its bio and synthetic derivatives, is rapidly establishing itself as a key player in the decarbonization efforts of the shipping sector.
Current Landscape of LNG-Fueled Vessels
As of now, there are 609 LNG-fueled vessels operating globally, with an additional 632 on order, excluding LNG carriers. When including LNG carriers, the total number of vessels in operation jumps to 1,314, with 983 more on order. This marks a significant increase from just 21 LNG-fueled vessels in operation in 2010. Currently, LNG-fueled vessels represent approximately 4% of the global fleet, which consists of around 60,000 vessels. This growth trajectory is expected to continue, as evidenced by a record-breaking month in October 2024, where DNV reported 66 new LNG-fueled vessel orders, alongside 29 methanol and 2 LPG (liquefied petroleum gas) vessels.
The container shipping sector, known for its high fuel consumption, is leading the charge in adopting LNG as a marine fuel. Major players like MSC and CMA CGM are set to receive 92 and 34 LNG dual-fuel vessels, respectively, starting in 2025. Additionally, AP Moller Maersk has announced a substantial investment of $4.6 billion for up to 22 new LNG dual-fuel container ships. Hapag-Lloyd has also signed contracts for 24 new LNG dual-fuel vessels. This surge in investment underscores the industry’s commitment to transitioning to cleaner fuels.
The Advantages of LNG for Decarbonization
LNG presents a compelling case for ship owners and operators aiming for net-zero emissions. The shipping industry faces increasing regulatory pressures and competitive markets, making it essential for any alternative fuel investment to deliver immediate emissions reductions while also being future-proof. LNG meets these criteria effectively. It can reduce greenhouse gas emissions from marine propulsion by up to 23% in high-pressure engines, which dominate the current order book. Furthermore, methane slip—a common concern regarding LNG—can be minimized to nearly undetectable levels when vessels operate at recommended power loads. Continuous advancements in technology are also addressing methane slip in various engine types.
Beyond its immediate benefits, LNG holds significant future potential. By transitioning to liquefied biomethane, also known as renewable natural gas (RNG) or bio-LNG, ship operators can achieve greenhouse gas emissions reductions of up to 80%. In some cases, such as when produced from anaerobic digestion of manure, these reductions can exceed 188% compared to traditional marine fuels. The introduction of liquefied e-methane, derived from hydrogen, further enhances LNG’s appeal, as it aligns with the IMO’s 2050 regulations and can facilitate carbon-neutral operations. This positions LNG as a robust solution for the shipping industry’s decarbonization journey.
Supply and Demand Dynamics in LNG Adoption
The growth of LNG as a marine fuel can be likened to a chicken-and-egg scenario. Recent developments have made LNG more accessible globally, encouraging shipping companies to adopt it. In turn, the rising demand for LNG has spurred investments to enhance LNG bunkering capabilities in ports worldwide. Currently, LNG bunkering is available in approximately 185 ports, with projections to increase to 235 by 2025. Additionally, liquefied bio-methane bunkering is available in around 70 ports across key global trade routes in Asia, Europe, and North America.
However, there are concerns regarding the availability and rising costs of other alternative fuels, such as bio- and e-methanol. In 2023, methanol-fueled vessels accounted for 51% of new container ship orders, but this figure dropped to just 21% in 2024. This shift indicates a growing preference for LNG as a more reliable and cost-effective alternative.
The LNG pathway offers a viable route to meet the 2030 emissions regulations and achieve net-zero emissions by 2050 through the use of liquefied biomethane and e-methane. Given the increasing pressure on the shipping industry to decarbonize, LNG presents a practical and incremental solution. Its compatibility with existing infrastructure, growing availability, and commercial viability solidify its position as a leading fuel for the future of shipping.
