Analysis: LNG dual-fuel ships are ‘the lowest’ cost option for ensuring compliance with regulations

December 17, 2024, by Naida Hakirevic Prevljak

LNG dual-fuel vessels provide ‘the lowest’ compliance cost for meeting EU and IMO decarbonization regulations, an analysis by industry coalition SEA-LNG found.

Illustration; Image Courtesy: Containerships/CMA CGM

SEA-LNG has completed the analysis based on a modeled mid-sized, 14,000 TEU container vessel and using Z-Joule’s fleet-wide optimization tool.

As explained, the analysis is in the form of both a single vessel and also an eight-vessel fleet operating the Rotterdam–Singapore trade route over the period 2025 to 2040. It focuses on the LNG, methanol, and ammonia fuel pathways and compares their compliance costs against the default of using very low sulfur fuel oil (VLSFO). The analysis uses the specifications for main and auxiliary engines published by the main marine engine manufacturers MAN ES, Wärtsilä and WinDG.

“The study indicates that LNG, methanol, and ammonia dual-fuel engine technologies can reduce compliance costs compared with VLSFO, with LNG dual-fuel vessels providing a significantly lower cost compliance solution,” SEA-LNG said.

The basis for this is that the LNG pathway offers immediate greenhouse gas reductions now and in the future compared with the other fuel choices. The use of LNG also reduces SOx, NOx and Particulate Matter (PM), thereby avoiding the use of relatively expensive marine gas oil (MGO) for emission control area (ECA) compliance, as per SEA-LNG.

In terms of fleet operations, for an eight-vessel fleet with two alternatively fueled “balancing vessels,” the overall cost of compliance with LNG will be between $5 million and $17 million per annum lower than other alternative fuels such as methanol and ammonia.

Further, as FuelEU Maritime is implemented from 2025 onwards, fleet operators using ammonia and methanol dual-fuel vessels are likely to need significant quantities of ‘expensive’ green fuels in an effort to avoid very high penalty charges.

“It’s our mission to provide objective data and analysis to support owners and operators in decision-making at this critical juncture for shipping. As greenhouse gas emissions become subject to increasingly stringent regulation, the industry needs cost-effective solutions to meet its decarbonisation goals. Today, this study clearly illustrates that the LNG pathway is a cost-effective way to meet regulatory compliance targets now and in the future,” Steve Esau, Chief Operating Officer at SEA-LNG, commented.

In related news, SEA-LNG recently revealed that over 2,000 of the world’s 60,000 largest vessels will be powered by LNG in the near future as LNG-fueled vessels keep increasing their share of the global fleet.

According to the coalition, active LNG-fueled vessels now represent over 2% of the global shipping fleet. When factoring in vessels on order, this figure rises to 4% by number and 6% by deadweight tonnage.