LNG as marine fuel: Fast-maturing but still in early stages, SEA-LNG found

December 6, 2024, by Sara Kosmajac

Despite the fact that it is maturing faster than other alternative fuels, LNG and the pathway to net zero is still in its adolescence as more investment in this segment is needed, industry coalition SEA-LNG has noted.

SEA-LNG highlighted that the approximately 2,200 LNG-fuelled vessels and LNG carriers reflect only ‘two minutes into the hour’ of the global fleet of circa 60,000 deep sea vessels—a number said to represent around 2% of the global fleet.

In an October 2024 release, the coalition stressed that if vessels on order were factored in, too, then the percentage would jump to 4% by number and 6% by deadweight tonnage (DWT).

“While that’s a small percentage, as the clock ticks towards shipping’s emissions reduction targets, the LNG pathway is maturing far faster than other alternative fuels,” Petter Keller, SEA-LNG Chairman, accentuated.

To put this into context, concerning other clean fuels, Norway’s classification society DNV stated that there are currently 54 methanol vessels and 2 ammonia vessels on the water.

The coalition nevertheless suggested that LNG was still an ‘adolescent’ segment and that there is an ‘urgent’ need for more funding and other forms of investments, particularly in landside facilities for liquefaction near ports, bio and synthetic methane production and bunkering capacity worldwide.

That said, according to SEA-LNG, there are aspects of LNG usage that are “fully mature”, such as safety. The organization elaborated that this is due to the fact that this alternative fuel is easy to transport, with a ‘minimal’ impact on marine environments and a low flammability range. On top of that, it is also considered to be non-toxic.

Additionally, ‘effective’ regulations, standards, as well as guidelines for secure operations, appear to be ‘widespread’, with LNG being shipped globally for nearly six decades without major incidents at sea or in ports.

“When compared to traditional fuels, LNG is more of a teenager with all the growing pains, challenges and victories associated with adolescence. But it is maturing all the time as the market continues to grow, new build orders continue to rise, and the LNG pathway with biomethane and eventually e-methane produced from renewable hydrogen, gains acceptance globally,” Keller continued.

“Shipping stakeholders are investing in LNG because it provides a low-risk, incremental pathway for decarbonization, starting now. The other alternative fuels are basically toddlers by comparison. And when it comes to safety, some are mere newborns.”

SEA-LNG spotlighted that 2024 saw ‘substantial’ investments in the maturing and scaling of LNG from ship owners as this fuel slowly started to ‘dominate’ the preferred future fuel pathway. Despite this, the coalition underscored that the bunker market, in particular, has been lagging, with concerns regarding the ability to supply the growing fleet of LNG-fuelled vessels persisting.

Here, Keller argued that as long as ship owners and operators keep choosing the LNG pathway, the trend could continue ballooning well into 2025 and beyond. He also remarked that there is a “growing realization that the LNG pathway is more practical and realistic than others”.

“While investment in newbuild LNG-fuelled ships is robust, we need to see the same for bunker vessels, supply and liquefaction infrastructure. As the LNG pathway continues to mature and the use of liquefied biomethane and eventually e-methane increases, the delivery of the fuel to vessels must be assured and the investment gap closed.”

SEA-LNG further shared that there is another ‘vital’ link in the maturing process during a period of increased carbon emissions regulations: the adoption of ‘standardized’ chain of custody models on a worldwide scale.

As explained, chain of custody models are becoming increasingly important to maritime decarbonization as they provide mechanisms to verify that the fuels used are, indeed, low carbon.

Such verification is deemed an important factor for investor confidence in new fuel supply chains. It has also reportedly accelerated the transition to low-carbon fuels, enabling their early adoption in conditions of limited supply.

These models can also create a market for green fuels by connecting buyers to fuel producers away from bunker ports, thus potentially allowing for faster scaling, and offering flexibility to ship owners ‘at a lower cost’, SEA-LNG concluded.