London — Global energy producer Shell is betting on LNG as the first step in ridding shipping of its greenhouse gas emissions while cleaner fuels are still in research and development.
Beyond next year's tougher sulfur emission limits, the next big regulatory challenge for shipping will be decarbonization. The International Maritime Organization has set an initial strategy of cutting carbon emissions per ship by at least 40% by 2030, and total greenhouse gas emissions for the shipping industry as a whole by at least 50% from 2008's levels by 2050.
Over the longer term, new carbon-neutral energy sources for the shipping industry like hydrogen or ammonia may emerge as an option for how to comply with the 2050 target. But as these new fuels are not yet commercially available, switching to LNG is an option shipowners can consider to bear down on their GHG emissions today, according to Grahaeme Henderson, vice president of shipping and maritime at Shell International Trading and Shipping.
"There's an urgency to reduce carbon emissions now; we can't sit back and wait for all the research on these new fuels," Henderson told S&P Global Platts at an industry event Tuesday. "We've got to do the best we can today." Shell is already able to reduce carbon emissions by about 40% on new vessels with measures like better hull designs, air lubrication systems and route planning around weather systems, Henderson said, and switching from conventional bunker fuels to LNG can add another 20 percentage points to that saving.
Shell currently has four LNG fueled ships on the water, Henderson said, with around another 10 on order. S&P Global Platts Analytics forecasts LNG bunker demand may grow to as much as 15 million mt/year over the next decade, out of total global bunker fuel consumption of around 300 million mt/year.
The next decade is likely to see intense research and development into alternative fuels for the shipping industry, as well as intense lobbying and marketing efforts by each option's proponents. As a major producer of LNG, Shell has a strong interest in the nascent LNG bunkering industry continuing to expand.
Because of the 25-year lifespan of a typical commercial ship, meeting the IMO's 2050 target will need carbon-neutral ships to start entering service in the early 2030s.
"I don't think that the fuel choice of the future has been made yet," Henderson said. "The more I look at these fuels, the more I see challenges." Critics of LNG claim that the carbon emission savings it provides are at least partially offset by the greenhouse effect of methane released into the atmosphere during bunkering. And the 60% emissions savings noted on new LNG-fueled ships will not be enough alone for the 2050 target, as total shipping demand is expected to grow significantly over the next decade.
Henderson suggested carbon capture may be one option to remove the remaining emissions, and Shell is also looking at bio-LNG and synthetic fuels as other options. But under current estimates alternative fuels are an expensive option.
"At the moment the cost of these fuels is two or three times as much as what we pay with carbon-based fuels," he said.
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