Bio-LNG makes its pitch on shipping’s path to 2050

New analysis from SEA-LNG, the lobby group promoting LNG as a marine fuel, claims that for every 10% of bio-LNG dropped in and blended with LNG as a marine fuel, a vessel can achieve two extra years’ compliance with the annual efficiency ratio (AER) curve used to secure preferable funding under the Poseidon Principles. This extends the average seven-year additional competitive advantage for Poseidon Principle loans achieved with LNG alone, SEA-LNG claimed in a release yesterday. The analysis comes at a time where LNG as a future fuel is coming under pressure with significant announcements from Maersk on methanol and MISC on ammonia in recent days.

The analysis is based on a capesize vessel, considering the main engine only with no auxiliaries to provide a conservative estimate.

The analysis compares LNG plus bio-LNG from a zero-carbon, sustainable source with conventional vessel fuels such as HFO, VLSFO and MGO. Bio-LNG is fully compatible with existing LNG infrastructure and technologies and can be dropped in and blended with LNG.

The use of bio-LNG as a drop-in fuel may extend the compliance runway further

LNG fuel delivers greenhouse gas (GHG) reductions of up to 21% well-to-wake and up to 28% tank-to-wake, SEA-LNG data suggests, despite growing concerns about the methane slip from many LNG-powered vessels. The GHG data means that LNG-powered vessels perform well according to Poseidon Principles’ funding criteria, which were instigated by financial institutions to move shipping towards the International Maritime Organization’s 2050 decarbonisation goals.

The Poseidon Principles measure progress towards these objectives using an AER scoring.

John Hatley, SEA-LNG investment committee chairman, commented: “As banks increasingly align with green finance principles, LNG offers benefits for emissions reduction and provides an extended compliance runway for Poseidon Principle sustainability linked loans. An investor preserves more favourable financing terms compared to conventional marine fuels such as HSFO, VLSFO, and MGO. The use of bio-LNG as a drop-in fuel may extend this runway even further- an additional two years for every 10% dropped-in. This means lower ship emissions now and a compliance extension that yields long term competitive advantage.”

The recent CE Delft study concludes that bio-LNG is a scalable solution for the maritime sector. Estimated sustainable global supplies potentially exceed the future energy demand of the global shipping fleet. It also showed that bio-LNG will likely be commercially competitive relative to other low- and zero-carbon fuels.

This analysis is supported by a recent report by the IEA on the outlook for biogas and biomethane. The IEA report concludes that feedstocks available for sustainable production of biogas and biomethane are huge, but only a fraction of this potential is used today. For biomethane to realise its potential as a major zero-emissions energy carrier, policies should remove barriers to scaling and create a single, cross-border market for biomethane and bio-LNG.

“Bio-LNG has particular advantages when it is produced from domestic and agricultural waste. The process can capture methane that would otherwise be vented into the atmosphere, resulting in a fuel that is not just zero GHG emissions but has the potential for negative emissions,” SEA-LNG pointed out yesterday.

Peter Keller, chairman of SEA-LNG, added, “As GHG emissions are cumulative, the decarbonisation challenge only gets tougher the later we take steps to address it. Waiting for options is not an option. The industry must act now using LNG and bio-LNG that we know provide benefits today and into the future. With the introduction of bio and synthetic variants, LNG not only provides a pathway to decarbonisation in its own right, but also provides the physical infrastructure and asset base that can be used by other alternative fuels, when and if they become commercially viable.”

CMA CGM is the carrier with the biggest investments in LNG-powered tonnage to date. It is now actively investigating bio-LNG possibilities in a bid to futureproof its gas investments. CMA CGM is a founding member of the the Coalition for the Energy of the Future. Launched in France two years ago, other members include Airbus, Carrefour, ENGIE, Total and Wärtsilä. The coalition revealed this week it is working on developing carbon neutral liquefied natural gas.

Sam Chambers

Starting out with the Informa Group in 2000 in Hong Kong, Sam Chambers became editor of Maritime Asia magazine as well as East Asia Editor for the world’s oldest newspaper, Lloyd’s List. In 2005 he pursued a freelance career and wrote for a variety of titles including taking on the role of Asia Editor at Seatrade magazine and China correspondent for Supply Chain Asia. His work has also appeared in The Economist, The New York Times, The Sunday Times and The International Herald Tribune.
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