The European Commission today presented the preliminary results of a study on the perception of the risks and opportunities of LNG as a shipping fuel. The results show that stakeholders recognise the environmental advantages of LNG as a shipping fuel, but are still uncertain whether they offer a clear business case. At the meeting, held during the European Shipping Week, the European Commission discussed with LNG industry stakeholders the outcomes of the study.
“This study gives us a solid overview of the opportunities and remaining challenges for the use of LNG for shipping. More importantly: the outcome helps us to feed a public debate on LNG for shipping and provides arguments for a stakeholder debate at local level.” said Sandro Santamato, Head of Unit Maritime transport & Logistics, European Commission.
The study takes into account the overall EU policy aiming at reductions of emissions from shipping and looking for alternative energy sources, in view of growing constraints on the use of heavy fuels. It also summarises recent legislation: Firstly, the Directive on sulphur content in marine fuels (2012/33/EU ) which allows the use of LNG as an alternative fuel to comply with more stringent emission standards. Secondly, the Directive on deployment of alternative fuels infrastructure (2014/94/EU ) which aims at ensuring minimum coverage of LNG refuelling points in main maritime and inland ports across Europe by 2025 and 2030 respectively, with common standards for their design and use.
Environmental advantages remain undisputed, despite a lack of profitability
From the study it becomes clear that on the one hand, the major motivation for stakeholders to engage in LNG as a shipping fuel is to be compliant with Emission Controlled Area (ECA) zone requirements and the related positive environmental effects. On the other hand, the most critical issues for further deployment are the financing of LNG as a fuel and the pricing of LNG itself. For many companies, and especially shipping companies, LNG does not offer a profitable business model yet: the higher equipment costs for engines and tanks are not offset by savings in fuel or operating expenses. Also, the lack of existing bunkering infrastructure for LNG is another quite important barrier.
More about the study
The European Commission’s Directorate-General for Mobility and Transport (DG MOVE), PwC and DNV-GL are conducting the analysis and evaluation of the gaps that exist in the regulatory framework for LNG-fuelled ships and the provision of LNG fuel. The research is focusing on risks and opportunities of using LNG as a shipping fuel.
Final results of the study will become available in June/July 2015.
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