LNG Retrofits: The Time is Now

[By: Newport Shipping]

LNG as fuel has long been considered the industry’s last, best hope to meet the IMO’s  ambitious targets to reduce greenhouse gas emissions by 2030. So why aren’t we seeing more LNG retrofits on existing tonnage?

In April 2018, MEPC 72 adopted resolution MEPC.304(72) on the Initial IMO Strategy on reduction of greenhouse gas (GHG) emissions from ships. The IMO has called for the industry to reduce its average carbon intensity by up to 40 per cent by 2030 and by 70 per cent in 2050, compared to 2008.

Owner scepticism

The IMO’s bold vision was rightly applauded by politicians, the press, climate change activists and many industry stakeholders but unless the industry transitions to low carbon fuels, meeting these targets will be impossible. But because the IMO did not specify how these targets might be met, the resolution left owners with more questions than answers. What alternative fuels make sense?  Is there adequate bunkering infrastructure?  And more to the point, who pays?

For years, natural gas has been regarded as the marine “fuel of the future”.  After all, LNG is readily available, relatively affordable and because it has negligible NOx, Particulate Matter (PM) and zero SOx emissions, it will help owners comply with the IMO’s vision.  But the introduction of other alternative fuels solutions, such as hydrogen, ammonia, bio fuels and battery hybrid systems, caused many owners to hesitate: Why invest in LNG retrofits if natural gas will be replaced by other fuels that have lower GHG impacts?

Slipping up

Others point to recent studies highlighting the impacts of methane slip, an issue specific to gas-fuelled engine systems. Methane slip can occur during the gas exchange phase of the cycle when unused fuel can get trapped in the combustion chamber and top piston area, allowing some unburned methane gas to escape at the exhaust into the atmosphere. Methane slip not only results in less efficiency (thus higher fuel costs), it may add to the GHG impacts, as methane is a major contributor to global warming.

In a February press conference in London, DNV GL’s Maritime CEO Knut Ørbeck-Nilssen acknowledged that low carbon biodiesel, hydrogen, ammonia and synthetic fuels are promising, but said that they would take time to develop. “The pathway to carbon neutral fuels starts with gas,” he stated. “It is important to act now and not to wait for the ‘perfect’ fuel.”

As for emissions, Ørbeck-Nilssen pointed out that methane leakage had been drastically reduced in modern engines, and further improvements could be expected. Citing data provided from the engine manufacturer Wärtsilä, he noted that over the last decade, gas engines outperformed engines running marine gas oil (MGO) in terms of GHG emissions.

Engine technologies

Cato Esperø, Wärtsilä’s Head of Marine Sales (Norway) confirms that the company’s engineers have continuously improved the emissions performance of its dual fuel engines (notably the 46DF, 50DF, 31DF), which allow ships to operate using a broad range of fuels, including heavy fuel oil, MGO, light fuel oil, bio fuel and LNG. The company has also introduced the 31SG, an engine optimised to run on gas alone, and provides customers with the Wärtsilä Methane Number Calculator, a tool to help shipowners and operators calculate methane values in the fuel gas.

“Wärtsilä is a pioneer in the development of sustainable engine systems, including battery hybrid solutions and is working with other key industry stakeholders to achieve zero-emissions shipping,” he says. “Until we succeed, we believe LNG retrofits represent the best, most viable option.”

Esperø acknowledges that LNG retrofits are expensive, but is quick to point out that owners willing to make the investment now will be in a better position to migrate to other alternative fuels as they become available. “It is important that owners secure fuel flexibility to fit their operational profile, in the short, mid and long term,” he says. “For most owners,  a dual fuel/LNG setup reduces business risk and provides flexibility with regards to availability of new fuels during the transition.”

The cost of sustainability

Yet in a world still in the grip of the pandemic, one can forgive owners for being slow to book retrofits at their favourite yards.  After all, LNG conversions are expensive, time consuming and in some shipping segments, LNG tanks can reduce valuable cargo space.  Nevertheless, Lianghui Xia Managing Director of Newport Shipping UK LLP, a global service provider for ship repair and retrofit, argues that further delays will all but ensure the industry will fail to meet IMO targets. “The time to act is now,” he says. “Natural gas may not be perfect, but let us not make perfect the enemy of good.”

Xia acknowledges that more promising fuels are on the horizon, but for the next 5-10 years, LNG as fuel represents the only credible and achievable mid-term solution in cutting emissions. Yet so far, only a small fraction of the world fleet runs on natural gas. “Newport Shipping recognises that the number one challenge for owners is cost, so in addition to providing turnkey solutions that includes equipment procurement, full-scope design work, on-site project execution, we offer a 5-7-year payment plan without fixed vessel mortgage collateral.”

Collective action required

But that may not be enough. Indeed, Xia notes that if  the world is serious about cutting maritime emissions, it will require more than efficient engines, skilled yards and short-term  financing options. “Right now, many owners willing to make the change simply don’t have the capital to invest in conversions,” he says. “To reach IMO targets will take a collective effort.”

Xia says that governments could offer tax incentive schemes to reward owners and charterers could help subsidise conversions to achieve lower emissions throughout the value chain. Ports could work with logistics providers to improve bunkering access, and energy companies, which would benefit from greater demand, could help by lowering the production and delivery costs of natural gas. “If climate change is a shared challenge, then so is the solution,” he says. “Owners should not be forced to bear the costs alone.”

Do the right thing

To paraphrase a (likely apocryphal) quote from Sir Winston Churchill, “Shipowners can be counted on to do the right thing once they have exhausted every other option.”  With those options now almost exhausted, Xia says that the time to accelerate the industry’s migration to LNG is now. “When it comes to climate change, we cannot afford to wait for a solution to appear – there is no vaccine for global warming,” he says.  “The question is not ‘should we do this now?’, it is ‘why haven’t we already started’?”