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Latest analysis reveals more plus points for LNG in fuel transition

In less than three months’ time, FueEU Maritime will fundamentally alter the shipping industry’s bunkering strategies, with LNG notching up positive points.

Paul Bartlett, Correspondent

October 8, 2024

3 Min Read
OceanScore media roundtable
Credit: Paul Bartlett

Due to enter force in Europe in less than three months’ time, FuelEU Maritime offers a ‘carrot-and-stick’ approach to fuel decarbonisation between now and mid-century. Doing nothing is not an option because penalties are high from the outset. But savvy owners can accept the ‘carrot’ by adopting smart bunker strategies, generating new income streams and offsetting the dramatically higher costs of the marine fuels of the future.  

Speaking to journalists in London last week, OceanScore Managing Director, Albrecht Grell, revealed that renewable fuels of non-biological origin (RFNBO), also known as e-fuels, are likely to offer the best options in the long run. But they are not available today, and preparing for their arrival at scale is uncertain and a major challenge for owners.

The Hamburg-based company’s analysis of the future fuels’ landscape may well explain why some major tonnage operators have changed course recently. LNG appears to have become a popular choice ahead of biofuels and methanol which fares badly in FuelEU analysis unless it is either ‘blue’ or ‘green’, neither of which are currently available.

From January, FuelEU Maritime will require ship operators to ensure that the bunkers they use fall below the regulation’s tipping point of 89.3 grams of carbon dioxide equivalent per megajoule (gCO2eq/MJ). If the bunkers consumed exceed this figure, penalties will be incurred at the rate of EUR 2,400 per tonne of very low sulphur fuel oil equivalent (VLSFO).

If the fuel emissions fall below the 89.3 gram tipping point, owners will be able to bank, borrow, or pool the emission savings. Such a deficit is potentially a new revenue stream and it is here that preparing for the future is such a crunch decision.  

Even allowing for methane slip, the well-to-wake figures for LNG-fuelled ships with different engine technologies already fall below the 89.3 figure. Biofuels also fare well provided they are produced from animal fat or waste cooking oil. Biofuels that are made from potential foodstuffs – palm, rape, soy and sunflower,for example – are not accepted by the regulator.

Since conventional LNG already falls under the 89.3 figure in current engines, it is for the moment, a safe option even without the steps currently being taken to reduce methane emissions in the LNG combustion process. Regarding the development of RFNBOs (of which eLNG is one), Grell suggests that forward commitments by owners for the purchase of fuel to underpin development of production facilities for fuels that are likely to cost around $3,000 per tonne will be hard to secure.   

The world’s first pilot plant, Haru Oni, opened in Chile in 2022, supported by car maker, Porsche. E-fuels from the facility are made from water and carbon dioxide using wind energy, enabling almost neutral carbon dioxide operation of traditional combustion engines.

It is understood that there are also plans for up to four commercial-scale e-fuel plants which will be able to process a range of RFNBOs in the US, though, once again, forward commitments from consumers may be required and no timeline on their development has been given so far.  

About the Author

Paul Bartlett

Correspondent

UK-based Paul Bartlett is a maritime journalist and consultant with over four decades of experience in international shipping, including ship leasing, project finance and financial due diligence procedures.

Paul is a former Editor of Seatrade magazine, which later became Seatrade Maritime Review, and has contributed to a range of Seatrade publications over the years including Seatrade’s Green Guide, a publication investigating early developments in maritime sustainability initiatives, and Middle East Workboats and Offshore Marine, focusing on the vibrant market for such vessels across that region.

In 2002, Paul set up PB Marine Consulting Ltd and has worked on a variety of consultancy projects during the last two decades. He has also contributed regular articles on the maritime sector for a range of shipping publications and online services in Europe, Asia, and the US.

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