BioLNG infrastructure
Carbon-neutral bioLNG can be bunkered into existing fuel
tanks and blended with traditional LNG with no changes required to the vessel
or any of its operating systems or procedures. This ability to drop in bioLNG,
and in the longer-term renewable synthetic LNG, ensures that LNG-fueled vessels
are future-proof assets. Meanwhile, the option to blend bioLNG with traditional
LNG allows ship operators to incrementally introduce the lower carbon fuel in
line with availability and increasingly stringent emissions requirements.
BioLNG can also be transported, stored and bunkered with no
changes required to supply infrastructure. This means that it can be introduced
without the major, additional supply chain investments needed for other
alternative fuels. LNG’s mature infrastructure, and the marine fuel itself,
have a proven safety record with well-established standards, guidelines and
operating protocols. The knowledge that maritime professionals have accrued
over more than 50 years on how to safely handle, transport and bunker LNG, is
transferable to bioLNG too.
Engine manufacturers are already designing and building LNG
dual-fuel engines that in addition to using bio and renewable synthetic LNG
are, or will be, capable of using many of the future fuels being discussed.
This further protects the capital investments made by vessel owners today and
reduces risks. Further, engine manufacturers are focused on developing more
efficient engines which address the issue of methane slip. In the latest
high-pressure engines efficiency has reached a point where slip has been
virtually eliminated. As availability of carbon-neutral LNG fuels increases
towards 2030, technology developments will see methane emissions virtually
eliminated in both high-pressure and low-pressure LNG-fueled engines.
BioLNG demand
Orders for new LNG-fueled ships reached record highs in
2021. According to data from DNV, there was a net increase of 240 ships from
the previous year, more than the previous four years combined. This trend is
not letting up in early 2022, with DNV reporting that another 40 ships powered
by LNG were ordered in January of 2022 alone. With plenty of ship operators now
able to use bioLNG, what will incentivise them to do so?
Regulations such as the International Maritime Organization’s
(IMO) carbon intensity indicator (CII) are set to shake up emissions clauses in
charterparty agreements in 2022 and beyond. Recent SEA-LNG analysis shows that
LNG-fuelled vessels will be able to continue operating as normal under the
system until after 2030, while traditional LNG blended with bioLNG, or
renewable synthetic LNG will further extend compliance to 2050 and beyond.
The appetite of banks for climate-aligned investments also
plays a key role. Poseidon Principles signatories are set to tighten their 2050
targets to net zero, which will drive ship operators to use increasingly
lower-carbon fuels such as bioLNG. Analysis from SEA-LNG performed last year
determined that for every 10% of bioLNG 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.
BioLNG availability
While it is true that bioLNG production is in a nascent
stage and requires scaling up, there are some common misconceptions that should
be addressed.
The first misconception is that there is not sufficient
feedstock to produce enough bioLNG for the shipping industry. This is
inaccurate, as shown by the CE Delft study into the availability and costs of
liquefied bio and synthetic methane. This study showed the potential for bioLNG
produced from sustainable biomass resources to be orders of magnitude greater
than the total bunker demand from the global shipping industry forecast for
2030 and 2050.
BioLNG is commercially available in Europe right now.
Suppliers are quoting prices for delivery of bioLNG bunkers in Rotterdam, the
biggest marine fuel bunkering hub in Europe, and several North Sea and Baltic
Sea ports. The world’s largest LNG-fueled vessel, the CMA CGM Jacques Saade
used a 13% bioLNG mix when refuelling in Rotterdam as early as 2020.
Supplies of bioLNG are also forecast to rise dramatically as
businesses like Wärtsilä, Biokraft, Gasum, Titan LNG and CMA CGM step in to
increase production capacity. Gasum is confident it has enough capacity to meet
market demand for carbon-neutral fuels with its bioLNG production and at a
lower cost than other future alternative fuels.
Meanwhile, Titan LNG recently announced a partnership with
Attero and Nordsol on an EU-backed bioLNG production plant, which will produce
around 2,400 ton/year of bioLNG by 2023. Titan LNG, the exclusive long-term
off-taker of the project, will supply the bioLNG to the maritime industry.
This availability of bioLNG puts the LNG pathway
significantly closer to delivering decarbonized shipping than alternatives,
some of which, such as ammonia, are based on unproven technologies and require
massive investments to build new fuel supply chains that do not exist today.
Costs of production
The second misconception is that bioLNG will be more
expensive than alternative bunker fuels. The CE Delft study forecast that
production costs for bioLNG would be comparable to those of other alternative
marine fuels. Scaling up production of any alternative marine fuel is
expensive. Any of these fuels will, at least initially, be more expensive than
conventional marine fuels. However, by leveraging green financing and
government funding effectively and by using existing LNG infrastructure, the
total costs of producing and delivering bioLNG are lowered.
BioLNG production is a known quantity – prices are already
quoted for bioLNG blends in NW Europe. For other alternative marine fuels, we
still don’t have a realistic picture of the potential costs of production.
Furthermore, as the production of bioLNG scales up stimulated by growing
demand, facilities will benefit from economies of scale.
We know that bioLNG uses existing infrastructure, there will
be no shortage of demand, there is sufficient feedstock available for
production and the costs are comparable to alternatives and will reduce over
time. What then are the other main benefits of bioLNG?
LNG can reduce CO2 emissions by up to 23% on a Well-to-Wake
(WtW) basis compared to liquid fossil fuels. Depending on the ratios, blending
in bioLNG can dramatically improve this percentage. The use of certain forms of
bioLNG, for example, when produced from anaerobic digestion of animal slurry
can even offer negative emissions on a full lifecycle basis.
Bio-LNG is produced using waste feedstock, particularly
domestic and agricultural waste. Taking waste and regenerating it into clean
carbon free energy is a classic example of an ideal circular economy. The process
can capture methane that would otherwise be vented into the atmosphere,
resulting in a fuel that is potentially net negative in GHG emissions. By
assisting with the reprocessing of waste materials, production can also help
improve waste management and begin to solve yet another major global concern.
These credentials, along with its current growing
availability, are what makes bioLNG a major step on the LNG pathway to maritime
decarbonization.
The pathway
The pathway to maritime decarbonization using LNG is clear.
The initial steps using traditional LNG are already well-trodden, while many
progressive stakeholders are already taking the second step – bioLNG. The final
step is moving to renewable synthetic LNG. It is important to remember some key
points when evaluating these pathways.
Firstly, you cannot look at fuels in isolation, but rather
must examine the entire pathway to decarbonization that that fuel offers.
Secondly, you must compare apples to apples. BioLNG should be considered a
net-zero evolution of traditional LNG, while renewable synthetic LNG should be
compared to other hydrogen-derived e-fuels.
Finally, shipping is likely to need a basket of alternative
fuels in order to successfully decarbonize. LNG and the pathway forward will be
a dominant part of that basket of future fuels. An evolution from LNG to bioLNG
to renewable synthetic LNG is a safe, sustainable, and practical option that
allows ship owners and operators to start reducing emissions right now, not
decades in the future.