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Study on LNG as shipping fuel highlights industry support

LNG Industry,

A study from the European Commission (EC) on LNG as a shipping fuel has highlighted high levels of support from the industry.

The EC has 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, however are still uncertain whether they offer a clear business case.

The outcomes of the study were discussed at a meeting held during the European Shipping Week.

LNG for shipping

Sandro Santamato, Head of Unit Maritime Transport & Logistics at the Commission, explained: "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."

The study takes into account the overall European Union (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 the following legislation.

  • The Directive on sulfur content in marine fuels, which allows the use of LNG as an alternative fuel to comply with more stringent emission standards.
  • The Directive on deployment of alternative fuels infrastructure, 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.

Pros and cons

The study has also revealed 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, particularly shipping companies, LNG does not yet offer a profitable business model. The higher equipment costs for engines and tanks are currently not offset by savings in fuel or operating expenses. Also, the lack of existing bunkering infrastructure for LNG is another important barrier.

Final results of the study will become available in June/July 2015.

Adapted from press release by Katie Woodward

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