Wärtsilä’s Johnny Kackur, general manager, merchant and gas carrier segment sales, says new fuels are key to reducing shipping emissions and meeting IMO 2030 and 2050 targets. Find out why in the latest of our In Conversation series.
1. What are the best options for decreasing emissions in the shipping sector today?
Meeting the IMO (International Maritime Organization) targets for 2030 and 2050 will require several measures. Increasing vessel efficiency and improving operations are helping reduce emissions, but these efforts alone will not be enough to meet the IMO targets without bringing alternative fuels into the equation.
For newbuilds today, LNG is the best alternative fuel widely available to reduce emissions— both local emission SOx, NOx emissions and particulates, as well as greenhouse gas emissions. LNG offers very high reductions in local emissions. Our new generation dual-fuel engines reduce greenhouse gas emissions by about 14%. Although most of the LNG available today is fossil LNG, it is already possible to mix bio and synthetic LNG with fossil LNG in any ratio without any changes to the equipment.
For the existing fleet we see an increased interest in the use of biodiesel. The current challenge with biodiesels is the availability, but if available, biodiesel offers high reductions in greenhouse gas emissions as well.
2. What role does infrastructure and transportation play in getting ship owners to use these fuels?
It is, of course, critical. It is a chicken-and-egg phenomenon. No one will invest in LNG infrastructure unless there is a need for it, so it comes gradually. The infrastructure for LNG is improving all the time, but it’s still not as good as it is for diesel fuel oils. Now with the increasing number of orders for LNG-fuelled ships, we also see accelerating improvement in the LNG bunkering infrastructure worldwide. In 2019, more than 30% of all ships ordered were capable of running on LNG. The proportion of LNG fuelled vessels ordered is steadily increasing every year, and the LNG bunkering infrastructure is advancing accordingly.
This is also a challenge when considering other alternative fuels like green hydrogen, green methanol, and green ammonia. There is no existing infrastructure for these alternative fuels, and we have seen already from LNG that it takes a long time to build up this infrastructure.
This is also one reason why it’s best to invest in LNG right now. It’s the only alternative fuel with an existing infrastructure. There are still a lot of questions around the use of these other alternative fuels whereas LNG can be used to make improvements right away while preserving the capacity to switch to bio or synthetic LNG in the future. When opting to go with LNG, you also get a wider possibility to use other alternative green fuels in the future. If or when some of these other alternative green fuels become widely available, shipowners investing in LNG will have a greater flexibility to also use other alternative green fuels, whereas owners only investing in conventional diesel-fuelled vessels will be less flexible.
3. Do you have a timeline for when these types of LNG will come on the market?
It’s already possible to buy bio-LNG. For example, Gasum, a local energy company in northern Europe can deliver bio-LNG in addition to fossil LNG. Bio-LNG is sold at a premium compared to fossil LNG, but it is also possible to use blends of 10% bio-LNG and 90% fossil LNG, for example. It is therefore more a question of how much more the industry is willing to pay for reducing emission levels. There is not enough bio-LNG available to cover the whole shipping sector, but more bio-LNG could be used to reduce the emissions from shipping.
Today, synthetic LNG is more expensive to produce than bio-LNG. After 2030 or 2040, it might be possible to produce synthetic LNG on a large scale, and then the prices would likely be reduced. A lot of green energy (wind and solar power) is needed to produce synthetic LNG. In the future, as electricity production from wind and solar power expands, there will be time periods with overproduction — periods when more electricity is produced than can be consumed — and then you can produce synthetic fuels from this overproduction.
4. What role does LNG play in meeting the IMO 2030 and 2050 targets?
We see LNG as a cornerstone for meeting the 2030 targets. Fossil LNG alone lowers CO2 emissions 7-15%, and when you use it together with improved technologies like smart propulsion machineries to increase efficiency, it’s possible to reach the 2030 goals.
To meet the 2050 goals, we will need to use biofuels and synthetic fuels. These could well be based on LNG, but we are now also making sure we have the technologies ready for green ammonia, green hydrogen and green methanol. We also will most likely see more of a mix of alternative fuels from 2030 and going forward.
5. There has been a lot of speculation that the use of future fuels will make the internal combustion engine obsolete. Do you think there is a role for it in the future?
There will definitely be a future for internal combustion engines because of their unbeatable fuel flexibility. Our engines can run on diesel or LNG, and it will also be possible to run the same engines on alternative fuels when they are available. The internal combustion engine is a proven technology, and a very flexible one, well-suited to meet the coming challenges for the future.
6. The use of LNG has also been criticised for adding greenhouse gases through the ‘methane slip.’ Do you see this as a major issue?
First of all, it’s important to remember that what we need to do is to reduce the total GHG emissions, of which the methane slip is only one element. Wärtsilä has worked to lower the methane slip from our gas engines for the past 30 years, and we have been able to demonstrate constant development. Our R&D activities to minimise the methane slip are ongoing, and we have measures to minimise the methane slip even further. In the case of our new generation gas engines, the equivalent CO2 emissions even with the methane slip are much lower than we can reach with our new-generation diesel engines. In terms of minimising greenhouse gases, our new-generation gas and dual-fuel engines are the best options going forward. We already have an installed base of around 2 GW with a methane slip <1 g/kWh and we are targeting to reach this level for all our gas engines.
7. What role do cargo owners play in driving a shift towards lower emissions from LNG?
The cargo owners are in the driver’s seat. For most of the LNG-fuelled merchant vessels contracted so far, it is the cargo owner who has opted for LNG as part of a decision to lower the environmental footprint of their operations.
In Australia, for example, there are more than 500 bulk carriers on fixed routes transporting natural resources to Asia. The owners of this cargo are major multinational companies — BHP, for example — and they are keen on showing that they are doing something to reduce emissions from their activities. They have decided that one way to do this is to try to reduce emissions from transportation. Last year, BHP issued a tender for new bulk carriers and specified that they must be LNG-fuelled. This trend is also driving developments at the big ports on the west side of Australia to start investing in LNG bunkering terminals and in LNG bunkering vessels to supply the LNG-fuelled bulk carriers. These companies are not ship owners, but if they decide they want their cargo to be transported on ships powered by alternative fuels, ship owners will have to order LNG-fuelled ships. In this situation, cargo owners can have a real impact, and this is already happening in Australia.
When evaluating different alternatives for reducing emissions, LNG as a fuel is typically one of the alternatives, but the downside to it is increased CAPEX. Most of the options available for reducing emissions come with an increase in CAPEX — the initial price for the ship gets higher. On the other hand, reducing emissions also means that OPEX is decreased. It is not an easy equation to review all the different technology alternatives to reduce emissions. The best outcomes can be achieved through cooperation between the different parties in the newbuilding process: cargo owner, shipowner, shipyard, and technology providers like Wärtsilä. Only through true collaboration can we achieve the best outcomes, both in terms of reduced emission levels and profitability.
