Natural gas and propane are emerging as the leading choices for fuel sources to power vessels for shipping companies moving to slash carbon emissions in their operations.
More than a quarter of the ships on order in terms of tonnage are slated to run on liquefied natural gas or liquefied petroleum gas, commonly known as propane, according to an industry trade group, a clear signal of how operators are planning to meet mandates to meet clean-air standards.
The industry is mandated by global regulators to cut overall greenhouse-gas emissions by half in 2050 compared with 2008 levels, a target that has triggered a search by shipbuilders, ocean carriers, fuel providers and equipment makers for new types of engines and fuel sources to power vessels that handle global trade. Options under consideration include hydrogen, biofuels and electric power, along with LNG and LPG.
“Although there remain pros and cons to every option, alternative fuels are beginning to gain traction, with 27% of the newbuilding order book by tonnage now on alternative fuel,” said Stephen Gordon, managing director at Clarkson Research Services, a unit of London-based shipbroker Clarkson PLC.
“LNG is gaining the most traction for the moment as a potential steppingstone to meeting emissions targets and LPG is also gaining traction,” Mr. Gordon said.
Vessel operators are under growing pressure to make strides in protecting the environment. Oceangoing ships pump out around 2.5% of total carbon emissions, according to the International Maritime Organization, roughly equal to what a developed European country such as Germany emits.
Many big maritime shipping customers, such as Amazon.com Inc. and Walmart Inc., are asking for proof that their cargoes are moving on cleaner ships as those companies look to reduce the carbon footprint of their supply chains. Shipping finance providers are also moving toward the preferential treatment of new loans to shipowners that renew their fleets with such vessels.
Clarkson Research said in a Nov. 30 report that there are 227 vessels on the order that will run on natural gas, excluding some LNG transport carriers that are dipping into their own cargo as fuel. That is more than the 202 currently in the water.
Most of those ships will be delivered over the next couple of years.
Tankers lead the list, with 34 ships in service and 72 on order. Among container ships, 11 are operating with LNG fuel capability and 30 on order.
LPG is also gaining traction, with 37 pending orders for propane-fueled ships and 11 retrofits, from a single ship currently operating.
The numbers still represent a tiny fraction of the more than 60,000 oceangoing vessels in operation, but shipyard executives said the tide is turning.
“Shipping is a latecomer in protecting the environment, but that’s changing fast,” said an executive at Korea’s Hyundai Heavy Industries Co., the world’s biggest shipbuilder. “Clean ships are now a prime consideration behind every single order.”