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This is the second article of a series of articles describing the issues with the current way that the maritime shipping industry is fuelled, and further exploring how the following four alternative fuel types may help to reduce pollution and safeguard marine biodiversity: hydrogen, methanol, LNG and ammonia.
In the previous edition of “Navigating the future”, LNG was briefly mentioned as the most likely replacement of Heavy Fuel Oil (HFO) for the next 5 to 10 years. With introductions covered from our previous article, this article will dive into the intricacies of LNG, exploring its various pros and cons.
Liquefied Natural Gas (LNG) stands out as a cleaner alternative to traditional fossil fuels. By cooling natural gas to -162 oC, it transforms into a liquid state, in turn shrinking its volume to approximately 1/600th of its original, gaseous form. This transformation facilitates easier storage and transportation. Predominantly composed of methane, ranging from 85% to 95%, LNG is both odourless and colourless, emitting almost no particulate matter and containing less carbon than other forms of fossil fuels, earning it the title of the cleanest fossil fuel.
The LNG market has matured since its growth spurt in the 1970s, gaining significant traction in 2022 when Europe, seeking alternatives to Russian natural gas amidst geopolitical tensions, turned to LNG. While Europe’s demand surged, most of the demand still derives from Asia, particularly China and India, which are rapidly expanding their infrastructure to accommodate LNG imports.
The high maturity of the market is a major reason in LNG’s competitive pricing, which in turn makes it the most likely replacement of HFO for the next 5 to 10 years as seen in our previous article.
Despite its cleaner combustion compared to HFO, LNG’s life cycle involves four energy-intensive stages; namely: extraction, liquefaction, shipping and regasification. On top of being energy-intensive, each stage carries the risk of methane leakage. This leakage is known as methane slippage, which is particularly troubling as methane is an extremely potent greenhouse gas (GHG), which is estimated to have an impact 25 times greater than CO2 over a 100-year period. Recent research published by McKinsey, suggests that the slippage may, in some cases, render LNG more detrimental to the environment than traditional HFO.
Bio-LNG and e-LNG are renewable variants of LNG, as they do not depend on fossil fuels. Bio-LNG is produced from biogas derived from organic waste through anaerobic digestion. Anaerobic digestion is a process in which organic waste materials are broken down by bacteria in the absence of oxygen, producing biogas, which primarily consists of methane (CH4) and carbon dioxide (CO2), along with small amounts of other gases. To increase the purification of the raw biogas, impurities are being removed through desulfurisation (removal of hydrogen sulphide (H2S)) and CO2 Removal, using methods such as water scrubbing, pressure swing adsorption, or membrane separation to separate CO2 from the biogas, resulting in a higher concentration of methane (usually above 90%).
E-LNG is produced from water and CO2 using renewable electricity through electrolysis (to produce hydrogen) and carbon capture. The process of combining hydrogen with the captured CO2, is called Methanation. This results in a chemical reaction to produce methane and water (CO2+4H2→CH4+2H2O). This reaction can be catalysed in several ways, using either a material as catalyst (such as nickel) to facilitate the reaction at elevated temperatures and pressures (Catalytic Methanation) or certain microorganisms to catalyse the reaction at lower temperatures and pressures (Biological Methanation).
However, issues of methane slippage and energy insensitivity remain, with the added disadvantage of higher costs. Bio-LNG has limited potential for cost reduction due to an already mature production process, while costs for e-methanol will decrease in line with the costs of renewables and green hydrogen. Currently, the market for Bio-LNG and e-LNG is relatively small but growing. Bio-LNG and e-LNG together account for a small percentage of the total LNG market, with leading countries in their adoption including the Netherlands, Germany, and Sweden. Major organisations spearheading this transition include Shell, TotalEnergies, and various smaller renewable energy companies such as Renewi and Nordsol.
Proponents of LNG highlight its potential for the energy transition, positioning it as a bridge fuel to replace more carbon intensive fuels. However, the issue in establishing LNG as a bridge fuel is that it demands the development of more fossil fuel infrastructure, effectively “locking-in” emissions for decades, as developers of such infrastructure demand long-term contracts to guarantee return on investment. There are already concerns that the race to build LNG facilities could lead to overcapacity, stranding assets and complicating matters for investors and governments alike. This issue mainly stems from the uncertainty of demand for LNG, which is partly caused by the attractiveness of renewables as an alternative source, as through technological advancements, they are expected to become cheap enough to fully replace demand for gas. Consequently, each new LNG terminal could hinder the shift towards renewables, making the path to a sustainable energy future more complex.
The issue is that building more fossil fuel infrastructure of any kind is that emissions are then “locked-in” for decades, as operators usually set up long-term contracts to guarantee that the infrastructure will be used for decades. As more infrastructure is built to sustain a transition to LNG, there may be a risk of overcapacity, where more infrastructure is built than needed, leaving stranded assets causing issues for investors and governments. This problem stems from the uncertainty of demand for LNG, which is in part caused by the attractiveness of renewables as an alternative source, as through technological advancements, they are expected to become cheap enough to fully replace demand for gas. Every terminal built to support LNG, makes the transition to renewables harder.
Overall, while LNG presents certain advantages, its long-term viability and environmental impact remain subjects of debate. Is LNG truly the answer we’re looking for, or does it merely serve as a stepping stone to a more renewable future? The answer hinges on balancing immediate needs with long-term sustainability goals.
In our next edition of “Navigating the future”, arguably the most promising non-fossil fuel alternative will be analysed: biomethanol and e-methanol.
Enthusiastic about this topic? Contact us at info@platformzero.co and we can tell you more about it!
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