Essay On Importance of Liquefied Natural Gas (LNG)

Combating local emissions from shipping is twofold when viewed in light of plan by International Maritime Organisation. First is a reduction in SOx emissions from new built as well as existing ships that operate within emission control areas. Second is the reduction in NOx emissions from the ships that are newly built and are operating within international waters. These requirements have to be followed in full force from 2015 for SOx emissions and from 2016 for NOx emissions. Despite difficulties in the forecast of future prices, natural gas is perceived to be cheaper than oil when considered in long-term on an average per energy content. There are other options also such as nuclear and DME but these do not have significant potential required to manage the significant volumes. Only LNG solution is capable of complying with the NOx regulations and the ships can reduce NOx by installing systems such as SCR if these ships are using MDO or HFO as fuel.

However, LNG bunkering process lacks the set of comprehensive regulations on bunkering and this is the key issue in use of LNG as ship fuel. Another regulatory barrier remains the use of LNG in inland vessels in Europe as this is not allowed under the agreement by inland waterways  LNG prices are not much uniform and transparent as compared to that of the oil market. Currently, there is lack of the infrastructure and supply chain for bunkering operations that represent uncertainty in LNG fuel prices. This has also led to a slower rate of application as the ship owners are not able to find out future LNG prices.

Despite the issues and challenges, LNG is recommended to be used as marine and transportation fuel as the combustion phase results in less CO2 compared to conventional fuel combustion that makes it preferred fuel for marine transportation when seen in the light of the regulations and the increased climate focus. It is concluded that LNG is the better tool to be used as the ship fuel as it meets the environmental regulations, reduces greenhouse gases and also improves the air quality.

LNG is appealing when compared to other alternatives such as scrubber technology and MGO because of four major reasons that are cost differences between the LNG and MGO/ HPG+scrubber; time that vessel spends within ECA; availability of financial incentives and investment costs for the technology of LNG. EU is an attractive market for LNG given a continued implementation of all the provisions. In this way, EU consumers can benefit from the potentials of LNG if there are provisions of liquid gas market functions, infrastructure and short to medium term diversification. The market has already developed energy legislation in light of the network codes and Third Energy Package.

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