Shippers focus on LNG, biofuels and methanol to meet emissions targets


By Jeslyn Lerh

SINGAPORE, October 7 (Reuters)Shipping and commodity companies will commission more ships partially fueled by liquefied natural gas (LNG) next year while stepping up biofuel bunkering trials as they seek to reduce emissions from ship operations , senior executives said this week.

The shipping industry is seeking to reduce its dependence on oil while trying to meet carbon emission reduction targets set by the United Nations International Maritime Organization.

These include reducing carbon emissions from the shipping industry by 40% below 2008 levels by 2030, and global greenhouse gas (GHG) emissions by 50% by here 2050.

LNG, methanol and biofuels are among the most popular alternative fuel options, industry leaders said at the Singapore International Bunkering Conference and Exhibition (SIBCON) 2022 which ended on Thursday.

Several companies, including Mitsui OSK loader 9104.T and Rio Tinto mining companies RIO.L and BHP BHP.AXare expected to welcome more LNG supply vessels in 2023, which will help reduce some emissions during voyages.

Rio Tinto will add nine Newcastlemax dual-fuel LNG vessels to its portfolio, with first delivery expected from the first half of next year, said Laure Baratgin, head of commercial operations at Rio Tinto.

The company has also launched a year-long trial of biofuels, as it aims to reduce emissions from its operations by 40% by 2025.

“We’ve seen up to 25-26% emission reductions (so far),” she told Reuters, referring to the biofuel trial.

The company said its overall decarbonization strategy has so far reduced its emissions by 30%.

Meanwhile, AP Moller-Maersk MAERSKb.COthe largest container operator in the world, focuses on the use of methanol.

The company announced on Wednesday that it has ordered six more methanol-fueled vessels, bringing its total order of such vessels to 19.

Maersk’s approach is to “go into the green fields immediately,” said Berit Hinnemann, business development manager for decarbonization at Maersk, adding that the company will not adopt LNG in its energy mix.

“We see green methanol as a technologically ready solution, fuel production can be scaled up and so we see it as a fuel option to have a huge impact already this decade,” she told Reuters.

“The demand (for methanol) wasn’t really there and what we tried to do was build momentum, bring the demand to market through our ship orders,” Hinnemann said.

BIOFUELS, GREEN AMMONIA

More companies are also conducting trials to blend biofuels with marine oil, which doesn’t require shippers to make huge modifications to current engines.

TotalEnergies France TTEF.PA will begin offering biofuels as bunker fuel to customers in Singapore from next year, while Cargill Inc CARG.UL is looking to boost the use of biofuels in a bunkering trial next year.

But limited biofuel supplies, a lack of industry standards to ensure fuel quality and higher prices could limit its use in bunkering, industry sources said.

Further afield, companies have also started turning to green ammonia for bunkering beyond 2030.

The first ammonia-powered ship could be built in 2026 or 2027, BHP marine manager Fergus Eley told Reuters, adding he hoped the fuel would have started pilot production by then.

(Reporting by Jeslyn Lerh; Editing by Florence Tan and Ana Nicolaci da Costa)

((Jeslyn.Lerh@thomsonreuters.com))

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