IMO Regulations and Government Efforts to Encourage Usage of LNG as a Bunker Fuel across Shipping Industry

An Increasing number of ships and vessels are using liquefied natural gas or LNG as a clean fuel to comply with the regulations laid by the International Maritime Organization (IMO) across emission control areas. LNG as a ship fuel reduces the emission of sulphur dioxide by 90-95% compared to the conventional petroleum fuels. This factor has propelled the growth of the global LNG bunkering market. The market stood at 70 kilo tons in 2013 and is anticipated to expand phenomenally at a CAGR of 63.6% during the period between 2014 and 2025. The overall market is projected to reach 22,540 kilo tons by 2025.

What are the key factors hindering the expansion of the global LNG bunkering market?

The lack of LNG fuelling infrastructure across the major bunkering destinations is one of the primary factors impeding the growth of the LNG bunkering market worldwide. The high cost of building LNG fuel ships has slowed down their adoption among the shipping companies. Furthermore, the storage of LNG at low temperature of about -162 degree Celsius poses as a key challenge to its usage as a marine fuel. The necessary additional safety measures for the storage of LNG increases the cost of production and designing of LNG-fuelled vessels. As a result, a number of shipping companies are resorting to alternative approaches to meet the IMO regulations. 

How is the LNG bunkering market across Asia Pacific evolving?

In Asia Pacific, South Korea and China are among the key countries that are investing significantly on LNG as a bunker fuel. Countries such as Singapore are fast adopting LNG as a sustainable alternative source of fuel in the maritime industry. The Maritime and Port Authority of Singapore has recently announced the extension of the Green Ship Programme (GSP) incentives to ships that are using LNG as fuel. The Singapore government is taking efforts to cut down the emission of sulphur and carbon dioxide. The GSP has been started to encourage the domestic maritime industry to contribute towards the conservation of environment.

Under this programme, Singapore-flagged ships are entitled to reduction in initial registration fees and tax rebate on annual tonnage. With this effort, over 50% of the ships qualified for the programme have exceeded the present Energy Efficiency Design Index set up by the IMO.

On the other hand, the Indian government is trying to reduce carbon emissions without extra operating costs. The Ministry of Shipping has announced that Petronet LNG Ltd. will be working with the Inland Waterways Authority of India to develop the operation of LNG barges on the river Ganga by December 2018. All these recent developments are expected to immensely support the adoption of LNG as a bunker fuel in Asia Pacific.


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