Op-Ed: Where next for LNG after IMO carbon pricing pause?

Benny Hilström, vice president of market development, WinGD

by Benny Hilström, vice president of market development, WinGD

With or without the IMO Net Zero Framework, LNG remains a viable transition pathway towards decarbonization and, with X-DF technology, ultra-low air pollution.

Going into the extraordinary session of IMO’s Marine Environment Protection Committee in mid-October, many in the industry had high hopes that the Net Zero Framework (NZF) would be adopted. WinGD was and remains one of the believers; incentivising the production and uptake of clean fuels is the only way to meet both IMO emissions ambitions and wider global climate targets.

The NZF does not mean, as some have suggested, that the case for LNG fuel or for installing dual-fuel LNG technology is over. Just like our X-DF-A ammonia-fueled and X-DF-M methanol-fueled engines, our X-DF dual-fuel LNG engines are ready to use zero or near-zero emissions (ZNZ) fuels. In the case of LNG those ZNZ fuels are bio-methane and e-methane, produced using captured carbon and renewable electricity, which can be used without modification and in any blend in X-DF engines.

Had the NZF been adopted with reduction targets and penalties stringent enough to drive people towards bio-methane, and rewards high enough to encourage e-methane production and use, the transition towards those fuels would have come sooner. A pause in implementing the policy only pushes the transition from fossil LNG further down the road.

That is why the NZF delay has made more operators consider LNG propulsion. Without a global carbon pricing policy and immediate e-fuel incentives, it remains the most affordable, widely available and well-established of all marine alternative fuels. Even fossil LNG can push vessels a long way towards the 30% reduction in emissions sought by 2030—an intermediate checkpoint under IMO’s GHG reduction strategy (which remains in place even after the NZF vote postponement).

WinGD’s X-DF concept has been in service since 2016, with more than 900 engines sold. Over that time we have amassed more than 8 million running hours of experience and continuously refined fuel consumption and emissions performance via innovations including iCER and VCR technology.

Advancing GHG reduction benefits

Take methane slip as an example. In less than a decade we have reduced slippage by 60%, thanks to iCER, VCR and other design adaptations. Combined with low fuel consumption, this means that X-DF outperforms current high-pressure LNG engines in total greenhouse gas emissions in several vessel applications. In even more applications, low opex and initial system costs mean that total vessel lifecycle costs remain lower for X-DF than for high-pressure counterparts, regardless of IMO penalties.

Time in the market and continuous improvement have enabled us to develop an engine platform that will yield the best performance whether operating in fossil LNG or biological or synthetic derivatives. Regardless of the status of NZF, those years of refinements will pay dividends for operators choosing methane.

What happens next is far from clear. If the global framework were to fail, a patchwork of regional regulatory regimes would likely follow. Across several regions, port authorities are working to lower air pollution in their communities. It is therefore possible that, as regions regulate, they expand the scope of emissions policy to include not only GHG but also air pollutants.

In such a case, X-DF again has benefits for operators, offering the best air pollution profile of any LNG dual-fuel engine. That includes SOx, NOx and particulate matter. While IMO’s threshold requirements for NOx and SOx hide X-DF’s advantages, under schemes where operators pay for polluting the air, its low emissions profile would translate to real cost savings.

The Net Zero Framework would not have killed the use of LNG, but its pause certainly enhances the business case. Regardless, WinGD’s near decade of optimizing the X-DF platform means operators will pay less, whether they use fossil LNG or transition to cleaner variants. And it opens up new opportunities for air pollution improvements that could also have a significant financial impact on operators.