Summary and conclusions

Natural gas for ship propulsion in Denmark

Natural gas is a feasible substitute for current marine fuels with low emissions to air. When the shipping sector considers its options to comply with current and planned restrictions on environmental grounds natural gas, in particular as Liquefied Natural Gas (LNG), promises solutions with few technical obstacles, but with a number of logistical and economical challenges to overcome.

The drive toward mechanisms to decrease emissions to air is borne out of the limits and timelines set in International Maritime Organisation (IMO) MARPOL Annex VI. The reductions are further accelerated in Sulphur Emission Control Areas (SECAs), which include both the Baltic Sea and the North Sea. Shipowners operating in SECAs are therefore looking for economically sustainable alternatives to diesel and heavy fuel, and the emerging alternative fuel solution for ship propulsion appears increasingly to be natural gas.

This study “Natural gas for ship propulsion in Denmark - possibilities for using LNG and CNG on ferry and cargo routes” was conducted for “Partnerskab for Renere Skibsfart” (a partnership between Danish Environmental Protection Agency (Danish Ministry of Environment) and Danish Shipowner’s Association) and DONG Energy, and the main objectives of the study was to

establish the scope for conversion in the Danish ferry and short sea cargo sector,
describe the options for utilising LNG or Compressed Natural Gas,
identify the benefits and drawbacks of natural gas in shipping,
assess the most important economic, operational and regulatory barriers, and
point to options for overcoming the barriers

The technical developments needed to introduce natural gas for propulsion are available for shipping both for ferries and the short sea shipping. For LNG the experiences with onshore and onboard installations are recent and during the coming years the knowledge base is expected to be continuously expanding due to a range of new developments and installations. For CNG the development for the shipping sector appears not to have progressed much over the last decade, although considerable information is available from land transport. For the short sea shipping sector the development and marketing of a dual fuel engine able to operate on gas or marine fuel depending on fuel availability and requirements is a recent advantage.

From a comparison of fuel consumption in the ferry and short sea shipping sector under four different scenarios it emerges that part of the ferry sector is well suited to conversion to natural gas. However, the fuel consumption in the many smaller ferries is relatively small due to the limited installed engine power and only in the nine ferry ports with the largest ferries is the fuel consumption substantial.

The short sea shipping sector is estimated to be 75 lines with 78 vessels calling 14 ports and to account for a maximum of 25% of the total fuel consumption in ferry and short sea sector combined.

Table S-1 The nine ports with combined energy consumption >20,000 t/y
Port	Ferries	Number of ferries	Total conventional fuel consumption
Sjællands Odde Havn	Mai Mols, Mie Mols, Max Mols	3	65000
Rønne Havn	Hammerodde, Dueodde, Povl Anker, Villum Clausen	4	57000
Rødby Færgehavn	Prinsesse Bennedikte, Prins Richard, Deutchland, Schleswig-Holstein	4	55000
Københavns Havn	Crown of Scandinavia, Pearl of Scandinavia	2	41000
Gedser Havn	Prins Joakim, Kronprins Frederik	2	40000
Hirtshals Havn	Bergensfjord, Fjord Cat	2	35000
Helsingør Havn	Tycho Brahe, Hamlet , Aurora af Helsingborg, , Mercandia IV	4	28000
Esbjerg Havn	Dana Sirena, Norrøna (Winter), Fenja, Manja	4	27000
Århus Havn	Maren Mols, Mette Mols,	2	20000

In the scenario with only key ferries and short sea ports it is found that with less than 25% of the ports and with only 35% of the vessels, more than 80% of the potential conversion of fuel to LNG is still achievable.

Foreign ferry routes operating lines in Hirtshals and Frederikshavn may contribute significantly to the potentially converted fuel consumption by adding 150,000 ton in two ports adding to the total of 300,000 ton considered for nine ports (calculated as LNG).

Depending on the air pollution component the reduction potential is still 70-80% of that in scenario 1, which includes 65 ferries in 41 ports and 78 vessels in short sea line traffic in 14 ports, when assessing the most reduced scenario, which includes 27 ferries in nine ports and 20 vessels in short sea line traffic in four ports (Fredericia, Copenhagen, Esbjerg and Århus).

It therefore appears beneficial to target the installations of the LNG or CNG storage and refilling plant to the most consuming routes/ports and yet reap a large emission reduction potential. It is also clear the focusing on the ferry trade will give the most immediate and largest reductions.

Natural gas is a reliable fuel for both private and commercial vehicles and builds on a proven technology already implemented in many European countries. In other European cities natural gas powered vehicles for urban services, e.g. public transport and garbage collecting services, have proven successful. However, this success has been the result of a political will to support the use of natural gas fuel with subsidies or reduced tax. It is a commonly shared belief that lower taxes on natural gas are important for a successful implementation of natural gas driven vehicles in land transport.

There are technical synergies related to the facilities with LNG and CNG, yet the economic importance of them must be evaluated on a case-by-case basis. The main synergies between the two transport sectors take place on the political level where natural gas as a fuel could obtain better conditions if both sectors use the fuel. However, there could be significant operational synergies when using LNG in both shipping and land transport depending on the specific harbour in question.

Three out of the four scenarios indicate that fuel cost savings cannot cover the investments needed to use LNG as fuel. Only Scenario 4 indicates a positive case for natural gas. Here the investments in ports and vessels are limited to the most fuel consuming ports and vessels and yet the total amount of fuel consumed is to more than 80% of the fuel consumed in Scenario 1. However, the result of the business case still depends very much of the basic assumptions about investment levels and the expected cost difference between the alternative marine gas oil and LNG.

Hence, if there is a political demand to make the use of natural gas in ferries and short sea shipping in Denmark take off, public intervention may be needed to reduce the uncertainty related to profitability of an investment in natural gas. In Norway, the NO_x Fund supports investments aimed to reduce Nitrogen Oxides (NO_x) emissions. Ferries and cargo vessels pay on the one hand 4 NOK (0.5 EUR) per kilo NO_x to the fund, and in return, they can receive support for NO_x reducing investments. In Sweden no particular subsidies or regulation to increase usage of gas have been introduced for the shipping sector. In Gothenburg, the Göteborg Hamn and Göteborg Energi have initiated a project aiming at providing LNG bunker facilities by 2013.

Table S-2 Key barriers for introduction of LNG
Barriers	Possible actions
Technical: More demanding footprint onboard (takes up commercial space)	New designs and technical development of tanks and reconsideration of safety measures
Supply: For short sea shipping filling stations in key ports are lacking	Provide funds for pilot project, technology development etc.
Filling station/bunkering	Develop options for mobile tanks to be trucked onboard and installed
Regulation: Safety regulation for ship to ship transfer, Safety regulation for bunkering while passengers are onboard	Efforts to support the development of revised rules Develop safety measure to allow bunkering while passengers are onboard
Political-administrative: No reward for natural gas conversion in public tenders	Build in criteria in tenders to incentivise investments
Concession periods too short for capital investments	Prolong concession periods, where possible.

Barriers to the introduction of natural gas appear - rather than being technical - to be associated with supply chain issues and obviously economic issues. Several manufacturers have addressed the technical barriers regarding engines/turbines and most of the prominent remaining issues appear to be associated with the filling stations and the storage onboard. This is also an area where updated rules and regulations may provide much sought after clarity and that will reportedly assist in promoting natural gas.

In comparing CNG and LNG it is often mentioned that CNG has more safety issues to be dealt with, but taking into account the widespread use of CNG globally in land-based traffic, it does appear that the hesitation to apply CNG in shipping is more related to a lack of maturity of the CNG technology for this particular purpose than actual insurmountable technical safety issues. It is, however, also clear from the present study that a short-term effort to introduce the wider use of natural gas for propulsion in Danish ferry and short sea shipping cannot be based alone on CNG. In important ports in several of the countries around Denmark (Norway, Sweden, Germany and Poland) LNG installations already exist, are under construction or in an advance stage of planning and design to supply the larger vessels and consumers.

To summarise, the following key findings are related to the use of natural gas as fuel for ships in Denmark:

Natural gas as propulsion fuel in ships:

Advantages: Provide solution to present air emission challenges
Barriers: Capital investments large
Synergies: Developments in Norway and Baltic Sea area
Economy: Positive case for operation for large consumers
Future: Develop bunkering options for short sea shipping

LNG:

Propulsion technology in ships is mature and proven
Distribution network not yet developed for use in ships
Safety concerns are demanding but manageable
Can enter existing bunkering value chain

CNG:

Well developed for land based transport, not yet for shipping
Distribution network for natural gas exists in Denmark
Safety concerns are demanding but manageable
No seaborne CNG value chains in operation

An immediate focus on the ferry sector in Denmark will reap benefits on a relatively short time scale. For the short sea shipping sector away to promote the conversion to natural gas is to support the development of storage and bunkering facilities in main ports. Given the general expectations in the shipping community LNG will presumably be the de facto choice at least for the 5-10 years ahead and the demand for facilities and bunkers will be for LNG.