9 Conclusions

Natural gas for ship propulsion in Denmark

The technical developments needed to introduce natural gas for propulsion is available for shipping both for ferries and the short sea shipping. For Liquefied Natural Gas (LNG) the experiences with onshore and onboard installations are recent and during the coming years the knowledge base will be continuously expanding due to new developments. For Compressed Natural Gas (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.

Potential for conversion to natural gas

From a comparison of fuel consumption in the Danish 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 (>20,000 t/y).

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.

Foreign ferry routes operating lines in Hirtshals and Frederikshavn may contribute significantly to the converted fuel consumption adding 150,000 ton in two ports adding to the total of 300,000 ton considered for nine ports (calculated as LNG). However, LNG bunkering infrastructure is more advanced in the ports of destination and if allowed by technical conditions it is assumed for the purpose of the study that the natural gas (LNG) facilities will be placed there rather than in Denmark. Given the potential significance of the contribution, the options for including these ports should not be ignored when considering a strategy for the use of natural gas in shipping in Denmark.

Emissions to air

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 (no 4), which includes 27 ferries in nine ports and 20 vessels in short sea line traffic in four ports (Fredericia, Copenhagen, Esbjerg and Århus). The total annual reductions amount to approx. 8,100 t SO_x 1100 t PM and 26,000 t NO_x with the short sea shipping accounting for 15-20% of the reduction in the most feasible scenario 4.

It will therefore be beneficial to target the installations of the LNG or CNG storage and filling stations to a few ports with a high consumption profile and yet reap a large emission reduction potential.

It may be added that a 10% reduction in the emissions of carbon dioxide can be foreseen, but the actual impact on climate change is sensitive to the potential release of unburned hydrocarbons, which will primarily be in the form of methane, a potent greenhouse gas.

Synergies with other transport sector

In a number of European countries 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 in the land transport sector hat lower taxes on natural gas are important for a successful implementation of natural gas driven vehicles.

There are technical synergies related to the facilities with LNG or CNG, yet the economic importance 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 used the fuel. However, there could be significant operational synergies when using LNG or CNG in both shipping and land transport depending on the specific harbour in question.

Economy

Three of the four assessed scenarios indicate that fuel cost savings cannot alone cover the investments needed to use LNG as fuel. Only the most reduced scenario (no. 4 targeting nine ferry ports and four cargo ports) indicates a positive case for natural gas. However, the result of the business case still depends very much on the basic assumptions about investment levels and the expected cost difference between the alternative (marine gas oil) and LNG. Insufficient information is available to allow for a specific analysis of CNG. It is, however, estimated that the primary difference is the logistical part where a tanker transports LNG to storage and user, whereas CNG will be distributed as natural gas in the grid and compressed on-site.

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 long term profitability of an investment in natural gas installations.

Barriers and possible actions

Barriers to the introduction of natural gas appear to be less technical than being associated with supply chain issues and economic issues. The introduction of LNG in shipping is already a fact in Norway and many technical and logistical challenges have been addressed. Although the potential for CNG is also considerable, the technology to be used in the shipping sector is less mature.

It is often mentioned as a key issue that CNG has more safety issues to be dealt with primarily caused by the high-pressure storage and filling facilities. 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. Having said that it is also clear from the present review that any short-term effort to initiate the wider use of natural gas for propulsion in Danish ferry and short sea shipping cannot be based on CNG. In important ports in several of the countries around Denmark (Norway, Sweden and Germany) LNG installations already exist, are under construction or in an advance stage of planning and design. Also, Mols Liniens project, which is the most progressed Danish project, will operate on LNG and their first hand experiences on LNG will presumably have a bearing on the Danish shipping community’s consideration of LNG provided the experiences are positive.

Table 9‑1 Key barriers for introduction of natural gas (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.

LNG versus CNG

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 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.

Investments in ships with natural gas propulsion based on LNG from a point of view of longevity of asset, second hand value and profitability appear presently to be prone to considerably fewer risks than CNG, and LNG based technology will also be ready for operation on a shorter time scale. In particular, for the fast ferries and long haul (high consumption) traditional ferries sustainable economic cases can be made for operation.

Regarding investments elsewhere, mainly in storage and transport facilities, the projected market size for LNG in shipping may be larger than CNG in the short term, but synergies with the wider land based transport sector may be more readily available to CNG than to LNG projects. This applies particularly in ports in major cities where synergies based on access to public/private bus fleets or other actors with large fuel consumption are available. However, 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.

To summarise, the following key findings are related to the use of natural gas as fuel for ships in Denmark with main the experiences and data from LNG installations:

Natural gas as propulsion fuel in ships offers and is faced with:

Advantages: Provide solution to present air emission challenges
Barriers: Capital investments large
Synergies: Developments with momentum in Norway and Baltic Sea area
Economy: Positive case for operation for large consumers (ferries)
Future effort: 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 a way to promote the conversion to natural gas is to support economically, on a political-administrative level or technically the development of storage and bunkering facilities in main ports. This may be suitably combined with bunkering stations also servicing the ferries operating from the ports of choice.