The shipping has grown used to being omitted from environmental requirements. This era has come to an end. Now the shipping industry is facing both stricter requirements and increasing uncertainty about future fuel prices. LNG comes to the rescue.
While businesses and industries on land have been hit with stricter and stricter environmental requirements for many years, the shipping industry has been omitted from most of these requirements. This era now seems to have come to an end. Requirements intended to curb local emissions are already being inforced, a topic we will revert to often in this blog, and global emissions are likely to receive more attention in the near future. And the consequence is quite simple to grasp: The shipping industry needs to do something to comply. The old technology and the old practices will no longer be accepted. And if environmental emission requirements was not enough for the shipping industry, there is also an increasing concern about future price developments for oil based fuels. Oil is close to peak production, and most analysts are unanimous in their expectations to an increasing oil price.
The white knight for the shipping industry, the one thing that solves both key challenges, right now appears to be LNG. Counting today 22 ships are operating on LNG. 21 of these are operating in Norway, and the last one is a tug operating on the Yangtze River in China. The reason why this development has been spearheaded from Norway is two-fold; one, the Government has stated direct requirements for new ferry routes to operate on LNG, and two, the Government has established a NOx-tax and NOx-fund to distribute the collected tax back to the industry to support NOx-reducing measures. This means many of the currently sailing ships have received more than half the extra cost in support from the fund.
The favorable conditions for LNG fuelled ships in Norway has led to substantial experience, both from construction and operation, and from regulatory development viewpoints. The first ferry, Glutra, was launched in 2000, soon followed by offshore supply vessels, exemplified by Eidesviks Viking Energy below, and more ferries. With 10 years of experience from various ship types, LNG is now ready take the step into global shipping as an economically viable fuel, even without Government support.
And through this blog, we intend to keep you up to speed on how our white knight, LNG, is holding it together.