New report of Intrernational Transport Forum assesses Japan’s ambition to become an international bunkering hub for LNG
A new report by the Intrernational Transport Forum at the OECD assesses Japan’s ambition to become an international bunkering hub for Liquefied Natural Gas (LNG), Intrernational Transport Forum said in its press release.
In the light of effort to decarbonise maritime transoirt, the Japanese government expects LNG to become a significant fuel for shipping and is positioning Japan as a hub for ships to bunker LNG.
Japan is already the world’s largest importer of LNG by a large margin. Alongside the fuel’s main use in electricity production, the country has developed marine bunkering facilities to provide LNG to ships. Japan is also a major trading nation and the volume of its maritime trade provides the basis for its LNG bunkering hub strategy.
Uptake of LNG as ship fuel: There are currently 118 LNG fuelled vessels in the world; a marginal share of the world fleet. However, the number is growing and will almost double by 2020, based on ship order data.
Availability of LNG bunkering facilities worldwide: Operators will need a network of ports where they can take on board LNG. These facilities are becoming increasingly available in Europe, and to a lesser extent in North America and Asia.
Recent and future emissions regulations. Regulations to reduce SOx and NOx emissions from ships have increased demand for alternative fuels including LNG. Emission Control Areas have boosted LNG-fuelled coastal shipping in Northern Europe and North America. The global sulphur cap from 2020 will likely drive the use of LNG-fuelled ships in other parts of the world.
Strategic location close to trade routes. The Port of Keihin (Yokohama, Tokyo and Kawasaki) is located at one end of the North Pacific trade route as a first port for loading and unloading. This gives it a locational advantage to become a major LNG bunkering hub, and Keihin already has existing LNG bunkering infrastructure
The report concludes that Japan has the potential to become a major LNG bunkering hub. At the same time, some uncertainties exist: Emissions regulations will soon target maritime CO2 and no longer mostly NOx and SOx. LNG can cut CO2 by around 20% but is not the ideal solution to reduce greenhouse gas from ships. For instance, it releases methane from unburnt gas in engine exhaust (“methane slip”), and handling LNG at each stage of the supply chain leads to fugitive emissions.
The report recommends to:
Involve stakeholders in the development of LNG bunkering policies includeing LNG importers, global and coastal shipping companies, as well as firms with a high degree of expertise in storage and handling of LNG.
Plan LNG infrastructure in a flexible manner that can be scaled up if and when demand grows. New storage facilities and gas infrastructure should be able to accommodate a range of gases, such as bio-methane.
Stimulate international cooperation in LNG bunkering services. Increasing the number of LNG-propelled vessels significantly requires a worldwide network of LNG bunkering facilities. Japan has been active in international coordination efforts, for instance via a Japan-Singapore Summit Meeting in 2016 and a Japan-Singapore Joint Study on LNG Bunkering in 2017. These efforts need to be sustained.
Mitigate negative environmental side-effects of LNG-fuelled shipping. LNG could increase its contribution to more sustainable maritime transport if operators of LNG supply facilities build on their experience to further minimise the remaining negative impacts.
The work for the report was carried support by a voluntary contribution from the Government of Japan.
About the International Transport Forum
The International Transport Forum is an intergovernmental organisation with 59 member countries. It acts as a think tank for transport policy and organises the Annual Summit of transport ministers. ITF is the only global body that covers all transport modes. The ITF is administratively integrated with the OECD, yet politically autonomous. ITF works for transport policies that improve peoples’ lives. ITF organises global dialogue for better transport.