SEA-LNG Analysis SEA-LNG has completed its initial assessment of the IMO Net-Zero Framework following MEPC 83, utilizing the independent Z-Joule cost of compliance calculator to evaluate the commercial impact of the new regulations.
According to the analysis, investments in LNG dual-fuel vessels provide shipowners with a significantly shorter payback period compared to methanol, ammonia, or VLSFO-fuelled vessels. SEA-LNG noted that LNG ships also provide commercial advantages through fuel flexibility and access to established infrastructure.
SEA-LNG’s study focused on a 14,000 TEU container vessel operating on the trans-Pacific route from Japan to the US West Coast. The research compared LNG, ammonia, and methanol dual-fuel vessels with a VLSFO-fuelled vessel over a 15-year investment period.
The cost comparisons were based on CAPEX, the fuels' carbon intensity, and fuel prices. Fuel price forecasts and carbon intensity values were sourced from DNV’s analysis (MEPC 82/INF.8/Add.1).
Results indicated that both high-pressure and low-pressure LNG dual-fuel engines present a payback period of between 4.5 and 5 years compared to VLSFO, due to lower compliance costs linked to LNG’s lower greenhouse gas fuel intensity.
Vessels using methanol and ammonia do not achieve payback within the 15-year horizon.
A second case study modeled a 14,000 TEU container vessel operating on the Rotterdam-Singapore route. In this scenario, the vessel is subject to both IMO and EU decarbonization regulations, with EU compliance applying to 50% of the voyage.
Here, the LNG-fuelled vessel's payback period was reduced to approximately 3.5 years, largely attributed to the effect of FuelEU Maritime in the early years.
Steve Esau, Chief Operating Officer of SEA-LNG, stated: “While many details need to be decided, the IMO Net-zero Framework provides a clear basis for maritime decarbonisation and should, in principle, enable all fuel pathways – be they LNG, methanol or ammonia – to compete on a level playing field. For this to continue, it is imperative that the ZNZ Reward Mechanism is designed in a fuel agnostic and technology neutral way.”
Peter Keller, Chairman of SEA-LNG, commented: “The industry continues to make major investments in the LNG pathway. These ships can use LNG, bio-methane and e-methane, and reduce greenhouse gas emissions and cut local pollution today. The IMO position, as well as the EU regulations, both affirm the pathway is heading in the right direction and offers a practical and realistic route to compliance, starting right now.”
SEA-LNG indicated this analysis is the first in a series of costs of compliance studies to be conducted using the Z-Joule calculator.
SEA-LNG is a multi-sector industry coalition that promotes the use of LNG as a marine fuel. Its members span the entire LNG value chain, including ship owners, LNG producers, engine manufacturers, ports, and classification societies.
Z-Joule is a decision-support platform providing strategic assistance for the maritime fuel transition. Its platform employs advanced algorithms and curated data sets to help stakeholders in the maritime fuel sector make informed decisions in response to evolving regulations and market dynamics.
DNV (Det Norske Veritas) is a leading global classification society and recognized advisor in the maritime, energy, and other industrial sectors.