An LNG retrofit could pay for itself in six years on a 16,000-TEU containership converted in 2030, while methanol and ammonia offer deeper emissions cuts with longer returns, according to WinGD.
The Swiss marine engine designer modelled three alternative-fuel conversion pathways using its high-pressure dual-fuel LNG engine X-DF-HP, methanol engine X-DF-M and ammonia engine X-DF-A.
Conversion investment, fuel costs and carbon costs were assessed under a global pricing regime similar to the IMO Net Zero Framework as drafted.
Under the assumptions modelled, all three retrofit pathways outperformed continued VLSFO operation over the vessel’s lifetime on both cost and emissions reduction.
LNG delivered the strongest and earliest financial return. The best-performing pathway, from LNG to low-GHG LNG, produced a six-year payback.
Ammonia and bio-methanol achieved substantially deeper emissions reductions but required longer payback periods.
WinGD Head of Strategic Marketing Carmelo Cartalemi said: “The important finding is that retrofit technology is increasingly not the limiting factor. The commercial outcome is determined far more by fuel price, fuel GHG intensity and the regulatory signal. Shipowners and operators need visibility not only on what a retrofit costs, but on what every ton of fuel will cost and how its emissions will be treated by regulations over the vessel's remaining life.”
The study also calculated net present value and the subsidy required to bring retrofit payback within five years. That support ranged from US$126 to US$330 per tonne of CO2-equivalent emissions. WinGD said a reward mechanism for zero or near-zero emissions fuels under the IMO framework would need to be on a similar scale to the US$100 to US$380 remedial units already considered for excess emissions.
Retrofit CAPEX was not the dominant factor in the business case. Across the scenarios, fuel costs and regulatory treatment had a much greater impact on lifetime economics than differences in conversion investment.
Cartalemi said: “The valuable insight for operators is that cost-effective options for retrofitting already exist, although the case is far from settled. For regulators, the modelling shows that without strong policy, the most cost-effective options are unlikely to include the fuels that contribute most to shipping’s decarbonisation trajectory.”
WinGD Ltd is a Winterthur-based marine power company whose origins trace back to the Sulzer Diesel Engine business established in 1893. Its activities include low-speed two-stroke marine engines and lifecycle engine support through Global Service by WinGD.