Rystad: By Slow Steaming, LNG Carriers Could Increase CO2 Emissions

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Published Jun 21, 2021 9:04 PM by The Maritime Executive

The IMO's new carbon intensity reduction rules could have unintended consequences, one of the industry's leading independent analysts has warned. 

According to consultancy Rystad Energy, the operational carbon intensity reduction requirements (CII) adopted at the Marine Environment Protection Committee's last meeting will likely require less-efficient, older LNG carriers to slow down below 15 knots. By running slow, they will deliver about nine billion fewer cubic meters of liquefied natural gas into Asian markets per year (about one percent of the total). This will reduce the supply of natural gas in Asia, where about 40 percent comes from overseas LNG imports. 

When the gas supply goes down, its price goes up. In Asia, electrical utilities respond to a high gas price by burning more coal instead. Coal is three times more carbon-intensive than gas, so utility gas-to-coal switching results in a net gain in carbon emissions. 

According to Rystad, this works out to an additional 38 million tonnes of powerplant CO2 per year by 2030 - more than twice the 15 million tonnes of CO2 reduction achieved by LNG carrier slow-steaming. The net 23 million tonne increase is equivalent to the emissions of an additional five million American passenger vehicles.

Adding more LNG carriers would solve the problem, but more hulls may not be available. The maximum possible production numbers at qualified shipyards are already short of the expected transport demand for LNG in the years ahead, according to Rystad.

"To offset the emitted CO2 from gas-to-coal switching and actually make IMO’s target meaningful for LNG vessels, a very large proportion of the lost LNG would need to be replaced through further expansion of renewable energy capacity in Asia," said Oddmund Føre, vice president of Rystad Energy’s energy service research team.