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Potential decarbonization strategies for a new LNG carrier design

In a Joint Industry Project, TotalEnergies, Hyundai Heavy Industries, a major shipping company and DNV studied an LNG carrier newbuild project to determine feasible approaches to achieving compliance with the IMO decarbonization trajectory toward 2050.

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Scope of the JIP
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Specifications of the baseline vessel
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Intersections with the decarbonization trajectories
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Measures to reduce carbon intensity
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Decarbonization strategies
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Technical implications of the different retrofitting measures
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Economic assessment with DNV's FuelPath model
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Effect of the different measures on carbon intensity
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Annual and accumulated costs for baseline price scenario
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Total cost of ownership - discounted cost
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Carbon tax assumptions
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Design and safety considerations
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Main conclusions

Potential decarbonization strategies for a new LNG carrier design

Scope of the JIP

Scope of the JIP

The JIP evaluated a current design for a 174,000 m3 LNG carrier to be constructed at HHI to determine how it can meet the IMO CO2 emission targets towards 2050. The goal was to chart a practicable path enabling the vessel to comply with the carbon reduction trajectories. In particular, the project aimed to identify the most cost-effective way to achieve compliance, identify the optimal time to implement a retrofit, and to understand uncertainties. Different decarbonization options, including measures related to energy efficiency, energy harvesting, on-board CCS, and alternative fuels, were investigated from a vessel lifetime perspective. Cost implications and safety were also considered.

Specifications of the baseline vessel

Specifications of the baseline vessel

The baseline vessel is a 109,000 dwt LNG carrier with a cargo capacity of 174,000 m3 equipped with a low-pressure (XDF) propulsion system and reliquefaction plant. As energy-saving devices the vessel will feature propeller boss cap fins and a rudder bulb, an air lubrication system and a shaft generator. The JIP assumed two trade routes: Houston–Antwerp and Houston–Japan, as well as two operational profiles, a normal trading speed and a slow-steaming profile. Typical annual operational data for the two routes, such as operational carbon intensity and annual fuel consumption, were used for reference.

Intersections with the decarbonization trajectories

Intersections with the decarbonization trajectories

The points in the graph where the carbon intensity of the vessel, shown as horizontal lines for either operating profile, intersects with the decarbonization trajectories towards 2050 and 2040 show the latest possible time for retrofitting energy saving measures and carbon-abatement technology and/or start using blend-in of carbon neutral fuels so that the ship will continue to comply with emission limits. For the 2050 trajectory, the critical year will be 2038 for operational profile 1, whereas for the more ambitious 2040 trajectory, the ship would have to be converted/be blended in by 2031. Assuming that the ship is commissioned in 2025, the second dry-docking in 2035 will be the best opportunity for this in the first scenario. For the slow-steaming operational profile (OP2), the third dry-docking in 2040 would be sufficient.

Measures to reduce carbon intensity

Measures to reduce carbon intensity

The baseline vessel design already includes several efficiency-enhancing features and energy-saving devices from the beginning. The JIP considered five additional measures to take when the vessel reaches the point where it needs to be upgraded and/or have blend-in of carbon-neutral fuels to remain compliant: - Wind-assisted propulsion in the form of three rotor sails (Flettner rotors) - Use of shore power (“cold ironing”) - On-board carbon capture and storage (CCS) - Fuel cells - Waste heat recovery (WHR)

Decarbonization strategies

Decarbonization strategies

The JIP evaluated the benefits and economic feasibility of four different strategies towards achieving compliance with the IMO decarbonization goal: Strategy A: The LNG carrier operates as designed and built throughout its lifetime, blending in progressive amounts of bio/e-LNG to remain compliant from 2037 onwards. Strategy B: The ship is additionally equipped with three rotor sails (Flettner rotors) as well as shore power equipment from the day of delivery and begins to blend in bio/e-LNG and bio/e-MGO in 2038. Strategy C: A carbon capture and storage (CCS) system is installed on board in 2035 to extract CO2 emissions from the exhaust. A 100% CO2 abatement potential (optimistic) is assumed, and therefore there is no need to blend in bio/e-fuel. Strategy D: A modular fuel cell system and a waste heat recovery system are installed in 2035. As of 2037, bio/e-LNG and bio/e-MGO are blended in progressively to achieve the target carbon intensity.

Technical implications of the different retrofitting measures

Technical implications of the different retrofitting measures

Rotor sails are a proven wind-assisted propulsion technology. Three rotor sails are estimated to reduce fuel consumption and CO2 emissions by almost 6% per year, based on historical trading patterns and wind conditions. Weather routing will further improve the benefit. Some crew training is necessary. Using shore power will further reduce fuel consumption while the vessel is in port and CO2 emissions by an estimated 8–9% (relative to total annual emissions), provided that the required infrastructure exists at the ports of call. On-board carbon capture and storage (CCS) requires significant modifications on board, e.g. an extra deck to accommodate the system and CO2 tank. The extra fuel needed (almost 24%) to power the system will not affect the vessel’s carbon footprint, which is considered to be zero after the retrofit. The feasibility of this strategy depends on the existence of an onshore CO2 infrastructure and value chain (still not in place). A modular Solid Oxide Fuel Cell (SOFC) system running on LNG combined with a waste heat recovery system can provide auxiliary power and increase efficiency. The fuel cells and batteries need to be replaced after 8 years. Fuel savings are estimated to be 6–7% and the CO2 abatement potential in the same range.

Economic assessment with DNV's FuelPath model

Economic assessment with DNV's FuelPath model

This JIP applied the DNV FuelPath Model to evaluate the economic performance of design options, i.e. fuel and energy-efficiency strategies available to a specific ship. Based on varying assumptions and scenarios, this model assists shipowners in identifying design choices that will be resilient to future changes and perform well under a range of scenarios over the vessel’s lifetime. The performance is expressed as total cost of ownership and other economic parameters. Since future fuel prices are hard to predict, the study accounted for three different fuel price scenarios (High, Baseline, Low).

Effect of the different measures on carbon intensity

Effect of the different measures on carbon intensity

The four strategies differ significantly in terms of carbon intensity (CII) after the retrofit. While the vessel under study will be equipped with state-of-the-art efficiency-enhancing features enabling its carbon intensity performance to be significantly better than that of the current fleet average, any of the three other strategies will further improve its CII rating and reduce fuel costs. Strategy B (rotor sail/shore power at newbuild stage) and to a lesser extent, Strategy D (fuel cell/waste heat recovery retrofit) will both delay the point in time at which it is necessary to blend in carbon-neutral fuel. Strategy C (carbon capture) reduces the CII to zero, which offsets the fact that it causes fuel consumption to increase.

Annual and accumulated costs for baseline price scenario

Annual and accumulated costs for baseline price scenario

The development of the annual costs – assuming the middle or “baseline” fuel price scenario – reflects the investments in the newbuild and subsequent retrofits as well as the resulting fuel costs. In the case of Strategy A, fuel expenditures rise steeply when carbon-neutral fuel is added progressively as of 2037. The rotor sails and shore power mitigate this effect for Strategy B. While Strategy C must invest a substantial amount in the CCS system in 2035, this investment keeps fuel costs constant during the remaining years. Strategy D ends up with the highest overall bill because of the investment in fuel cells; the fuel savings cannot compensate for that.

Total cost of ownership - discounted cost

Total cost of ownership - discounted cost

In general, Strategies B and C show the lowest TCO throughout the lifetime of the vessel. This conclusion may change, however, if a CO2 tax is introduced or a more ambitious target greenhouse gas intensity trajectory (e.g. to decarbonize by 2040) is applied. Strategy C is least sensitive to the different fuel price assumptions applied in this study, as it does not utilize carbon-neutral fuels. The TCO of Strategy A is found to have the greatest sensitivity to fuel prices because of its reliance on carbon-neutral fuels and relatively high energy consumption compared to Strategies B and D (after 2035), for example.  The best option in terms of TOC is the wind-assisted propulsion combined with shore power, closely followed by the CCS approach (base and low cases). In an accelerated scenario (decarbonize by 2040), the additional carbon-abatement measures must be taken at an earlier time.

Carbon tax assumptions

Carbon tax assumptions

A future CO2 price will have a significant effect on the cost scenarios by “punishing” the solutions with the highest fuel consumption. This should be taken into consideration when choosing the carbon reduction strategy for a newbuild. The JIP accounted for this parameter, assuming a carbon tax scenario believed by industry stakeholders to be realistic. The impact from the carbon tax is not shown here, but for Strategy A (baseline), for example, a carbon tax will increase the TCO by approximately 20%. Strategy C (CCS) performs relatively better when a CO2 tax is introduced. It is important to bear in mind the uncertainties affecting the study, in particular fuel price developments, fuel taxation, fuel availability in the relevant trading area, the regulatory decarbonization trajectory that will be applied, and the shipowner’s own decarbonization ambitions.

Design and safety considerations

Design and safety considerations

The JIP also carried out an overall review of design and safety considerations, some of which are worth mentioning: Rotor sails require free inflow of wind to maximize the forward thrust of the Magnus effect. Their arrangement on deck must account for factors such as rudder action, ship turning ability, cargo-deck operations, line of sight from the bridge and structural strengthening for the sail foundations. Some crew training is required and relevant safety rules must be taken into consideration. Rotor sail technology is mature. To use shore power, appropriate electrical installations are required on board and a range of considerations should be assessed, e.g. location of equipment relative to hazardous zones, emergency departure, switchboard arrangements, etc. CCS technology is expected to reach maturity within the next five years. The necessary modifications on board are significant; an extra deck close to the exhaust funnel may be required. On-board CO2 management has important implications for safety and crew training. The CCS system requires extra power generation and port infrastructure to collect the captured CO2. A fuel cell system is modular and containerized, requiring a safe space, an exhaust for the waste heat recovery system as well as access to fresh air and fuel. If this approach is chosen, it should be accounted for in the design of the engine room and funnel as well as some deck reinforcements. Fuel and electricity hazards and crew training are additional criteria. There is a way towards 2050, but the “right” direction is very ship- and trade-specific, and a range of assumptions need to be established.

Main conclusions

Main conclusions

The LNG carrier studied in this JIP is expected to be well-aligned with the IMO ambition to decarbonize shipping fully by 2050. A more ambitious target can be met by taking appropriate measures at an earlier time. The study concluded that for fuel price scenarios, CO2 pricing and timeline scenarios considered, Strategies B (rotor sail, shore power) and C (CCS) result in the lowest cost of ownership. Surprisingly, Strategy C is the most robust under these assumptions, provided this solution achieves a 100% carbon abatement rate and an appropriate CO2 onshore infrastructure is established. Strategy B has the lowest energy and drop-in fuel demand, provided shore power is available at all ports of call. The calculations for Strategies A, B and D are contingent upon the availability of carbon-neutral LNG and MGO at relevant bunkering ports. An unequivocal recommendation for any particular fuel or carbon abatement technology cannot be made, considering the uncertainties involved. Rather, the JIP illustrates a structured process that will help owners keep a range of options open as the shipping world steers towards decarbonization.

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