Marine Transportation System

Posts Tagged ‘vessels’

Europe is Breaking the Egg

In Efficiency, Energy/Environ, Infrastructure, MTS Policy, Ports on October 5, 2014 at 11:16 pm

Before we get to John Graykowski’s “Europe is Breaking the Egg” I would like to pose my own chicken-and-the-egg question as one might ask it here in Wonkington, D.C. Which comes first: the policy or the strategy? One might also ponder how good is a forward looking strategy when the policy is of the past century. The Maritime Administration is preparing a “National Maritime Strategy.” It is a principal objective of Administrator Chip Jaenichen and probably has been encouraged by congressional supporters of the U.S. flag industry who, like most of us, have not liked seeing the merchant fleet decline but who, unlike us, are in a position to redefine U.S. maritime policy. The piece below begs the question whether a new national maritime strategy would benefit by first fixing the national maritime policy that for the most part has been in place while the United States lost its prominent role in world shipping. Certainly it would make it easier on Mr. Jaenichen and the Secretary of Transportation to have an updated national policy framework as a basis for new strategies to get to where we need to be. John Graykowski’s article first appeared in Pacific Maritime Magazine on September 1, 2014. You can find it here. He poses the policy question in the context of a growing American supply of natural gas and the multiple benefits to be realized by fostering a bunker switch to LNG. This is the third in his series for MTS Matters on the subject of developing LNG distribution infrastructure to advance the adoption of LNG as a marine fuel. It also is a recurring theme in these pages.  Pbea

We may soon be able to retire the tiresome “chicken and egg” cliché to describe LNG development, since there has been movement in the last year in Europe and the United States that indicates the circle may be breaking; but it’s too soon to tell whether the movement is temporary or permanent. What is apparent, however, it that Europe has moved forward in a more focused and strategic way, to create LNG infrastructure and markets, which is yielding results. By 2016, permanent LNG bunkering facilities will be in operation in Rotterdam and Antwerp – both among the largest ports in the world – thereby signaling that the supply uncertainties have been resolved. It bears asking, therefore, how Europe has done this, and whether we should consider similar measures here if the goal is to expand LNG as a marine and transportation fuel throughout the United States.

In 2008, Norway effectively made LNG the preferred fuel choice for marine operators through a combination of regulatory mandates relating to Nitrogen Oxide (NOx) and financial incentives covering up to 80 percent of the capital cost of the LNG-related components. Following these actions, the number of Norwegian vessels using LNG as a primary fuel went from 3 to 12 vessels in five years, with more than 50 vessels of various types now under construction along with the supporting LNG infrastructure. Concurrent with this, Norway is addressing the regulatory and operational issues, and is now seen as a leader in marine LNG development.

The European Union (EU) is also pursuing a comprehensive effort to increase LNG as a marine fuel with the goal of developing LNG infrastructure in every major seaport by 2020, and every inland terminal by 2025; a total of 139 ports across Europe. This goal coincides with estimates that by 2020, 1,700 dual fuel vessels will be built or converted worldwide, with many of these operating in, or calling on, the EU.

By 2020, the United Arab Shipping Corporation (USAC) dual fuel container vessels will be operating between the Far East and Europe. This activity will spawn additional interest and movement in Europe and among its global trading partners leading to a rapid transition from diesel to LNG as a major transportation fuel.

The EU is employing a “carrot and stick” approach combining financial support for the conversion and construction of vessels and infrastructure with increased regulation. Projects such as the Trans-European Network for Transport (Ten-T) and the Rhine-Main-Danube initiatives have produced significant results. $139 million has already been allocated to 7 Ten-T projects to support vessel conversion and LNG infrastructure development, with more funding promised. Support of up to 50 percent of project costs is available for vessel conversion, construction and infrastructure, and just recently the first inland dual fuel barge was delivered and will shortly begin operations.

The EU adopted an approach that combines: (1) clear and defined goals that LNG will displace traditional marine fuels; (2) increased environmental regulations; (3) financial incentives to spur the initial transition; and (4) coordination among ports, governments; regulatory agencies and stakeholders to create uniform regulatory structures. Given the intrinsic advantages of LNG, there is recognition that the market would likely drive toward greater adoption of LNG without assistance. However, many vessel owners and gas suppliers are reluctant to be the first to make the investments in LNG vessels and infrastructure regardless of the advantages. The EU has determined that these measures are necessary in order to reduce perceived risks, accelerate market decisions, and attain the stated goals for LNG deployment.

In contrast, the United States does not have a national policy to support LNG as a marine and transportation fuel. Instead, our LNG market is developing project-by-project, driven by first-adopters such as Harvey Gulf, Tote, Matson, and Crowley with no federal support or strategy; despite the tremendous benefits LNG offers to the country. While we have seen some movement in disparate locations, there is not so much as a policy statement that commits this country to the development of LNG as a transportation fuel; and there are certainly no programs to support the construction of vessels and infrastructure to make this possible nor to address regulatory uncertainties and enhance public acceptance of LNG.

The challenges and obstacles that exist here are no different from those in Europe, and LNG is new to everyone. It appears, however, that the EU has tackled this question in a more coherent, direct, and proactive way that is rapidly producing results. To be sure, there are major differences between the US and the EU in terms of governmental structures and processes. The EU can promulgate Europe-wide regulations and implement promotional programs, and has a history of doing so. Here, that role would be shared between Congress and the Executive Branch, and that is yet another challenge given the continuing dysfunction between both branches of government.

A policy declaring that LNG as a transportation fuel is in the national interest, and committing to the support, promotion and encouragement of its development would have several immediate effects:

  • It would be a clear signal to all potential stakeholders that LNG is “real” and has the backing of Congress and Administration;
  • It would put federal agencies on notice – and could require them– to collaborate with industry on practical and uniform regulation, reduced delays and greater certainty; and
  • It could include limited and temporary financial incentives such as loan guarantees or tax incentives to accelerate LNG conversion, because early adopters should be encouraged in order to build a sustaining market that benefits the entire country.

Federal resources are constrained, but without a national commitment, LNG may not gain the critical mass and momentum to create a long-term viable market. Regulatory direction is important, and does not involve direct costs, but if combined with properly structured and managed loan guarantees or tax incentives they would have a greater likelihood of jump-starting this industry at low risk and large benefit to the whole nation in emissions reductions, energy independence, economic activity in shipyards and elsewhere. The promise of LNG is so great it deserves this sort of recognition, attention, and effort. Clearly the EU sees it that way, and we should as well and the risk if we don’t address it in this way is diminished potential for LNG to transform this country and the lost opportunity to lead the world in LNG development and utilization.   John Graykowski

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The Grass is Greener — Pt. 3

In Efficiency, Energy/Environ, Green Transportation on July 28, 2010 at 8:26 am

Here in the U.S. some vessels may qualify as green or, in the instance of refitted tugs and ferries by the Port Authority of NY & NJ to mitigate against dredge emissions for a major deepening project, are greener than they once were.  Then there’s the Foss Marine hybrid tug that was built with help from the Port of Long Beach.  And there are the efforts in the Port of Los Angeles which along with POLB has a multifaceted vessel emissions reduction program including regulation, financial inducements, technology demonstrations, and infrastructure investments.  What the U.S. government is doing to support technology improvements as part of an energy/environment policy is not readily apparent.  Lest we be satisfied that all is well in America let’s peer across the pond to Norway and see….ships powered by LNG and fuel cells.

LNG-powered ship nominated for ‘Ship of the Year’

A liquefied natural gas (LNG)-powered ship has been nominated for the “Ship of the Year 2010” award by Skipsrevyen, a Norwegian maritime publication.

The KV Bergen, and its sister vessels KV Barentshav and KV Sortland, “are by far the world’s most energy efficient and environmentally friendly coast guard vessels,” said a statement from Norwegian shipbuilder Kleven Maritime.

According to the company, the vessels use LNG as a primary source of fuel.  In addition, the vessels are equipped with large capacity marine diesel oil (MDO) engines to ensure high speed (maximum 20 knots) and towing performance when required.

“This, along with an optimized hull with very low resistance through the water again optimises fuel consumption during the vessels main operations – patrolling at low speed in rough waters,” the statement added.

“The reduction in NOX emission when using LNG is measured at around 90% compared to MDO, likewise the reduction in CO2 emission is measured at 25%.”

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From Eidesvik Offshore of Norway

“Launched in 2003, the FellowSHIP project began with a feasibility study and completed basic design and development of fuel cell technologies for vessels by 2005. In 2006, the JIP began development of an auxiliary electric power pack (320kW) fueled by LNG, which was successfully installed in September aboard the OSV Viking Lady…   The third and final phase of the project, intends to be testing, qualifying and demonstrating a main fuel cell electric system…

“The success of the project so far has raised expectations that fuel cell technology is close to a commercial application and has resulted in a regulatory review to establish frameworks for moving the technology forward.

“The FellowSHIP project was developed in response to rising concerns about the environmental impact of harmful emissions to air, including NOx, SOx, and CO2. ….

“With new tougher, emissions regulations now being considered by the IMO and EU, demand for commercial alternatives to traditional onboard power systems has risen. Fuel cell technology is not expected to manage the issue alone, but the technology represents a vital piece of the puzzle in certain shipping segments, such as short sea, local port traffic, commuter ferries and cruise ships and offshore, among others…”

The FellowSHIP project is a Joint Industry Project with Norweigian and German support.