LNG-Fuelled Ships Can Pay for Their Higher Costs in Five Years Under IMO 2028: SEA-LNG

The LNG pathway 'offers the best returns' under the IMO 2028 deal, according to SEA-LNG's Peter Keller. Image Credit: SEA-LNG

A shipping company ordering a large LNG-fuelled boxship could recover the higher costs relative to a conventionally-fuelled vessel in under five years under the IMO 2028 GHG framework, according to LNG advocates SEA-LNG.

The organisation sees a relative payback of 4.5-5 years under the IMO 2028 deal for an LNG-fuelled 14,000 TEU container ship on the Japan to US West Coast route, compared to VLSFO, SEA-LNG said in a statement on its website on Monday.

The organisation's analysis indicate ammonia- and methanol-fuelled ships would not recover their higher costs over a 15-year horizon, it said.

"The costs of compliance analysis shows that the LNG pathway offers the best returns under the MEPC 83 IMO Net-Zero Framework," Peter Keller, chairman of SEA-LNG, said in the statement.

"But more than that, this route offers shipowners and operators access to widespread global infrastructure, fuel optionality, local emissions reductions and a proven safety record for seafarers and port workers.

"These are the practical points our industry must consider and prioritise to realistically achieve its climate targets."

The IMO 2028 deal, agreed earlier this year and set for adoption in October, sets progressively tougher carbon intensity requirements for marine fuel consumption from 2028-2035, with those failing to meet the targets needing to buy remedial units. 

The shipping industry can expect to pay about $75/mt extra in IMO 2028 compliance costs for every tonne of VLSFO consumed in 2028, moving up to $469/mt by 2035.