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Study: LNG-capable fleet could reach total ‘value at risk’ of ~USD 1trillion by 2030

Shipowners should consider not ordering LNG-capable ships and investing in conventionally fuelled ships which are designed for retrofit to zero-emission fuels, says UCL Energy Institute study.

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A new study by UCL Energy Institute released on Tuesday (20 September) revealed that the rapidly growing LNG-capable fleet could reach a total “value at risk” of ~USD 1trillion (USD 850 billion) by 2030.

The study found that if policies that incentivise shipping to decarbonise in line with the Paris Agreement were in place by the end of the decade, the LNG-capable fleet would compete against zero emissions shipping, whilst also being incentivised to switch away from the use of fossil fuel.

Whilst policy and competition would affect all ships built to use fossil fuels, the analysis suggests that more expensive LNG-capable assets (also known as LNG dual-fuel) would see reductions in their value to match the value of similar aged but lower cost conventional vessels designed to use fuel oil.

The report titled Exploring methods for understanding stranded value: case study on LNG-capable ships found that the write-down of the full USD 850 billion value at risk is not realised if LNG-capable vessels retrofit to run on scalable zero emission fuels (hydrogen and hydrogen-derived fuels such as ammonia). Under these circumstances, the stranded value is estimated at approximately 15-25% of their value (USD 129-USD 210 billion if the LNG-capable fleet grows strongly this decade).

The study said LNG has been portrayed as transitional fuel for the shipping sector, but there is growing scientific evidence that shows the environmental benefits are limited, if not negative, compared to LSHFO (Low Sulphur Heavy Fuel Oil), when considering a full lifecycle analysis of emissions and accounting for greenhouse gases (GHG) emissions.

The least-cost pathway for shipping to meet its required shift away from fossil fuels is to a mix of electrification in short-sea shipping, and use of scalable hydrogen and hydrogen-derived fuels such as ammonia and methanol for deep-sea shipping.

Marie Fricaudet, lead author and PhD student at UCL Energy Institute, said: “This report is a first attempt to extend the research on stranded power generation assets and unburnable fossil fuel reserves to the shipping sector.”

“The findings highlight that the risk of stranded assets is also very material in the shipping sector. The longer we leave the LNG transition running and then switch, the more painful it will be and technology lock-in during this crucial decade will create more resistance to change later.”

The report shows a boom in the ordering of LNG vessels over the recent years, with 65% of the newbuilding deliveries by 2025 being capable of running on LNG as a marine fuel, up from only 10% a couple of years ago. Yet, the size of the LNG-capable fleet (by dwt and number of ships) is currently small, therefore there is still time to anticipate regulatory and technology developments and manage exposure to a class of assets that may be particularly exposed to stranded value risk.

Public funding has played a major role in financing LNG vessels through various government run schemes, directives and export credit agencies, such as the NOx Fund in Norway, the European Union’s directive on the deployment of alternative fuels infrastructure, the European Investment Bank and the Japanese and Korean Export Credit Agencies.

Dr Tristan Smith, co-author and Associate Professor at UCL Energy Institute, said: “As this decade proceeds, we will continue to experience more and more severe impacts from climate change. This will further grow pressure both in markets (ESG) and policy negotiations to align assets to a rapid shift to zero emissions. Anticipating this pressure is straightforwards, and whilst the best solutions for zero emissions international shipping are still emerging, it is already clear that LNG-capable shipping is not well positioned and faces a higher risk of stranded value during the transition.”

The study argued that governments should not use public funding to exacerbate the creation of stranded value and identifies methods that investors can use to identify the risks posed by climate change on shipping assets.

The report said shipowners and financiers should consider not ordering LNG-capable ships and investing in conventionally fuelled ships which are designed for retrofit to zero-emission fuels. 

“For existing LNG-capable ships, investors should consider ways to manage the risk of stranded value – e.g. factoring in the cost of retrofit (or other actions to remain compliant) at the point of newbuild or using a steeper than linear depreciation curve,” it said.

For policy makers, the report asks for urgency and clarity of future regulations, especially around when and how methane emissions will be considered, to help investors in both existing ships and newbuilds consider and anticipate the potential impact of regulation on values.

 

Photo credit: Shaah Shahidh on Unsplash
Published: 21 September, 2022

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Newbuilding

Chinese shipbuilder delivers CMA CGM’s Singapore-flagged LNG-powered boxship

CMA CGM welcomes “CMA CGM SEINE”, the first in a four-ship series of 24,000 TEU LNG dual-fuel container ships, by Hudong-Zhonghua Shipbuilding, according to BV Marine & Offshore.

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Chinese shipbuilder delivers CMA CGM’s Singapore-flagged LNG-powered boxship

Bureau Veritas Marine & Offshore (BV) on Wednesday (16 April) announced the successful delivery of CMA CGM SEINE, a new 24,000 TEU LNG dual-fuel container ship, by Hudong-Zhonghua Shipbuilding (HZSY). 

This milestone marked the completion of the first vessel in a four-ship series, with BV providing classification and BV Solutions Marine & Offshore (BVS) providing advisory services. 

It is CMA CGM’s first LNG-powered vessel flying the Singaporean flag with a capacity of 24,000 TEU. 

It was reported that CMA CGM planned to expand its fleet and vessel tonnage, adding more vessels under the Singapore Registry of Ships. To support the transition to more sustainable fuels, CMA CGM said it would register and bunker alternative fuel vessels under the Singapore flag.

Xavier Leclercq, Vice President of CMA Ships, said: “Today’s delivery of the ‘CMA CGM SEINE’ featuring LNG as fuel at such a large scale, will remain a major landmark in the shipping world and embodies the engagement of the CMA CGM group toward an ambitious decarbonisation path, leading the way to our industry.”

Mr. Xiufeng ZHANG, Vice General Manger of Hudong-Zhonghua shipyard, said: “CMA CGM SEINE, as the lead ship of the four 24,000-TEU LNG dual-fuel powered container ships ordered by CMA Ships from our company, stands as a new-generation maritime ‘Green Giant’ and ‘super cargo hauler’.”

The vessel integrates a dual-fuel propulsion system supported by GTT Mark III membrane-type LNG bunker tanks, with a total capacity of 18,600 cubic meters, designed to enhance both environmental performance and operational efficiency.

Measuring 399.9 meters in length and 61.3 meters in beam, the vessel has a carrying capacity of 23,876 TEU and is equipped with a WinGD W12X92DF-2.0 dual-fuel main engine, incorporating the Intelligent Control by Exhaust Recycling (iCER) system. 

This configuration significantly reduces methane emissions and enables compliance with IMO Tier III emission standards when operating in "Diesel + iCER mode". 

BV worked closely with the engine manufacturer and the shipyard to test the parent engine and issued the Engine International Air Pollution Prevention (EIAPP) certificate, establishing a foundation for compliance across the series. The iCER system optimises energy efficiency, achieving an Energy Efficiency Design Index (EEDI) reduction well beyond the IMO’s Tier III standards.

To address the critical sloshing challenges in large-volume LNG bunker tanks, BVS performed direct computational fluid dynamics (CFD) simulations. The verified pressure data was provided to the design unit for structural strength checks, ensuring the safety of the cargo containment system and hull support structure.

The vessel features advanced technologies to boost operational performance and energy efficiency. Equipped with the SmartEye intelligent monitoring system and the TotalCommand full-control system, it achieves automated precision control during berthing, significantly reducing berthing time and enhancing port operations. 

Energy efficiency is further improved by applying variable frequency drive (VFD) technology to the engine room fans and seawater cooling pumps. Meanwhile, the WinGD Data Collection Monitoring (DCM) system offers real-time tracking and analysis for the dual-fuel main engine, supporting operational optimisation. 

BV also supported the upgrade of BV certified boil-off gas (BOG) compressors by conducting sea trial tests and re-issuing product certificates, facilitating seamless system commissioning and vessel delivery.

Related: CMA CGM to participate in bunkering trials of alternative fuels in Singapore

 

Photo credit: Bureau Veritas Marine & Offshore
Published: 17 April, 2025

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LNG Bunkering

AD Ports Group hosts first STS LNG bunkering operation at Khalifa Port

STS bunkering was part of a simultaneous operation, in which container vessel “MSC Thais” received LNG marine fuel from bunker vessel “Green Zeebrugge”, supplied by marine fuels provider Monjasa.

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AD Ports Group hosts first STS LNG bunkering operation at Khalifa Port

AD Ports Group on Wednesday (16 April) said it hosted its first ship-to-ship (STS) liquified natural gas (LNG) bunkering operation recently at its flagship deep-water Khalifa Port.

The STS bunkering was part of a simultaneous operation, in which the container vessel MSC Thais berthed at Abu Dhabi Terminals, received LNG marine fuel from the dedicated LNG bunker vessel Green Zeebrugge, supplied by marine fuels provider Monjasa. 

Captain Saif Al Mheiri, CEO of Abu Dhabi Maritime and Chief Sustainability Officer at AD Ports Group, said: “By adhering to the highest safety and environmental standards, AD Ports Group and Monjasa are ensuring that shipowners have reliable access to a diversified fuel mix that supports their decarbonisation objectives.”

“AD Ports Group will continue to explore and implement forward-looking solutions that drive progress toward global sustainability goals.”

Liquified natural gas offers reduced greenhouse gas emissions and significantly less sulphur oxide, nitrogen oxide, and particulate matter emissions compared to traditional marine fuels.

AD Ports Group and Monjasa will continue expanding LNG bunkering services across the Group’s commercial ports in Abu Dhabi, including cruise vessels at Zayed Port, while offering a comprehensive fuel portfolio that includes Very Low Sulphur Fuel Oil (VLSFO), Marine Gas Oil (MGO), and High-Sulfur Fuel Oil (HSFO).

The STS operation was executed in accordance with international best practices and regulatory standards, that include LNG bunkering protocols and guidelines set by the International Maritime Organization (IMO), International Association of Ports and Harbors (IAPH), International Organization for Standardization (ISO), and Society of International Gas Tanker and Terminal Operators (SIGTTO).

With this achievement, AD Ports Group is accelerating the shift toward sustainable marine fuels, while reinforcing Abu Dhabi’s leadership in the global energy transition and advancing the UAE’s Net Zero 2050 Strategy.

 

Photo credit: AD Ports Group
Published: 17 April, 2025

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Decarbonisation

VPS on IMO 2028: A new legislative measure for the decarbonisation of shipping

Steve Bee and Emilian Buksak break down what the newly approved IMO framework means for ship operators and how VPS can support compliance through fuel testing, emissions measurement, and strategic advisory.

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Steve Bee, Group Marketing and Strategic Projects Director, and Emilian Buksak, Decarbonisation Advisor of marine fuels testing company VPS, on Wednesday (16 April) broke down what the newly approved IMO net-zero framework means for ship operators and how VPS can support compliance through fuel testing, emissions measurement, and strategic advisory:

On Friday 11th April 2025, the International Maritime Organization (IMO) achieved another important step towards establishing a legally binding framework to reduce greenhouse gas (GHG) emissions from ships globally, aiming for net-zero emissions by or around 2050.

The IMO Net-zero Framework is the first in the world to combine mandatory emissions limits and GHG pricing across an entire industry sector.   Approved by the Marine Environment Protection Committee during its 83rd session (MEPC 83), the measures include a new fuel standard for ships and a global pricing mechanism for emissions.

These measures, set to be formally adopted in October 2025 before entry into force in 2027, will become mandatory for large ocean-going ships over 5,000 gross tonnage, which emit 85% of the total CO2 emissions from international shipping.  This Net-Zero Framework will be included in a new Chapter 5 of MARPOL Annex VI.

With an estimated 900 renewable-fuel-ready vessels expected to be sailing the seas by 2030, it is felt necessary to implement global regulation to deliver renewable fuels at a commercially viable price, as current pricing for “green fuels” is 3-4 times the price of fossil fuels. Such regulations will make it possible for ships to operate on green fuels and also incentivise fuel and energy providers to invest in new production capacity.

Under the draft regulations, ships will be required to comply with: 

Global fuel standard: Ships must reduce, over time, their annual greenhouse gas fuel intensity (GFI) – that is, how much GHG is emitted for each unit of energy used. This is calculated using a well-to-wake basis, meaning total emissions are measured from fuel production through to its use on board.  

Global economic measure: Ships operating above GFI thresholds will need to acquire remedial units to balance their excess emissions, while those using zero or near-zero GHG  fuels or technologies will be eligible for financial rewards for their lower emissions profile.

Two-tier Compliance Targets: Each ship will have to meet both a Base Target and a Direct Compliance Target for its annual GFI. Vessels that stay under the stricter Direct Compliance Target are eligible to earn surplus units, whereas those over the thresholds face a compliance deficit that must be remedied.

Data Collection & Reporting: Operators must calculate and report their attained annual GFI each calendar year, verifying it against their target annual GFI. This includes rigorous recordkeeping and submission to the IMO GFI Registry, which tracks each vessel’s emissions performance and any remedial or surplus units.

IMO Net-Zero Fund Contributions: Ships that exceed their GFI limits are required to make GHG emissions pricing contributions to the new IMO Net-Zero Fund. Collected revenues will be used to reward ships using zero/near-zero fuels, support research and technological innovation in cleaner shipping, and help ensure a just and equitable transition for the maritime sector.

Net-Zero Framework Implementation and Green Balance Mechanism

From 2028 to 2030, ships will be subject to a tiered levy linked to their well-to-wake (WtW) carbon intensity. Based on a 2008 baseline of 93.3 gCO₂eq/MJ (the industry average in 2008), operators will face no charge for fuel emissions at or below approximately 77.44 gCO₂eq/MJ, a moderate levy of $100/mtCO₂eq for emissions between 77.44 and 89.57 gCO₂eq/MJ, and a higher rate of $380/mtCO₂eq for emissions exceeding 89.57 gCO₂eq/MJ. These thresholds and levies align with the overarching goal of driving down overall carbon intensity by a minimum of 4% by 2028 and 17%for direct compliance targets—with further, more stringent reductions taking effect in subsequent years. 

Surplus Units and Over-Compliance

A ship’s carbon intensity below the lower threshold (77.44 gCO₂eq/MJ) constitutes “over-compliance,” generating surplus units that can be banked or traded. Conversely, exceeding thresholds will require the purchase of remedial units to cover the compliance deficit.

Sustainable Fuel Certification Scheme (SFCS) and Fuel Lifecycle Label (FLL)

Under the new framework, all fuels must carry a Fuel Lifecycle Label (FLL), which documents their GHG intensity and other sustainability attributes on a well-to-wake basis. These values must be certified by a recognized Sustainable Fuel Certification Scheme (SFCS), ensuring accurate, transparent calculations and preventing any misrepresentation of environmental impact. 

Zero or Near-Zero GHG Technologies, Fuels, and Energy Sources

Recognising the importance of incentivising advanced solutions, the regulation sets specific lifecycle emission thresholds for what qualifies as a zero or near-zero GHG (ZNZ) fuel or technology: Initial threshold (valid until 31 December 2034): ZNZ fuels must not exceed 19.0 g CO₂eq/MJ on a well-to-wake basis. Post-2035 Threshold: Starting 1 January 2035, the permissible GHG intensity tightens to no more than 14.0 g CO₂eq/MJ.

Ships adopting fuels and technologies below these thresholds can earn financial rewards through the IMO Net-Zero Fund, effectively offsetting some of the initial costs of transitioning away from conventional fossil fuels. By gradually lowering the allowable GHG intensity, the regulation encourages ongoing innovation, investment, and broader adoption of advanced, low-emission solutions across the global fleet.

Green Balance Mechanism

Central to this approach is the Green Balance Mechanism, which integrates closely with the GFI. In essence, it applies a fee on higher-intensity fossil fuels and allocates those proceeds to green fuels, balancing costs across a diverse energy mix. The greater the well-to-wake emission reductions a fuel delivers, the larger the financial allocation it receives—effectively levelling the playing field and stimulating a shift to sustainable alternatives.

VPS on IMO 2028: A new legislative measure for the decarbonisation of shipping

Disbursement of Revenues

All revenues from levies and remedial unit purchases will be directed to the IMO Net-Zero Fund, which will then distribute the funds to:

  • Reward low-emission ships
  • Support innovation, research, infrastructure, and just-transition initiatives (particularly in developing countries)
  • Fund training, technology transfer, and capacity-building aligned with the IMO GHG Strategy
  • Mitigate impacts on vulnerable States, such as Small Island Developing States (SIDS) and Least Developed Countries (LDCs)
  • By steadily lowering the permissible carbon intensity and introducing financial incentives for clean fuels, the new framework aims not only to reduce overall emissions but also to accelerate the maritime sector’s transition to sustainable energy solutions.

Note: The full article, including on how VPS can support compliance through fuel testing, emissions measurement, and strategic advisory, can be found here

Related: IMO MPEC 83 approves net-zero regulations for global shipping

 

Photo credit: VPS
Published: 17 April, 2025

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