LNG – a fuel for transition or long-term option?

As sustainability pressures mount across the maritime industry and emissions control areas (ECAs) expand globally, shipping companies face an urgent challenge: how to meet increasingly stringent environmental regulations while maintaining operational viability. In this race against regulatory deadlines, liquefied natural gas (LNG) has emerged as one of the industry's fuels of choice. 

This is because it’s the most technically mature option in terms of alternative fuels, with on-land grids already in place in Europe, Australia, and East Asia, with bunker facilities being constructed worldwide, as well as advanced on-ship technologies being fitted onboard vessels. 

Hapag-Lloyd was one of the first shipping companies to look at the economic viability of LNG as a propulsion fuel, and its technical maturity led to the company first retrofitting an existing ship before ordering 12 LNG-powered vessels. Last year, Hapag-Lloyd ordered a further 24 vessels, which underpins its belief in LNG as a viable solution. 

“By 2029, when the current order of 24 ships will be delivered, we will have a total of 37 ships powered by LNG – approximately 10%-15% of our entire fleet. It’s not that we’re in a casino betting everything on LNG, but this is what we’re starting with,” says Arne Maibohm, director of decarbonisation at Hapag-Lloyd.

But with such big investments taking place, does that mean LNG is a credible long-term solution for the industry’s decarbonisation strategy? 

As Maibohm alludes to, the short answer is no. This is because LNG is still a fossil fuel, and while it offers reduced emissions compared to traditional fossil fuels, it’s not entirely carbon neutral. LNG also has a major challenge in the form of methane slip – unburned methane in the exhaust gases. 

“As methane is a much stronger greenhouse gas (GHG), its impact is quite important and depending on the combustion technology, it may have a big impact on the environmental performance of LNG-fuelled vessels,” notes Jason Stefanatos, global decarbonisation director at DNV Maritime. 

Engine manufacturers have been working to resolve this issue for some time. For example, MAN Energy Solutions has, for well over a decade, focused two-stroke methane engine development on a high-pressure system – The MAN B&W ME-GI.

“Due to the nature of this concept, methane slip is extremely low,” says Rasmus Holm Bidstrup, head of two-stroke promotion at MAN Energy Solutions.

“The M-type electronically controlled gas injection (ME-GI) concept has evolved to also include an optional gas return system as part of the purging process, which can take an already extremely low methane slip to even better levels.”

If LNG is seen as a bridging fuel, the big question remains: how long will that transition period last?

This depends on the targets and deadlines set by the regulatory schemes, which is why many organisations are embracing LNG at present while also closely watching or starting to invest in other alternative fuels, such as methanol and ammonia.

“Since the technologies for these aren’t there yet, we see that LNG and methane are the best options for at least the next decade,” says Maibohm. “We will see methanol and ammonia increase their share of the maritime energy mix over this time, because LNG is to some extent in heavy competition from other industries. We’ll therefore need to find some synergies with these.”

It’s also worth noting that LNG-fuelled vessels need not become obsolete. This is because they have the option to burn renewable natural gas (RNG), “which may provide long-term compliance,” notes Stefanatos. 

Understandably, dual-fuel solutions are of huge interest to shipping firms, who are looking for ways to align with the International Maritime Organization’s (IMO) GHG reduction targets. 

Hapag-Lloyd has its Strategy 2030, which is the company’s transition plan for moving the 37 LNG-fueled ships over to biofuel or e-methane. 

“Simply put, LNG won’t get us the required emission reductions that we need,” says Maibohm. “However, fuel producers and traders can source these molecules throughout Europe, inject them into the gas grid and then we can receive them in the form of liquified methane in a single bunker location via bunker barge. 

“I think this has a very positive effect on logistics and cost. So, our ships can currently bunker at several locations for this, while the infrastructure for methanol and ammonia doesn’t exist.” 

Looking forward, LNG-fuelled ships will also be easier to retrofit for the next generation of fuels compared with conventional-fuelled vessels, says Stefanatos, highlighting another reason for shipping firms to embrace this bridging fuel. But what’s clear is that a level regulatory playing field is essential to drive meaningful progress.  

The IMO’s recent midterm measure – a zero-emission fuel framework – does just that, requiring carriers to reduce carbon intensity and create incentives for early adopters. Those who move faster may even monetise their overcompliance, helping others catch up. 

However, two critical challenges remain: worldwide fuel availability at scale and closing the cost gap between conventional and alternative fuels. Currently, fossil fuels are available at every port globally, but widespread adoption of alternatives requires the same accessibility at economically viable prices. 

"We need subsidies, carbon levies, or customers willing to pay for green transportation," notes Maibohm. "Many pledges exist, but when costs rise, willingness to pay often diminishes." 

Despite geopolitical shifts that have redirected focus from climate to energy security, optimism still exists.  

“It’s a huge task – one of humanity’s biggest transitions – but we believe we can do this,” Maibohm continues. "We call the philosophy ‘by baby steps’. We must take it step by step, learning along the way, and finding collaborative solutions to enable this transition together.”