MAGALOG. Maritime Fuel Gas Logistics. Best Practices Report

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1 Grant agreement no. EIE/06/016/SI MAGALOG Maritime Fuel Gas Logistics Intelligent Energy Europe (IEE) ALTENER Key action: VKA 8 Best Practices Report Period covered: from to Start date of the action: End date of the action: Project coordinator: Aksel Skjervheim/ Gasnor AS Assistant project coordinator: Jörg Sträussler/ Baltic Energy Forum e.v. / Author: Jörg Sträussler, Baltic Energy Forum e.v. Project website: MAGALOG Best Practices Report page 1

2 Index 1 Contribution to the Gothenburg Strategy and protection of the environment Contribution to the Lisbon Strategy and innovation Contribution to the Biomass Action Plan and the EU Strategy for Biofuels The cluster and integrated approach The regional approach The bottom-up approach The joint management approach Publicity and disssemination of results Sustainability after the end of the project... 6 MAGALOG Best Practices Report page 2

3 1 Contribution to the Gothenburg Strategy and protection of the environment Since the first and second oil crises in the late 1970s shipping is using mostly heavy fuel as bunker fuel. Heavy fuel is fairly cheap because it is the waste of the refinery process from which higher quality fuels like diesel or gasoline are derived. On the other hand heavy fuel, as a residue, contains impurities like heavy metals and especially sulphur up to 4.5%. In the beginning heavy fuel was only used for the main engines of ships. For river and archipelago passages and in ports marine diesel was used. In recent years it has become standard to have ships running on heavy fuel from pier to pier. Together with increasing fleets, ships and motor s sizes this resulted in heavily increased and not acceptable air pollution in port cities and often in adjacent touristic areas. This situation called for corrective actions on the side of national bodies like ports, the European Union and by the international community. In 2008, as an international response to the environmental challenges in global shipping, the MARPOL (international convention for the prevention of pollution from ships) was set to be revised to stricter standards for emissions from ships. Globally, sulphur content in fuels will be limited to 0.5% from 2020, compared to 4.5% now. This will greatly reduce not only sulphur emissions, but also particulate matter from ships engines. New limitations will also apply to emissions of nitrogen oxides (NO X ), which has implications for fuels as well as engines. The Baltic and North Seas have been designated as ECAs (Environmental Control Areas) with even stricter limitations. In order to meet future limitations within the ECAs, ships must switch to much cleaner fuels than the heavy bunker oils currently in use. Low-sulphur distillates, similar to diesel fuel used in road vehicles, are widely anticipated as a required solution to the challenge. Such fuels tend to be 70% - 100% more costly than conventional heavy bunker fuel, and must be supplemented by exhaust treatment to stay within the NOx limits that will be required. Today, especially sulphur oxide emission loads from shipping in port cities are larger then in traditional industrial areas. They are by dimensions larger then emissions from land based transport. In Germany, for example, the National Emission Ceiling for sulphur oxides stands at 2,000 t per year. A most recent German study stipulates that the total sulphur oxide emission load in German waters and ports sums up 47,000 t per year. Here then comes LNG into the game. There seems to be a large potential to alter the landscape of shipping fuels (bunkers) towards the use of LNG. LNG has several environmental benefits. It is almost pure methane with zero sulphur. In the combustion process it doesn t produce any sulphur oxide or particulate matter emissions. Moreover, without any additional appliances, it reduces nitrogen oxides emissions by 80% versus marine diesel and it contributes to the abatement of greenhouses gases with a reduction of CO 2 by up to 25%. Converting large fleets of ships to the use of LNG would by dimensions contribute more to the abatement of air pollution and greenhouse gases then small scale measures for cars and households. Shipping could, with the introduction of LNG, considerably help achieving the objectives of the Gothenburg Strategy. MAGALOG Best Practices Report page 3

4 2 Contribution to the Lisbon Strategy and innovation The Lisbon Strategy, also known as the Lisbon Agenda or Lisbon Process, is an action and development plan for the European Union. Its objective is to make the EU "the most dynamic and competitive knowledge-based economy in the world capable of sustainable economic growth with more and better jobs and greater social cohesion, and respect for the environment by 2010". It was set out by the European Council in Lisbon in March Introducing LNG as a fuel in shipping doesn t only alter the landscape of fuels but also logistic patterns and most importantly the design of ships. In Norway, several fjord ferries, offshore vessels and coastguard ships are already running on LNG. These ships had to be designed for the use of LNG from the outset. The conversion of existing ships seems unpractical and expensive. LNG powered ships must have special purpose engines or engines which can run both on gas or diesel (dual fuel). Some engine makers have already engines for the use of gas on offer, other manufacturers are following suit. During the course of MAGALOG it had been reported that engine manufactures like Caterpillar and MTU are preparing maritime gas engines. Moreover, LNG requires highly insulated special purpose tanks which have nothing in common with traditional ships bunkers and which must keep temperature at minus 163 O C for at least fourteen days. Until now only very few companies are manufacturing such tanks. It is to be expected that more companies will engage in this field. Engine rooms, piping, safety equipment, the position of the LNG tanks on board, all of this poses challenges to the ship design and ship building industries. Until now, only Norway has the expertise to design such ships until now. However, some shipbuilding and shipping companies are preparing for the gas age in shipping. During the course of the project MAGALOG a German shipbuilding consortium together with shipping companies embarked in a scientific project in order to investigate the use of LNG on RoRo-vessels, cruise liners and mega yachts. A tug owner is investigating the use of LNG but also LPG for its next generation of vessels. Some ferry lines are sincerely considering the use of LNG. A large cruise liner company intends to use gas from local pipelines during stay of their vessels in ports. All of this shows the beginning of a huge change in the design of ships which requires new technologies, materials and special staff to cope with the challenges ahead. In fact designing green ships seems to be the future for the European shipbuilding industry. MAGALOG Best Practices Report page 4

5 3 Contribution to the Biomass Action Plan and the EU Strategy for Biofuels Until now, bio fuels were not really regarded applicable for the shipping sector because the large quantities needed here are virtually not existent and use by shipping would heavily increase competition for scarce biologic resources and prices for land based fuels. The project MAGALOG was not primarily concerned with bio fuels. However, it opened up great potential fur the use of bio fuels together with LNG or even independent from it in shipping. During the lifetime of the project contacts were taken up with four actors who are thinking in terms of finite sustainability and the immediate use of (bio) gas for shipping instead of going the indirect route via LNG. In Sweden, between the cities of Malmö and Trelleborg, there will be the world s largest biogas production plant to be built by E.On Sweden. It appeared logic to use this bio fuel resource also for shipping since the energy supplier is looking for potential clients. The plan is to supply ships during stay in port with gas and have the auxiliary engines or one of the diesel-generator units run on gas. One of Europe s largest cruise line companies is following a similar approach. 4 The cluster and integrated approach MAGALOG followed a cluster approach in that it engaged all relevant stakeholders as direct or indirect partners in the project. The partnership comprised of a Gasnor AS, a LNG and natural gas supplier, Stadtwerke Lübeck GmbH, the public utility of the City of Lübeck, the Municipality of Swinoujscie as a potential beneficiary of cleaner air in its touristic areas, Marintek AS, a scientific organization concerned with the development of maritime LNG fuel systems, the ports of Gothenburg and Stockholm as beneficiaries of new energy systems for shipping, Hordaland Oil and Gas, a supporter of the use of regional energy resources and Baltic Energy Forum e.v., an IEE energy management agency. Other stakeholders like ship owners, ship yards, shipping organizations, engine manufacturers, port organizations, municipalities and others were informed by conferences, local workshops and in individual meetings. The integrated approach is being followed up by regional clusters in Norway, Sweden, Germany and Poland. 5 The regional approach Purposefully the project concentrated on a specific European region, the wider Baltic Sea Region including Norway and the western parts of Sweden. y this the project followed the strategy of the Baltic Sea Programme It proved to be very valuable to follow such concentration strategy firstly to show a sharp spearhead and secondly not to fritter resources and interests. In the past years Norway and the Baltic Sea Region have been breeding grounds for environmental innovation such as the environmentally related harbour dues in Sweden, the NO X tax in Norway, shoreside electricity systems for ships in Sweden and Germany and now innovative gas and LNG systems in all of the Baltic Sea. Once such innovative systems have proven their viability on a larger scale then they could be transferred to other European regions. MAGALOG Best Practices Report page 5

6 6 The bottom-up approach The idea for the use of LNG and biogas on ships and spreading it in the Baltic Sea Region was born on the practical level of companies and organizations engaged in furthering the use of environmentally friendly fuels. This bottom-up strategy fits however, very well into European strategies for securing and greening fuel supply 7 The joint management approach Managing a complex project like MAGALOG is a challenge in itself. Effective management is an important requirement for successful project execution not least due to the complexity of the tasks and the significant number of partners and other stakeholders involved. Six tasks with associated target outcomes and eight participating partners from four European countries had to be coordinated. This management task was jointly undertaken by Gasnor AS the official coordinator or lead partner and Baltic Energy Forum e.v. the assistant coordinator. By sharing the management tasks two distinctive strengths were used for the benefit of the project. Gasnor contributed with highly professional project management knowhow whereas Baltic Energy Forum added know-how in European programmes and competence in publicity and dissemination. 8 Publicity and disssemination of results A European official ennobled MAGALOG with these words: The project is highly visible. In order to fulfil the cluster strategy it proved to be necessary that stakeholders outside Norway became aware of the benefits and potentials of LNG. Therefore a wide rage of measures was used to make MAGALOG known in the wider Baltic Sea Region and in regions beyond. The publicity actions entailed the organization of two public project conferences in Bergen, Norway, and Lübeck, Germany. Furthermore the project was presented at numerous external conferences. Lloyd s List events like Green Shippping in Rotterdam, Bunkering in the Baltic and Northsea in Hamburg and RoRo2008 in Gothenburg may be named as examples. The website may also be mentioned in this context. This website does not only relate to internal project events and results but it shows also information on developments in the world of sustainable shipping so that interested can easily follow-up. Moreover the project produced several posters in all project partner languages, two flyers, one of which with the project objectives and the other with the achievements. Information was furthermore spread by three newsletters. Intensive publicity made MAGALOG a large success, internally and externally. 9 Sustainability after the end of the project Lübecker Nachrichten, the local daily newspaper of the Hanseatic City of Lübeck expressed it like this: The final conference is more a beginning of future cooperation then the end of a project. The partners Gasnor AS and Stadtwerke Lübeck GmbH agreed on cooperating further in the planning and taking into use of a medium sized LNG terminal in Lübeck as a back-up for Lübeck s city gas system and as a bunkering facility for shipping. Work will also continue in the partner cities Gothenburg and Stockholm. Moreover biogas is on the agenda both of Gasnor AS and Baltic Energy Forum e.v. in order to come to the point of real environmental sustainability. MAGALOG Best Practices Report page 6