Report Industry Investment Rating No relevant content provided Core Viewpoints of the Report - Due to mandatory environmental regulations, LNG has become a key compliance solution for the shipping industry, but methane emissions pose a significant challenge to its long - term sustainability. Despite this, LNG currently holds a dominant position in the alternative fuel new - ship orders and is expected to strengthen its market position through technological innovation [3][4][5] Summary by Directory LNG Ship Fuel Policy Background - **IMO 2020 Global Sulfur Cap**: Effective from January 1, 2020, it reduced the sulfur content limit for ships' fuel. Shipowners can choose compliant fuel, install desulfurization towers, or use alternative fuels like LNG. LNG can directly meet the sulfur limit standard, making the sulfur cap a strong policy driver for LNG's commercial application [11] - **IMO Tier III Nitrogen Oxide Standards**: For ships built after January 1, 2016, in designated nitrogen oxide emission control areas, nitrogen oxide emissions need to be reduced by about 80% compared to Tier I. LNG engines, especially those using the lean - burn Otto cycle, can meet this standard without additional post - treatment systems. However, the lean - burn technology causes methane slip [12][13][14] Advantages and Disadvantages of LNG Decarbonization Transformation - **Pollution Gas Emission Reduction Advantages**: LNG can eliminate sulfur oxide emissions almost completely and significantly reduce particulate matter and nitrogen oxide emissions. Different institutions have evaluated that the reduction rates of sulfur oxides, particulate matter, and nitrogen oxides are very high [16][17] - **Carbon Dioxide Emission Reduction Advantages in the On - board Combustion Stage**: LNG has a higher hydrogen - to - carbon ratio than petroleum - based fuels, resulting in less carbon dioxide emissions when burning the same amount of energy. It also has an advantage in obtaining a better CII rating [19][20] - **Technical Maturity and Infrastructure Adaptability Advantages**: LNG dual - fuel engines are mature, and global mainstream manufacturers can provide reliable products. The global LNG refueling network is expanding rapidly, with 188 ports offering refueling services by the end of 2023 and 82 more in construction or planning [23] - **Methane Emission Disadvantages**: Methane is a potent greenhouse gas. Its warming effect is much stronger than that of carbon dioxide, especially in the short - term (GWP20). The GWP20 value of methane is 82.5 [24][26] - **Emission Disadvantages under the Full - Life - Cycle Assessment Framework**: The IMO 2023 greenhouse gas emission reduction strategy uses the Well - to - Wake assessment method. Different studies have different conclusions on LNG's full - life - cycle greenhouse gas emissions, which depend on upstream production, engine technology, and the GWP assessment time scale [27][29][31] Current Application and Outlook of LNG in the Ship Market - **Engine Technology**: The mainstream LNG engine technologies are low - pressure dual - fuel (LPDF) and high - pressure dual - fuel (HPDF) engines. LPDF engines are more common but have a serious methane slip problem. Manufacturers are innovating to address this issue, such as Wärtsilä's NextDF technology [33][37] - **Fleet Size and Market Share**: The LNG - powered fleet has been growing rapidly. It is expected to double by 2030. LNG is mainly used in container ships and car carriers. CMA CGM is a strong promoter of LNG fuel [38][41][43] - **Competition Pattern of Ship Alternative Fuels**: LNG, methanol, and ammonia are the most promising alternative fuels. LNG is the most widely used and technically mature. Methanol has storage advantages but faces a supply bottleneck for green methanol. Ammonia has zero - carbon potential but is in the early R & D stage [45][47] - **Applications in Other Commercial Transport Fields**: LNG is a mature and growing alternative fuel in road freight, especially for heavy - duty trucks. However, its application in aviation is still in the theoretical and experimental stage due to low volume energy density [51] - **Compliance Cost Measurement**: The IMO's GFI standard, effective from January 1, 2028, will link the full - life - cycle carbon intensity of fuel to operating costs. LNG - powered ships have a cost advantage, especially those using low - methane - slip technology [54][56][58] Summary - LNG has established its leading position as a mainstream alternative fuel. Advanced technologies are solving the methane slip problem. The growth of the LNG - powered fleet and strategic investments from industry giants show that LNG is seen as a long - term strategic platform. In the future, LNG's competitive advantage will be strengthened under tightening environmental regulations [60][61]