Lng bunkering china status report January 2016

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LNG as Ship Fuel in China1Understanding the status of regulations, incentives and infrastructure for LNG bunkering.

Dan-Hermann Thue

Safer, smarter, greenerDNV GL 2014

Ungraded07 January 2016

MaritimeDraft

DNV GL 2014UngradedDraft07 January 2016

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Background China has 7 of the worlds top 10 trafficked container ports. And handles 30% of the worlds containers every yearNeeds to improve air qualityYangtze River is transporting more cargo than any other river in the world. China tightens regulations for air emissions for ships.New Emission control areas ECAsLNG as ship fuel is one solution to meet and surpass requirementsSupply stations of LNG for ships needs to be builtWhere and what typeRegulations need to be simplifiedGovernment support needed to incentivize change to cleaner solutions including LNG

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DNV GL 2014UngradedDraft07 January 20167 of the top ten trafficked container ports is in china, and china handles 30% of the worlds containers every year. Recently focus on air emissions from ships have become much more clear. As SOx NOx and particulates from ships at port and river transport contribute a lot to air pollution due to lower requirements. New SOx ECAs in the most trafficked shipping ports will gradually come into effect towards 2020.Yangtze river is the river in the world that transports the most cargo and has more than 100,000 vessels. Totally, Chinas inland waterways has around 240,000 vesselsLNG is a future oriented solution to meet air emissions requirementsNew bunker stations needs building, along rivers and bunker supply for ports is needed. Regularions for LNG needs clarification and standardized solutions neededGovernment is supporting the transition and development of LNG infrastructure to avoid a chicken and egg situation.

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Emission Control Areas 3

DNV GL 2014UngradedDraft07 January 2016New Chinese Emission Control Areas

SOx content in fuel maximum 0.5 % In order to meet requirementLow sulphur marine diesel oil < 0.5% SLNG as fuel Scrubber (not feasible for smaller ships)Shore to ship Electrification 411 key ports to start the effect from Jan 2017 (see map)Ships need to comply from 1 hour after docking to one hour before departure.

Tianjin, Qinhuangdao, Tangshan and Huaye Shanghai Ningbo- Zhoushan, Suzhou and Nantong Shenzhen, Guangzhou and Zhuhai

DNV GL 2014UngradedDraft07 January 2016

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Timeline of Implementation of ECA regulationsImplementations in beginning of each year5

DNV GL 2014UngradedDraft07 January 2016Strategy for cleaner shipping previous 5yr PlanPhasing out and replacing old inefficient vessels more quickly.

Improve the regulations to encourage more energy efficient newbuilt ships.

Upgrading port infrastructure, and provide green alternatives such as shore to ship electricity at berth (Cold Ironing). Electric cranes etc.

No specific goals for LNG implementation mentioned.

Still The Govt. Ministry of Transportation published a report (2013) with goals to start pilots for LNG implementation for IWW.Goal of 2% (2,000) of vessels on Yangtze converted to LNG by 2015And 10 % (10,000) by 2020

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Inland waterways first approachSupport Newbuilds of LNG ships 800 million RMB annually.

DNV GL 2014UngradedDraft07 January 2016These goals concerns retrofit and were very ambitious and show commitment. However, the goal of 2000 converted LNG vessels by end of 2015 was not met. Time was needed for new ship designs and the lowered fuel oil cost in 2014 and 2015 also made the incentives to switch to LNG fuel less in the short term. The development in the cheap oil price continues to threaten LNG solutions and MDO with sulphur content < 0.5% will be the easiest measure to stay within the current SOx requirements for now6

LNG fuel emissions savings Emission typePure LNG reduction potential compared to MDO 1% SHow SOX~100 %No sulfur in LNGParticulate matter~100 %No black carbon source from LNGNOx85-90 %Better combustion performanceCO220 25 %Higher energy content in fuel per weight

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DNV GL 2014UngradedDraft07 January 2016Sulphur emissions and comes from the Sulphur found in the fuel. LNG has no sulfur in it because it must be removed from the natural gas before it is liquefied to LNG.

HFO and oil based fuels contains black incombustible particles that may escape the exhaust as particulate matter. LNG turns into clean gas and adds no PM from combustion.

Nox emissions come from high peak temperatures during combustion. A more uniform combustion with good mixture of air and fuel helps to reduce the peak temperatures.

LNG has a higher Heating Value than fuel oils and refined oils. This is due to more C-H connections per C atom. As the energy comes from breaking those bonds and making H2O and CO2.

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Graphical Comparison LNG and MDO 1% S

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DNV GL 2014UngradedDraft07 January 2016It should also be stated that methane, the largest component of natural gas, is itself a potent greenhouse gas, and procedures to reduce methane slip to the atmosphere should also be done. Methane emissions from LNG ships may come from unburnt fuel in exhaust or vented trace amounts purged to the atmosphere during refuelling. Boil of gas (BOG) from LNG carriers or land stations are re-liquefied or used for propulsion in todays best practices.

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Inland Waterway requirements

Currently 350 ppm Sulphur allowed in fuels for smaller vesselsTighten to 50 ppm in 07.2017Tighten to 10 ppm in 01.01.2018Larger Coasters and Channel ships have requirement of 0.1% SulphurSame as is in force in European and American ECAs todayHFO is forbidden, but can be used with scrubbers9

DNV GL 2014UngradedDraft07 January 2016Nanjing is the divide on Yangtze between River and Coast. Giving the port strategic importance.

The content of Sulphur is less than 350 ppm or 0.0350 % which is 100 times stricter than current, ocean going vessel requirement of 3.5% Sulphur. These requirements are planned to be made gradually stricter. From 01.07.2017 it is planned maximum 50 ppm sulphur fuel cap and less than 10 ppm sulphur from 01.01.2018. Larger river vessels such as coasters and channel ships are allowed different requirement of less than 1000 ppm sulphur content (0.1% sulphur similar to European ECA). In addition marine residual fuel is forbidden, HFO etc. This prohibition can be circumvented if one uses exhaust gas cleaning technology such as Scrubbers, and the SOx removal efficiency is equal to reduction from fuel requirement. Of course LNG will also be a possible solution to eliminate PM and SOx emission from the fuel, as no SOx is present in LNG.

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Stage 1 IWW emeission requirements from 2017 CategoryCylinder DisplacementPowerCOg/kWhHC + NOXg/kWhPMg/kWhV 1:1Vh,z < 0.9 l5.07.50.4Pn > 37 kWV 1:20.9 l < Vh,z < 1.2 l5.07.20.3V 1:31.2 l < Vh,z < 2.5 l5.07.20.2V 1:42.5 l < Vh,z < 5.0 l5.07.20.2V 2:15.0 l < Vh,z < 15.0 l5.07.80.27V 2:215.0 l < Vh,z < 20.0 l5.08.70.5Pn < 3300 kWV 3:215.0 l < Vh,z < 20.0 l5.09.80.5Pn > 3300 kWV 2:420.0 l < Vh,z < 25.0 l5.09.80.5V 2:525.0 l < Vh,z < 30.0 l5.011.00.5

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DNV GL 2014UngradedDraft07 January 2016Stage 1 emission requirements will take effect from January 1st 2017. This are the same rules which were already put in effect in the EU zone in the 2000nds and corresponds to the stage 2 (Tier 2) of the US-EPA Final Rule for inland marine vessels. HC and NOx are grouped together because the emissions of these two pollutants are oppositely related. At higher combustion temperatures there is more NOX and less HC and vice versa.

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Stage 2 IWW emeission requirements from 2017 CategoryCylinder DisplacementPowerCOg/kWhHC + NOXg/kWhPMg/kWhCategory 1Vh,z < 0.9 l5.05.80.3Pn > 37 kW0.9 l < Vh,z < 1.2 l5.05.80.141.2 l < Vh,z < 5.0 l5.05.80.12Category 25 l < Vh,z < 15 lP < 20005.06.20.142000