The Effect of LNG and Diesel Fuel Emissions of Marine Engines on GHG-Reduction Revenue Policies Under Life-Cycle Costing Analysis in Shipping

Abstract

The fuel life cycle involves different phases of extraction/refinery (well to tank: WtT), transport (tank to propeller: TtP), and storage where each of these processes can add a specific amount of emissions to the overall LCCA inventory. During the extraction or operation of machinery on the raw material, the released amount of GHG components is undergoing a change in the generated emissions per functional unit of the consumed fuel. As a result, the machinery efficiency, electricity share, and resources mix during the extraction or refinery would impact the emission factor and subsequent carbon credit plans. Additionally, the transportation characteristics such as the traveled distance, multi-model transportation share, and ship engine fuel efficiency can make difference in the emitted GHGs into the atmosphere. The GHG credit rate and duration under different carbon allowance scenarios in the LNG-powered vessel are considered for the current life-cycle carbon emission cost analysis. For the lifecycle costing, the inflation rate, and the discount rate along with the emission reduction incentives are going to be emphasized in the project’s feasibility indicators and its profitability. The results have shown to what extent the LNG use in marine transportation can favor green shipping and how the legislated carbon incentives encourage the shipping industry for the LNG infrastructure development. The methane slip (evaporation) during the liquefaction of LNG will also be addressed, i.e., during the LNG production phase, and its effect on the emission factor of GHGs to have a better understanding of the challenges and outlook on the LNG production industry and its utilization in shipping.