Has the coronavirus pandemic impacted on the environmental situation all over the world? – Definitely yes. All known unprecedented collapse in economic activities over the last decade hides some benefits from mass shutdown or slower pace of work.
The journal of Nature Climate Change published some data showing that global carbon dioxide emissions could fall by up to 7%. This level depends on the lockdown measures and quarantine period on the world stage. In more detail Reuters informs:
“In early April 2020, emissions fell to 83 million tonnes per day, a drop of 17%, and some countries’ emissions dropped by as much as 26% on average during the peak of the confinement. If pre-pandemic conditions return by mid-June, then 2020 emissions could decline by 4% compared to 2019 but if restrictions remain worldwide until the end of the year, then emissions could drop by 7%.”
According to the media source above, such an absolute emission reduction could be the largest for the last 75 years. It should be noted that the data of about 70 countries, including the USA and China, were studied in this research.
Of course, these changes are temporary. Probably, as soon as the world economy is stabilized more or less and the international air traffic and shipping normalize, the level of air emissions will rise to the previous level.
Given CO2 Emissions Target, agreed by IMO several years ago, global shipping aims to reduce greenhouse gas emissions by 50% by 2050 compared to 2008 levels. Ironically, COVID-19 has played its part in the Earth’s ecology situation. However, there is more in this than meets the eye. With the economic damage the pandemic mixed up shipowners’ prospects for new ship orders and fleet modernization shortly.
It is no secret that value of LNG-powered vessels is higher than value of ships running on fuel oil, even if it is very low sulfur fuel oil. Of course, construction of LNG-fuelled vessels is a step into the future of maritime industry, but nowadays many shipowners have postponed their ambitious plans and began to calculate losses and cut costs.
The WSJ expert Costas Paris also studied this issue and states:
“Middle East energy giant Saudi Aramco and its shipping arm Bahri have put on hold their planned entry this year into LNG shipping, pushing back an order of a dozen gas carriers worth up to $2.5 billion. The postponement came after San Diego-based Sempra Energy said in early May it would delay an investment decision on its Port Arthur, Texas, LNG export project until 2021. The company cited adverse market conditions from the pandemic lockdowns.”
This is the position of global shipowners as well as ship managers, decided to pay maximum attention to their existing vessels. On the other hand, due to the outbreak of COVID-19, shipbuilders and shipyards were also forced to suspend their activities. Because of blocked or delayed deliveries of parts and raw materials, many shipyards slowed down their pace of work.
“Delays in LNG-fuelled vessel deliveries could check the rise in LNG bunkering demand.” Argus, the independent media organization, informs. “The coronavirus pandemic is also likely to have a longer-term impact on LNG bunkering, with shipowners unlikely to place orders for new vessels in the coming months, market participants said. Around 65 LNG-fuelled vessels, including newbuilds and retrofits, were expected to be delivered globally this year, and another 85 next year.”
Shipowners are likely to expect the reopening of shipyards, as well as pandemic-free journey. Even six months ago, LNG was known as an excellent alternative to high sulfur fuel oil banned without using scrubber systems by IMO requirements. It would seem, owing to the high cost, “clean” LNG fuel has to lose its attractiveness to maritime industry participants… However, there’s an exception to every rule!
The world’s largest LNG producer Qatar Petroleum took a decisive step forward. The state-owned public corporation signed three ambitious agreements with South Korea. As The Maritime Executive reports, cooperating with the three main Korean shipyards, Qatar Petroleum reserved the major portion of their LNG ship construction capacity through 2027. Valued at around USD 19.1 billion, the deal involves the construction of more than 100 LNG tankers. The newbuildings will be equipped with slow speed dual-fuel engines, using LNG as a ship fuel. As minister of state for energy affairs in Qatar Saad Sherida al-Kaabi said, it can provide “the reliable supply of additional clean energy to the world at a time when investments to meet these requirements are most needed”.
When the collapse caused by COVID-19 is over and the global economy returns to normal, the shipping community will again be interested in alternative fuels, as well as LNG fuel and LNG-powered ships will become a popular topic for many speeches.