COMMISSION STAFF WORKING DOCUMENT Actions towards a comprehensive EU framework on LNG for shipping Accompanying the document Communication de la Commission au Parlement européen, au Conseil, au Comité économique et social européen et au comité des régions Energie propre pour les transports: une stratégie européenne en matière de carburants de substitution
Date: 2013-01-24
Institutions: European Commission
Subjects: import (EU), maritime transport, petroleum product, self-sufficiency in energy, substitute fuel, transport infrastructure

EUROPEAN 
COMMISSION 

Brussels, 24.1.2013  
SWD(2013) 4 final 

COMMISSION STAFF WORKING DOCUMENT 

Actions towards a comprehensive EU framework on LNG for shipping 

Accompanying the document 

Communication de la Commission au Parlement européen, au Conseil, au Comité 
économique et social européen et au comité des régions 

Energie propre pour les transports: une stratégie européenne en matière de carburants 
de substitution 

{COM(2013) 17 final} 

EN 

   EN 

 
 
 
 
  
 
 
1 

Actions towards a comprehensive EU framework on LNG for shipping 

The  staff  working  document  compliments  the  Clean  Power  for  Transport  Communication  regarding  the 
introduction of LNG as an alternative fuel for shipping.   

1. The case for LNG as an alternative fuel for shipping 

The  EU  White  Paper  for  Transport  has  set  a  greenhouse  gas  reduction  goal  of  at  least  40%  by  2050 
(compared  to  2005)  in  absolute  terms  for  the  shipping  sector.  This  has  to  take  into  account  the  expected 
substantial traffic increase during that period. The White Paper also states that shipping will need to further 
contribute to the reduction of local and global emissions. In addition, the dependency on oil, a general risk 
factor  for  transport  and  EU  economy,  requires  looking  for  alternative  fuels  which  also  further  reduce 
greenhouse gas emissions.  

LNG is the most promising alternative shipping fuel technology in the short to medium term, at least for 
short sea (and possibly inland waterway transport), but also for maritime activities outside transport, e.g. 
fisheries and offshore services. Nearly a decade of small scale LNG driven ships experience has proven the 
reliability of the technology. LNG can be sourced from a number of world regions and further distributed 
via existing and planned LNG import facilities to port based and mobile refuelling stations. Global known 
gas reserves are considerably higher than oil.  

Compared  to  today's  commonly  used  bunker  oil  for  shipping,  LNG  reduces  sulphur  emissions  down  to 
nearly  0%  and  thereby  fulfils  existing  and  planned  emission  limits1  for  the  currently  designated  sulphur 
emission  control  areas  (SECAs)  in  the  EU  such  as  the  Baltic  Sea,  North  Sea  and  English  Channel.  The 
economic  factors,  once  LNG  takes  up  in  SECAs,  can  also  prevail  and  promote  the  use  of  the  bunker  in 
other areas across the EU. 

LNG fuelled ships emit nearly no particulate matters, about 90% less nitrogen oxides and 20-25% less CO2. 
Also  from  an  economical  point  of  view  LNG  is  seen  by  many  as  –  due  to  recent  discoveries  of  vast 
resources - having the potential to decouple bunker prices from expected further increases in the cost of oil. 
This trend is also seen in other regions of the world such as in China, Japan, South Korea, Singapore and 
the US where plans to use LNG for shipping are emerging.  

It needs to be noted that while the use of LNG in shipping will help to reach environmental targets with 
regards to emissions of sulphur and particulate matters, with regards to the CO2 targets the use of LNG will 
have  to  be  complemented  on  the  long  run  by  more  energy  efficient  engines  and  vessels.  A  number  of 
activities  are  on-going,  amongst  which  R&D  projects,  but  also  incentives  schemes  such  differentiated 
infrastructure  charges  and  port  fees  and  regulatory  actions  like  the  recently  adopted  Energy  Efficiency 
Design  Index  (EEDI)  by  the  International  Maritime  Organization  (IMO),  which  sets  specific  criteria  for 
new-built ships. Research and innovation have thus to be further supported also in view of the long-term 
competitiveness of the EU's maritime clusters. The potentials of non-fossil alternative shipping fuels (e.g. 
bio-LNG, methanol, hybrid propulsion and hydrogen) need to be further analysed and tested with a view to 
achieving a fuel mix that will further reduce greenhouse gas emissions.   

2. Economic aspects of LNG for shipping 

Apart  from  a  clear  environmental  case,  there  seems  to  be  a  very  strong  economic  argument  in  favour  of 
supporting  LNG  in  shipping.  Even  based  on  today's  (July  2012)  landed  prices  for  LNG  (300-410 
EUR/tonne  in  the  EU),  it  potentially  provides  a  viable  alternative  to  the  use  of  heavy  fuel  oil  (~480 
EUR/tonne) and even  more in SECAs  which from  2015 will require the use  of ultra-low  sulphur marine 
gasoil (~ 730 EUR/tonne). Once a viable spot market for LNG for shipping establishes, prices might drop 
even further (prices in the US are as low as 90 EUR/tonne; it also reflects a huge supply of unconventional 
gas in the country). Variations in prices might be encountered until the major new LNG export countries 
(Australia, US) are in full production.  

1  Directive  2012/33/EU  of  21  November  2012  amending  Council  Directive  1999/32/EC  as  regards  the 

sulphur content of marine fuels 

 
 
 
 
                                                 
2 

A  broader  market  for  manufacturers  of  LNG  (dual)  engines,  fuel  tanks  etc.  and  the  introduction  of 
innovative LNG technology is expected not only to reduce these prices in the future, but also to provide 
opportunities for European shipyards and equipment manufacturers. Currently ship-owners seem to take a 
cautious approach and order few new ships for short sea traffic and/or opt for dual fuel engines (LNG and 
oil).  The  latter  option  not  only  increases  costs  but  delays  operational  benefits  until  operations  can  be 
switched permanently to LNG.  
A recent study2 co-financed by the Trans-European Transport Network (TEN-T) looked into the payback 
time for ship LNG modifications or the acquisition of new ships for SECAs and concluded that payback 
times  would  be  between  2-4  years  for  all  of  them.  The  same  study  concluded  that  a  small  scale  LNG 
bunker facility would require an investment of 15 million EUR and while a full network would require a 
mix of some large, medium and many small bunkering facilities, infrastructure should develop in a cost-
efficient, incremental way. This should include transitional mobile solutions such as LNG tank trucks.   

3. State of deployment and main obstacles 

Around 10.000 ships are currently mainly used for European Short Sea Shipping of which around 5000 are 
spending more than 50% of their time in SECAs, thus having to use mainly low sulphur marine gasoil (1% 
until 2015, 0.1% from 2015).  

With  the  exception  of  Norway,  supported  by  the  state-driven  introduction  of  a  national  LNG  bunkering 
network,  the  take-up  of  LNG  ship  technology  in  Europe  is  still  mainly  in  its  infancy  stage.  Many  ship-
owners and ship operators have stated their interest in switching to LNG fuel, but withhold their investment 
and conversion plans due to missing LNG supply at their preferred ports of call. Given today's technology, 
LNG  ship  tanks  require  at  least  two  times  the  size  of  an  equivalent  oil  tank.  Combined  with  a  lack  of 
appropriate  bunkering  facilities  along  shipping  routes,  this  poses  economic  challenges  (reduced  cargo 
space) and potential stability issues (for existing vessels). A further concern for ship operators is the lack of 
harmonised  bunkering  procedures,  requiring  compliance  with  different  procedures  and  technical 
requirements in every port of call. 

The issue of locally applicable and diverging rules is shared by the port community where also a number of 
pioneers  are  analysing  options  for  the  provision  of  LNG  bunker.  Current  procedures  foresee  conformity 
with  local  permit  procedures  and  the  local  interpretation  of  environmental  rules  (e.g.  Seveso  rules,  local 
risk  assessments  and  stakeholder  consultations).  Those  rules  were  not  aimed  at  small  or  medium  scale 
bunkering  facilities,  but  at  large  scale  LNG  import  and  storage.  Permit  processes  tend  to  take  more  than 
two  years  even  in  the  best  of  cases.  Furthermore  and  in  particular  for  smaller  ports,  it  seems  difficult  to 
justify investment into LNG infrastructure, not knowing about the future evolution (or absence) of a LNG 
bunkering network and thus the future demand by shipping (waiting for such a network to evolve). 

Both ports and ship operators highlight the need for appropriate and harmonised safety rules and training 
for small scale LNG storage, bunkering and on-board use. Ship operators emphasise the potential increase 
in non-productive additional times spend in ports as currently Stockholm is the only EU port where LNG 
bunkering (unlike bunkering of oil) is permitted during cargo loading or while passengers are on board.   

An  issue  beyond  the  transport  sector  is  the  perceived  negative  public  perception  of  the  dangers  of  LNG. 
Despite its excellent safety record so far, LNG is seen as a dangerous technology. There seems to be a need 
to provide more information, "demystify" the handling of LNG and better communicate the advantages of 
LNG as a cleaner fuel for shipping. 

While European shipbuilding industry is still a global leader in innovative technologies, it is suffering from 
lack  of  demand  for  their  products.  Ship-owners  seem  to  be  waiting  for  clear  indications  as  to  the 
development of a future network for cleaner fuels before committing to modifying their ships or acquiring 
new  ships.  Empty  order  books  and  an  uncertain  economic  future  keep  shipbuilders  from  investing  into 
further research and innovation that could produce more efficient LNG technology.  

2 North European LNG infrastructure project; final report May 2012  

 
 
 
 
 
 
 
                                                 
3 

4. The infrastructure issue 

The  EU  co-financed  study  mentioned  above  concludes  on  the  need  to  quickly  establish  a  minimal 
infrastructure  for  LNG  bunkering  in  order  to  kick-start  the  development,  increase  demand  by  ships  and 
further decrease prices for technology and LNG fuel. The Impact Assessment accompanying document to 
the Legislative proposal on the deployment of Alternative Fuels Infrastructure showed that the build-up of 
a sufficient infrastructure network for alternative fuels is a necessary condition to achieve the take-up of the 
alternative fuel vessels. 

A number of LNG import terminals already exist in Europe which could also further distribute and provide 
shipping with bunker fuel. Several ports are pursuing the introduction of LNG bunkering, mainly as local 
projects and based on local rules and procedures.     

Accordingly,  with  targeted,  limited  public  financial  support  it  should  be  possible  to  lay  the  ground  for 
initial fuelling infrastructure development along the EU coastline and effectively break the chicken and egg 
situation,  with  the  market  then  picking  up  without  additional  public  support  needed.  A  harmonised 
framework  for  rules  and  procedures  would  ensure  interoperability,  a  level  playing  field  and  avoid  costly 
parallel developments.  

Ambitious targets on development of LNG bunkering facilities and infrastructure have been included in the 
proposal for the "Directive of the European Parliament and of the Council on the deployment of alternative 
fuels infrastructure" which is part of the "Clean Power for Transport Package". 

5. Available financial support  

A  number  of  financial  instruments  are  available  to  support  the  introduction  of  LNG  bunkering 
infrastructure, such as the Work Programme for the development of Motorways of the Sea (MoS) within 
the  Trans-European  Transport  Network  (TEN-T)  will  continue 
to  finance  projects  addressing 
environmental  issues  and  promoting  the  development  of  related  green  infrastructure  and  facilities.  Other 
EU funds may also be used for instance to promote R&D through the research programmes and through 
regional funds. This would mainly relate to the required investments into further research and innovation as 
mentioned above. 

Further  possibilities  for  financing  are  available  for  the  sector  through  the  lending  of  the  European 
Investment Bank (EIB)3. Financing of shipping is part of the core business of the EIB's overall long term 
transport  lending.  Particular  attention  is  given  to  projects  that  better  assist  the  sector  to  cope  with  the 
environmental challenges and encourage, in line with EU legislation, the development of clean technology.  

Financing  of  LNG  bunkering  stations  may  also  be  supported  under  the  conditions  laid  down  in  the 
Guidelines on National Regional Aid for 2007-20134.  

6. Scope of activities to achieve an EU framework for shipping LNG  

In order to create a harmonised framework for the provision and use of LNG for shipping, an appropriate 
set of guidelines, standards and rules could be recommended and where justified made mandatory on EU 
level.  
It is also important to keep coordinating the EU development with international initiatives in IMO, ISO and 
other relevant bodies. Globally interoperable rules and procedures for technical, operational, security and 
safety  aspects  are  required  to  ensure  operational  interconnectivity  in  the  global  shipping  sector. 
Furthermore compatibility has to be achieved and maintained between developing rules and practices for 
use  of  LNG  in  shipping  and  in  inland  waterways  navigation  to  improve  interfaces  for  sea/river  going 
vessels and economies of scale for LNG provision in ports with sea and inland waterway access. 

The  valuable  experiences  made  by  pioneering  ports,  ship-owners  and  LNG  providers  should  be  used  to 
shape  the  EU  framework  for  LNG  bunkering  and  could  also  provide  valuable  assistance  to  stakeholders 
wanting  to  turn  to  LNG  themselves.  Learning  from  best  practice  could  thus  shorten  the  implementation 

3 

4 

The EIB has lent more than €120 bn to the transport sector over the past decade. Out of the total, 
about 4% has been for maritime transport (ports and vessels).  
OJ C54 of 4.3.2006, p13 

 
 
 
 
                                                 
4 

time needed for new installations and ships and help to accelerate the development of a larger use of LNG 
as an alternative fuel, reduce the sectors emissions and help to ensure its long-term viability.  

While  conditions  for  ships  and  bunkering  procedures  are  just  emerging,  stakeholders  are  faced  with  a 
number  of  existing  rules  and  procedures  for  land  based  LNG  installations.  These  were  not  aimed  at 
bunkering  LNG,  but  created  with  a  different  focus  mainly  on  large  storage  of  hazardous  materials. 
Furthermore these conditions are established on a local level without a view to providing bunker fuel to a 
fleet of EU-wide or globally operating ships. It seems therefore particularly important to scrutinise existing 
rules  for  land  based  installations  and  try  to  adapt,  simplify  and  harmonise  them  for  the  purpose  of  safe, 
secure and efficient LNG bunker provision.    

A general assessment of risks, dangers and opportunities regarding the use of LNG for shipping could help 
to feed a public debate on LNG for shipping and provide arguments for stakeholder debate at local levels.  

While economic advantages would be most obvious for ships travelling in sulphur emission control areas, 
LNG  provision  and  use  in  other  EU  waters  would  not  only  help  to  reduce  local  and  global  emissions,  it 
would help to decouple shipping costs in those areas from rising oil prices and could be expected to reduce 
operational costs, thus increasing the perspectives for long-term sustainability of EU shipping operations.     

7. EU action already taken by the Commission 
In September 2011, the Commission issued a staff working paper5 on a "sustainable waterborne transport 
toolbox" describing possible measures to minimise the compliance costs for the industry in view of the new 
sulphur limits6.  

The Commission launched in April 2012 together with the European Maritime Safety Agency (EMSA) and 
stakeholders  a  number  of  activities  in  order  to progress  the  introduction  of  LNG  for  shipping  in  the  EU. 
Taking  into  account  on-going  work  at  international  organisations  such  as  the  International  Maritime 
Organization (IMO) and the International Standardization Organization (ISO), the toolbox approach aims 
at identifying gaps and the need for harmonised guidelines, standards and rules for LNG for three aspects: 
(a) the storage and provision of LNG 
(b) the use of LNG on ships 
(c) the bunkering procedures 

A  comprehensive  framework  will  need  to  cover  all  relevant  aspects  of  safety,  security,  operations  and 
training.   

8. Next steps to achieve the EU framework for LNG as an alternative fuel for shipping  

Current planning foreseen the following timeline: 

Nov. 2012:  

First  draft  results  of  a  legal  gap  analysis  carried  out  by  EMSA  will  become  available. 
This  gap  analysis  takes  in  particular  into  account  on-going  developments  at  IMO  and 
ISO;   

04 Dec. 2012:    The  Commission  together  with  EMSA  will  hold  a  stakeholder  workshop  (involving 
industry  and Member  States)  to  assess  and  validate the  results  of  the  draft gap  analysis 
including a first draft outline of a possible EU framework for LNG bunkering. ISO and 
IMO  as  well  as  third  countries  (US,  China,  Japan,  Singapore)  with  important  LNG 
bunkering developments have been invited to participate; 

January 2013: 

The final gap analysis study report by EMSA will be available; 

1Q2013: 

The Commission will set-up and chair  a European Sustainable Shipping Forum (ESSF) 
with  Member  States  and  EU  industry;  The  ESSF  will  progress  all  aspects  of  the 
sustainable waterborne transport toolbox; an expert working group as continuation of the 

5  
6  

(SEC(2011) 1052 final) 
Directive 2012/33/EU of 21 November 2012 amending Council Directive 1999/32/EC as regards 
the sulphur content of marine fuels 

 
 
 
 
                                                 
5 

2013/2014: 

Mid 2014: 

2014: 

throughout: 

throughout: 

End 2014: 

previous  LNG  ad-hoc  expert  working  groups  is  envisaged  to  carry  out  further  work 
towards an EU-wide framework for shipping LNG and also share best practices; 

The Commission continues co-financing a number of TEN-T studies which are analysing 
and refining LNG bunkering networks on a regional basis, such as LNG in Baltic ports 
(until  December  2014),  LNG  infrastructure  and  pilot  project  in  the  North  Sea  (until 
March  2013),  COSTA  study  on  use  of  LNG  in  the  Mediterranean,  Atlantic  Ocean  and 
Black Sea (until April 2014); 

ISO  will  finalise  a  global  ISO  guideline  on  LNG  storage  and  bunkering  (ISO 
TC67/WG10  currently  working  on  such  guideline  which  will  comprise  safety,  security 
and training); 

IMO  will  finalise  the  International  Code  on  Safety  for  Gas-Fuelled  Ships  (IGF-Code) 
covering all aspects of ship design and on-board use of LNG;  

The  Commission  will  address  the  progress  of  LNG  for  shipping  in  bilateral  and 
multilateral dialogues with major international partners and IMO in order to ensure global 
compatibility and sharing of lessons learned;  

The  Commission  will  continue  to  support  (via  TEN-T/CEF  and  regional  support 
measures) the implementation of LNG refuelling stations for ships; 

The  Commission,  in  cooperation  with  EMSA  will,  based  on  the  results  of  work 
mentioned  above,  propose  a  comprehensive  set  of  rules,  standards  and  guidelines  for 
LNG provision, bunkering and use in shipping; 

01 Jan 2015: 

New 0.1% SOx rules will apply in sulphur emission control areas (SECAs); 

01 Jan 2020: 

All TEN-T core ports will have to provide LNG refuelling facilities. 

(separate action on LNG promotion to the public could be part of wider general action including road 

transport, inland navigation etc.)