To address these high-level questions, this paper undertakes a case study on the risks associated with a particular candidate technology/fuel for shipping: LNG (Liquefied Natural Gas). LNG’s application as a marine fuel is a relevant candidate for use in a case study because it is associated with new investment today, which is widely recognised to be incompatible with the long-run movement away from use of fossil fuels. However, it has been portrayed as a transition fuel on the pathway for shipping’s decarbonisation. In recent years, increasing numbers of ships have been built to be LNG-capable (e.g. with dual fuel LNG/LSHFO machinery and storage and supply equipment for LNG), and many more are on order. However, there is growing scientific evidence that shows the climate benefits are limited, if not negative, compared to LSHFO (Low Sulphur Heavy Fuel Oil), when considering a full lifecycle analysis of emissions and accounting for all greenhouse gases (GHG) emissions. Furthermore, there is growing evidence that the least-cost pathway for shipping to meet its required shift away from fossil fuels is to reach a mix of electrification, and use of hydrogen and hydrogen-derived fuels (ammonia, methanol). Under an assumption that liquid bio and synthetic methane with equivalent GHG reductions to ammonia/methanol will be less competitive than ammonia, this creates a risk that the more capital-intensive LNG-capable1 assets will have a more limited economic life and/or higher risk of stranded value than less capital intensive conventionally fuelled (HFO/LSHFO) assets
