The Rise of Engine Retrofits to LNG Marine Fuel in 2024: A Report by Lloyd’s Register
The maritime industry is undergoing a significant shift towards engine retrofits to LNG marine fuel in 2024, according to the latest findings by Lloyd’s Register (LR). As shipowners seek immediate carbon reductions to comply with tightening regulatory requirements, the adoption of alternative fuels in existing vessels has become a key focus area.
LR’s Engine Retrofit Report highlights the progress made in the industry’s ability to execute ship engine retrofit projects since the initial report in 2023. The completion of the first methanol fuel conversion since 2015 and the expansion of shipyards with retrofit capabilities are among the advancements noted in the report.
However, despite these positive developments, the report points out the lack of strong incentives for fuel producers as a major obstacle to accelerating the adoption of alternative fuels. Regulatory drivers like the EU’s FuelEU Maritime and Emissions Trading System (ETS) have been instrumental in pushing for emissions reductions, but demand for alternative fuels remains low due to the absence of compelling incentives for producers.
The Surge of LNG Retrofits and Future Challenges
The report highlights a surge in LNG retrofits in 2024, with over 305 LNG-fueled ships ordered last year, accounting for approximately 14% of newbuilding orders. While LNG offers a near-term compliance solution, the report cautions that deeper emissions reductions will be necessary in the long run.
Methane emissions and the long-term availability of bio- and e-LNG pose challenges for the sustainability of LNG as a retrofit option. With zero-emission fuel supply chains still in their infancy, many operators view LNG as the most viable option for retrofitting vessels today.
Challenges and Solutions in Retrofit Projects
The report emphasizes the importance of supply chain readiness and improved coordination between engine manufacturers, fuel system suppliers, and shipyards to streamline retrofit projects. Regulatory amendments to the MARPOL Annex VI NOx Technical Code are expected to facilitate certification for converted engines.
Despite an increase in the number of shipyards capable of undertaking alternative fuel conversions, the report identifies a gap in retrofit capacity, with only around 465 vessel conversions annually compared to the projected requirement of over 1,000 conversions per year. LR has introduced a methodology for evaluating shipyard candidates to ensure successful retrofit project execution.
Looking Ahead: Future Market Demands
While new retrofit orders were relatively slow in 2024, engine designers are gearing up for future market demands. The shorter lead time for retrofit projects compared to newbuilds suggests that more projects for completion in 2026 and 2027 could be announced in 2025.
Claudene Sharp-Patel, LR’s Global Technical Director, stresses the need for decisive action to scale up alternative fuel supply chains. Without regulatory clarity and investment in bridging the gap between ambition and action, shipowners may face increasing compliance costs and operational uncertainties.