Industry LNG-fuelling coalition SEA-LNG has hit out at private sector benchmarking company Climate Bonds Initiative (CBI) for its exclusion of LNG in its proposed criteria for green bond certification.

In an open letter to CBI, SEA-LNG chairman Peter Keller said specifying green investment criteria that favour specific technologies and exclude other viable options like LNG risks forcing shipping to accept poorer environmental, operational and commercial solutions.

SEA-LNG accused CBI of taking “a precarious strategic approach” to what it said is a “highly complex international challenge”.

The LNG-fuelling group’s letter comes in response to CBI’s recent proposed sector criteria for green bond certification of low carbon shipping financing. These specifically exclude vessels that carry fossil fuel including crude oil and LNG from qualifying for such bonds.

In its letter SEA-LNG, argued that CBI’s criteria risks excluding green bond financing for LNG-fuelled vessels and LNG bunker vessels.

The coalition said LNG can reduce greenhouse gas emissions in the maritime sector by 21%, according to an independent study it commissioned in partnership with the Society of Gas as a Marine Fuel.

Significant efforts are being made to reduce methane slip further, it added.

To totally discount one alternative over another is frankly very strange

Peter Keller

In time LNG-fuelled vessels will be able to switch to carbon neutral forms of liquefied bio-methane (LBM) and liquefied synthetic-methane (LSM), SEA-LNG said.

SEA-LNG arguedthat both LBM and LSM can be used as “drop-in” fuels initially and supplied through existing infrastructure without the need to modify vessels. It highlighted its recent study which concluded that both are scaleable for maritime demand and will likely be commercially competitive to other low- and zero-carbon fuels.

SEA-LNG contrasted this with CBI’s apparent inclusion of technologies such as ammonia and hydrogen which it says will take many years to develop safely and make economical for the deep-sea maritime sector.

SEA-LNG chairman Peter Keller says there is not only one magical elixir for marine fuelling. Photo: Lucy Hine

Speaking to TradeWinds, Keller said SEA-LNG is “perplexed” that CBI is excluding LNG-fuelling as a viable alternative fuel for shipping.

Why wait?

“Why would one wait years if not decades for technology to develop when today you can take a 21 % benefit, as well as air quality benefits, and have a fuel that is basically future proof,” he said, referencing the path forward using LBM and LSM.

“Just do it,” Keller said, acknowledging his use of sportswear giant Nike’s slogan. “Waiting is not a plan. Companies that wait don’t do well.”

Keller said SEA-LNG acknowledges that there will be other technologies, including ammonia and hydrogen, that will likely provide solutions as future marine fuels. But at this stage he believes nothing should be ruled out.

“It’s way too early in all of this to say there is only one magical elixir. We [SEA-LNG] certainly don’t say that. We think LNG has a viable place, and an important place and can be future-proofed. But to totally discount one alternative over another is frankly very strange.”

Keller said SEA-LNG does not understand how a group with this background and understanding the global complexities of the carbon and air quality initiatives would totally discount LNG.

He admitted he has not yet had any direct conversations with CBI, although a March meeting with the investor-focused company’s advisor Tristan Smith was put on hold due to Covid-19 travel restrictions. But he said SEA-LNG will be responding to the draft sector criteria directly and through its members and other organisation.

“We should not be giving prescriptive approaches to this very difficult and challenging idea, Keller said. “What we really need to do is set policy and then let the solutions come to the fore."