Carnival Corp., the world’s largest cruise line, is increasing its focus on decarbonization, aiming for net-zero emissions by 2050. With a significant marine fuel consumption of 2.9 million metric tons in 2023, the company is exploring various strategies to reduce its carbon footprint.
The Growing Role of LNG
According to Tom Strang, Carnival’s Senior Vice President for Maritime Affairs, LNG currently constitutes 11% of the company’s bunker fuel mix, with a potential rise to 20% by 2030. Strang emphasizes LNG’s “major” role in the transition to net-zero, particularly as more LNG-capable ships are delivered.
Carnival’s LNG-Capable Fleet
Carnival operates a fleet of 95 cruise ships, including 10 dual-fuel vessels capable of running on both LNG and conventional fuels. The company’s order book includes six more LNG-capable ships, slated for delivery between 2025 and 2033, further increasing LNG’s share in their fuel mix.
Market Dynamics and LNG Demand
LNG bunker demand is expected to grow significantly, reaching 5.6% of total marine fuel demand by 2030 and 15.6% by 2050. Despite LNG’s ability to reduce greenhouse gas emissions by 20%-30% compared to conventional fuels, its availability and compliance with EU regulations make it a favored transitional fuel.
Regional Deployment and Bunkering Hubs
Carnival’s LNG-powered ships primarily operate in European waters, with deployments in South Florida, the Caribbean, the US Gulf, and the Persian Gulf depending on seasonal demand. Key refueling hubs include Barcelona, Southampton, Miami, and Port Canaveral, with plans to expand LNG bunkering to Panama, the Bahamas, and other Caribbean islands.
LNG’s Competitive Pricing
LNG’s popularity is partly driven by its competitive pricing in certain regions, such as the US Southeast Coast, where it can be cheaper than very low sulfur fuel oil (VLSFO). However, pricing varies, with some parts of the US facing higher costs due to logistical challenges.
Supply Contracts and Market Trends
Carnival has secured long-term LNG supply contracts with providers like Shell and Titan, viewing them as a stable solution amidst tightening demand-supply balances. The company anticipates a potential squeeze on LNG bunker vessel capacity due to fleet growth, which could affect spot market availability.
Challenges and Future Fuels
The future of LNG faces potential regulatory challenges, particularly concerning methane emissions, a potent greenhouse gas. While Carnival explores new technologies to address methane slip, alternative fuels like ammonia and methanol pose significant safety and logistical challenges for the cruise sector. Bio bunker trials show promise but are currently hindered by high costs and limited availability.
Meeting IMO’s Decarbonization Targets
The International Maritime Organization (IMO) has set ambitious decarbonization targets for the shipping industry, which Carnival acknowledges as challenging. Strang underscores the importance of fuel availability to meet these targets, stressing that without access to the right fuels, achieving the checkpoints will be difficult.
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Source: S & P Global
