LNG Masterplan for Rhine-Main-Danube · The drivers for LNG fuel adoption and the constraints...

LNG Masterplan for Rhine-Main-Danube

The European Union’s TEN-T programme supporting

This project is co-funded by the European Commission / DG MOVE / TEN-T

A project implemented by LNG Masterplan Consortium

Sub-activity 1.3 LNG Demand Analysis

D 1.3.1.2 Demand Study - LNG Framework and market analysis for the Rhine corridor

The sole responsibility of this publication lies with the author. The European Union is not responsible for any

use that may be made of the information contained therein.

D 1.3.1.2 Demand Study - LNG Framework and market analysis for the Rhine corridor

Version: 1.0

Date: 31.03.2015

Status: Final / Public

D 1.3.1.2 Demand Study – LNG Framework & Market Analysis - Rhine Corridor

SuAc 1.3 LNG Demand Analysis

Document History

Version Date Authorised

1.0 Final & approved 31.3.2015 Port of Rotterdam, Port of Antwerp, Port of Mannheim,

Port of Strasbourg, Port of Switzerland

Contributing Authors

Organisation

Buck Constultants International, Pace Global, TNO

Port of Rotterdam, Port of Antwerp, Port of Mannheim, Port of Strasbourg, Port of Switzerland

Introductory note

The Demand Study of the LNG Framework and market analysis for the Rhine corridor studies was

subcontracted to a consortium formed by Buck Constultants International, Pace Global, TNO after a

tendering procedure. The final deliverable was approved by involved beneficiaries and contractor(s)

in March 2015.

Commissioned by:

The Rhine Port Group

March 2015

LNG Framework and Market

Analysis for the Rhine corridor ________________________________________________________

Demand Study

I

Executive summary – Demand and Supply study Study Scope

The objective of this study was to rigorously quantify the LNG fuel infrastructure that might

be required along the Rhine river corridor to meet future LNG fuel demand. To accomplish

this required an understanding of LNG fuel adoption to forecast future LNG demand to

define the required LNG supply infrastructure. The project was funded by the EU via the

TEN-T Priority projects and administered by the Port of Rhine Group, which includes the

ports of Antwerp, Rotterdam, Strasbourg, Mannheim, and Basel.

The geography of the study region was determined through an economic analysis of the

likely competitive sub-regions for LNG fuel supply within each country bordering the Rhine.

The resultant study geography is depicted in figure 1 below:

Figure 1 Geographic scope of the study

The study was aimed to assess the impact on fueling infrastructure requirements of LNG

fuel demand in short sea shipping, inland waterway vessels, trucking, and industry not

connected to the natural gas grid.

A summary of the report and key findings are summarized below. The complete report is

structured into four parts which include the following:

An analysis of the current status of LNG fuel adoption in Inland Waterway Transport in

the study region

An assessment of the available LNG fuel supply infrastructure and active suppliers

II

A risk adjusted fuel switching economic quantification of LNG fuel adoption in the

following sectors: Short Sea Shipping (SSS), Inland Waterway transport (IWT) Heavy

Good Vehicles (HGV)Heavy Good Vehicles (HGV).

Operational and financial assessment of the required LNG fuel supply infrastructure

and required capital to keep pace with the forecasted demand

Study Findings

Current Market

Significant LNG fuel adoption is forecasted to be led by Heavy Good Vehicles (HGV). The

HGV growth is economically driven by significant reductions in fuel costs resulting in large

part from the on-road diesel taxes. The technology is widely adopted and understood

worldwide and constant innovation in engine technology is driving the cost of conversion

continuously downwards. Furthermore, local regulations like such as afterhours noise

ordinances provide additional incentives for owners to consider LNG fuel.

The IWT sector shows promising LNG adoption beyond 2020, once demand has absorbed

the current over capacity in the existing IWT fleet and capital will allow for new builds to be

ordered. To date, there are already 5 vessels running on LNG in the Rhine corridor. The

IWT faces attractive fundamental switching economics and is supported by the Clean

Power for Transport Act which stipulates that by 2025 ships should be able to bunker LNG

fuel in all major European ports (the Commission is proposing that LNG bunkering stations

be installed in all maritime and inland ports of the trans-European transport (TEN-T) core

network by 2020 (and in 2025 for inland ports).

There is growing LNG fuel activity led by SSS. The latest IMO emissions restriction in effect

since January 2015, requires all vessels operating within the SECA regions to reduce SOx

emissions. To comply, SSS operators have several choices which include; switching to low

sulfur marine fuels (MGO/MDO/ULSFO), consuming high sulfur heavy fuel oil while

removing sulfur from the emissions, or switching to LNG fuel. Currently there are 2 SSS

LNG vessels operating in European waters and 20 on the order books according to

published studies (DNV 2014).

There are strong fundamental economics for industrial conversion away from petroleum

fuels, result in solid project economics. Gas turbines are not a new technology and relatively

low cost and are already prevalent in industry. However, the availability of piped natural gas

in the study area limits the opportunity to deliver LNG to industries which are not on the

natural gas grid. Further, accessing industry decision makers is challenging - identifying

attractive conversions, gaining management’s attention, and access to capital. Despite

these challenges, industries in regions outside the study area with sparse grids (Nordic

countries, Poland, etc.) have already found LNG beneficial.

III

LNG Fuel Supply

The ‘chicken and egg’ analogy so often used to describe the LNG fuel business only a year

or two ago, is less pronounced today. The availability of LNG as a fuel has increased, as

well as modes of transport and refueling.

Primary supply from import terminals, though bio-LNG and gas grid peak shavers can

contribute. Wholesale LNG prices are driven by global LNG supply/demand fundamentals.

LNG fuel may be priced in a range that extends from a low based on delivered costs plus

supplier margins to a high based on an agreed discount to a consumer’s incumbent fuel.

The means to deliver relatively small LNG cargos is in place and continues to expand.

Projects around Europe include import terminals with break bulk facilities, for example in

Rotterdam, Zeebrugge and Dunkirk, but also expansions have been planned in La Spezia.

Bunker vessels and LNG tank carriers are being developed for bunkering processes or LNG

delivery to satellite storages. Further, major ports in the study region have undertaken

preparations for small scale LNG supply, for seagoing vessels and IWT. The table below

presents the current facilities for LNG supply:

Table 1 Relevant import terminals and satellite storage for LNG sourcing in the Rhine corridor

Country Terminal City Year in operation

Status

France Fos-Tonkin LNG Terminal (combined with Fos Faster LNG)

Fos-Tonkin 1972 In operation

France Montoir-de-Bretagne LNG Terminal

Montoir-de-Bretagne 1980 In operation

Belgium Zeebrugge LNG Terminal Zeebrugge 1987 In operation

France Fos Cavaou LNG Terminal Fos Cavaou 2010 In operation

Netherlands Rotterdam (Gate) LNG Terminal

Rotterdam 2011 In operation

France Dunkerque LNG Terminal Dunkerque 2015 Under construction

Netherlands Rotterdam LNG Break Bulk Rotterdam 2015 Under construction

Poland Swinoujscie LNG Terminal Swinoujscie 2015 Under construction

United Kingdom Grain LNG terminal Grain 2005 Planned (facility for reloading)

Italy La Spezia - Panigaglia LNG terminal

Panigaglia 1971 Planned (facility for reloading)

Germany Brunsbuttel LNG Terminal Brunsbuttel 2017 Planned

Germany Bremen Bremen Port 2017 Planned

Germany Rostock Port of Rostock/

Gazprom

2017 Planned

Germany Hamburg Hamburg LNG

Terminal

2018 Planned

Denmark Hirtshals Hirtshals 2018 Planned

As a result of strong fundamental drivers, a dozen LNG fuel suppliers like GDF, SHELL and

LNG Europe are actively working to deliver LNG fuel. While some seek a wholesale position

marketing LNG fuel to retailers, others have built trucks (e.g. RolandeLNG) or develop

barge fleets (e.g. Argos and VEKA) to ensure timely and efficient LNG delivery thereby

controlling much of the LNG fuel supply chain.

IV

LNG Fuel Demand Potential

The adoption is driven by a few fundamental drivers which must be sufficient to overcome

the perceived risks and switching costs of converting to LNG from incumbent fuels.

The fuel switching economics must be favorable, which means first and foremost, the price

difference between the delivered cost of LNG and the incumbent fuel must be strong over

the life of the investment. It also means that the incremental or conversion costs of LNG

capable equipment must not be too high. In addition to the global drivers of LNG and

petroleum fuel prices, both economic factors are indirectly impacted by regulatory policy

choices which directly impact cost such as taxes and technology innovation. Taxes, or the

lack thereof, can widen the differences in fuel prices, while grants, subsidies, and scale

economies can offset capital costs. Perhaps the greatest challenge to LNG fuels has been

the recent collapse in crude oil prices and the attendant decline in refined product prices

(e.g. distillates, and heavy fuel).

As mentioned above, an equipment owner (ship or vehicle) must be convinced that the

benefits of switching to LNG outweigh both the next best alternative and the risks of

change. First and foremost, they must be convinced that LNG will be reliably available at

their chosen fueling location, thus the readiness of fuel supply infrastructure, both

equipment and suppliers, must be sufficient to provide the comfort of reliability. It is the

express intent of this project to understand what physical infrastructure will be required to

meet demand so as to alleviate this critical concern. Owners must also be convinced that

the benefits outweigh the time and effort required to understand this new and unusual fuel,

and its impact on their operations and maintenance. Some questions that could arise by the

owners are: How safe is this fuel? What happens if there is a fire? How will my operations

need to change (if they can) to accommodate this fuel? These are all very real questions

requiring assuaging answers.

The drivers for LNG fuel adoption and the constraints limiting its adoption vary by sector.

Difference in tax structures, operating patterns, conversion costs, physical space limitations,

and regulations all impact the LNG fuel decision. The decision is made more complicated by

choice. Unlike HGV, IWT, and Industry participants, regulations force those in SSS who

were not already compliant by consuming low sulfur fuels to consider LNG as a choice.

By applying an end-user perspective driven risk adjusted economic fuel choice model, LNG

fuel adoption was forecast across each sector and location. The potential impacts of

fundamental shifts in economic and risk drivers were tested through high and low case

adoption scenarios, and a summary of the results is presented in figure 2 (see next page).

V

Figure 2 LNG demand per user group in the Lower Rhine and Upper Rhine

LNG demand per user group in the Lower Rhine

In 2020 In 2035

LNG demand per user group in the Upper Rhine

In 2020 In 2035

Market Implications

The LNG fuel demand forecast provided the foundation for estimates of the

infrastructure and capital required to meet demands. The analysis shows a clear

distinction between direct delivery from the LNG import terminal to the end user via

tank trucks and the use of an inland storage depot, with an intermediate bunker and

storage facility (IBSI) or a fully equipped inland storage. The preferred supply option

depends on the investment costs and the (annual) logistics costs.

VI

The table below presents the (economic) investments for the Reference case per

port:

Table 2 Investments in LNG infrastructure per port in the Reference case

Reference case in 2020 Reference case in 2035

Rotterdam Sea based:

IBSI of 1,500 m3

Investment: Euro 1,500,000,-

Sea based:

Inland storage of 13,500 m3


Land based:

Direct trucking from GATE

Investment: -

Land based:

Direct trucking from GATE

Investment: -

Antwerp Sea based:

IBSI of 1,500 m3


Sea based:

Inland storage of 12,000 m3


Land based:

Direct trucking from Zeebrugge or Rotterdam

Investment: -

Land based:

Direct trucking from Zeebrugge or Rotterdam

Investment: -

Mannheim Sea based:

Direct trucking from Zeebrugge, Rotterdam or

Dunkirk

Investment: -

Sea based:

Inland storage of 45,000 m3 (incl. land based

Investment: Euro 75-80 million

Land based:

Direct trucking from Zeebrugge, Rotterdam or

Dunkirk

Investment: -

Land based:

See above (sea based)

Strasbourg Sea based:

Direct trucking from Zeebrugge or Dunkirk

Investment: -

Sea based:

Inland storage of 13,000 m3 (incl. land based


Land based:

Direct trucking from Zeebrugge or Dunkirk

Investment: -

Land based:


Basel Sea based:

Direct trucking from Marseille Fos-sur-Mer or

La Spezia

Investment: -

Sea based:

Inland storage of 15,000 m3 (incl. land based)


Land based:

Direct trucking from Marseille Fos-sur-Mer or

La Spezia

Investment: -

Land based:


Building the infrastructure envisioned requires fuel consumers and suppliers to

jointly develop the market sharing both the risks and rewards. Suppliers cannot

place capital at risk investing in LNG infrastructure without some surety, and

consumers cannot access low priced LNG without taking risk by committing to

purchase. Some motivated suppliers are educating lenders to enable greater risk

taking and consumers are agreeing to favorable pricing allowing suppliers a return

commensurate with their risk while ensuring fuel cost savings for themselves. Still

other creative solutions involve suppliers bringing conversion capital and investing in

analysis educating consumers on the potential for LNG fuel to transform their

competitive position.

Finally, it is through efforts such as this one that LNG fuel stakeholders intend to

build awareness of the issues facing LNG fuel suppliers and consumers, and bridge

the gaps through understanding and creative solutions.

Contents

Page

GLOSSARY 1

Chapter 1 Introduction 2

1.1 LNG framework and market analysis 2 1.2 Project Structure and Interaction 3

1.3 Objective and scope of the demand study 5

1.4 Structure of the demand study 8

Chapter 2 Methodology 10

2.1 Incumbent fuel demand 10

2.2 LNG adoption and the Dynamic Fuel Model 10

2.3 Description of the Dynamic Fuel Model 11

Chapter 3 LNG End-user Categories 15

3.1 LNG End-user Categories 15

3.2 Northern Europe Seagoing Shipping Vessels 15

3.3 Short-Sea Shipping Vessels 18

3.4 Inland Waterway Transport 24

3.5 Light and Heavy Duty Vehicles 32

3.6 Industry 39

Chapter 4 LNG Demand Key Drivers 48

4.1 Overview of Key Drivers 48

4.2 Key LNG Adoption Drivers 49

4.3 Key LNG Adoption Drivers Ranking 85

Page

Chapter 5 LNG Demand Scenarios 89

5.1 Scenario Development 89

5.2 Reference Case 89

5.3 Low Demand Scenario 91

5.4 High Demand Scenario 94

Chapter 6 LNG Adoption 97

6.1 Summary 97

6.2 Current and planned Short Sea Shipping LNG Fuelled Vessels 105 6.3 Inland Waterway Transport Shipping 114

6.4 Light and Heavy Duty Vehicles 124

6.5 Industry 134

6.6 Conclusion 140

Annexe 1 Demand short sea shipping per port 142

A.1.1 Short Sea Shipping at the Port of Rotterdam 142

A.2.1 Short Sea Shipping at the Port of Antwerp 145

Annexe 2 Demand IWT per port 148

A.2.1 Inland Waterway Shipping at the Port of Rotterdam 148

A.2.2 Inland Waterway Shipping at the Port of Antwerp 150

A.2.3 Inland Waterway Shipping at the Port of Mannheim 153

A.2.4 Inland Waterway Shipping at the Port of Strasbourg 154

A.2.5 Inland Waterway Shipping at the Port of Basel 157

Annexe 3 LNG demand Light and Heavy Duty Vehicles per port 159

A.3.1 Light and Heavy Duty Vehicles at the Port of Rotterdam 159

A.3.2 Light and Heavy Duty Vehicles at the Port of Antwerp 162

A.3.3 Light and Heavy Duty Vehicles at the Port of Mannheim 166

A.3.4 Light and Heavy Duty Vehicles at the Port of Strasbourg 170

A.3.5 Light and Heavy Duty Vehicles at the Port of Basel 174

Page

Annexe 4 LNG demand Industry per port region 179

A.4.1 Industry in the Port of Rotterdam Region 179

A.4.2 Industry in the Port of Antwerp Region 181

A.4.3 Industry in the Port of Mannheim Region 183

A.4.4 Industry in the Port of Strasbourg Region 185

A.4.5 Industry in the Port of Basel Region 187

A.4.5 Total Demand in the Port of Rotterdam 190

A.4.5 Total Demand in the Port of Antwerp 191

A.4.5 Total Demand in the Port of Mannheim 192

A.4.5 Total Demand in the Port of Strasbourg 193

A.4.5 Total Demand in the Port of Basel 194

Buck Consultants International, TNO and Pace Global_A Siemens Business 1

GLOSSARY

BCI Buck Consultants International

CAGR Compounded Annual Growth Rate

CAPEX Capital Expenditure

CEMT Classification of European Inland Waterways

(Conférence européenne des ministres des Transports)

CIF Cost Insurance Freight

DWT Dead Wight Tonnage

ECA Emissions Control Area

EEDI Energy Efficiency Design Index

EEOI Energy Efficiency Operational Indicator

ETS Emission Trading System

GDP Gross Domestic Product

GHG Green House Gas Emissions

HFO Heavy Fuel Oil

IMF International Monetary Fund

IWT Inland Waterway Transport

LHDV Light and Heavy Duty Vehicles

LNG Liquid Natural Gas

MDO Marine Diesel Oil

MGO Marine Gasoline

MMBtu Million British Thermal Units

NACE Statistical classification of economic activities in the European Community

NUTS Nomenclature of territorial units for statistics

OPEX Operational Expenditure

PSV Platform Supply Vessel

Rhine Ports Ports of Rotterdam, Antwerp, Mannheim, Strasbourg, and Switzerland

Ro-Ro Roll-on Roll-off Ships

SEEMP Ship Energy Efficiency Management Plan

SOx Sulphur Oxides

SSS Short Sea Shipping

TCO Total Cost of Ownership

TEU Twenty Foot Equivalent Unit

TNO TNO Consultants

2 Buck Consultants International, TNO and Pace Global_A Siemens Business

Chapter 1 Introduction

1.1 LNG framework and market analysis

In 2013, the European Commission approved the project LNG Masterplan Rhine Main Dan-

ube. The LNG Masterplan aims to create a platform for the cooperation of authorities and

industry stakeholders with the purpose to facilitate the creation of a harmonized European

regulatory framework for LNG as fuel and cargo in inland navigation and to promote the

introduction of LNG as a fuel and cargo for inland shipping. It delivers technical concepts for

new and retrofitted vessels being propelled by LNG and transporting LNG as well as a sig-

nificant number of pilot deployments of vessels and terminals. It also develops a compre-

hensive strategy together with a detailed roadmap for the implementation of LNG in line with

the EU transport/energy/environmental policy goals and actions.

Figure 1.1 Work breakdown structure LNG Masterplan

Source: website LNG Masterplan

The work carried out in the LNG Masterplan is structured into 6 activities. The Framework &

Market Analysis is one of those activities, with the objective to investigate and to assess the

framework conditions, the supply markets and the market opportunities (market demand of

LNG) for the implementation of LNG as fuel and cargo on the Rhine-Main-Danube axis. The

Rhine Port Group (consisting of Port of Rotterdam Authority, the Port of Antwerp, the Port of

Mannheim, the Port of Strasbourg and the Port of Switzerland) asked the combination of

Buck Consultants International (BCI), TNO and Pace Global_ A Siemens Business (Pace

Global) for the execution of this market analysis. Core of the assignment is the analysis of

the market for LNG as an environmental friendly and economic priced fuel for selected user

groups. The user groups of LNG for this study are defined as Short Sea Shipping (SSS),

Inland Water Transport (IWT), Light and Heavy Duty Vehicles (LHDV) and Industry in the


Rhine corridor. The market analysis addresses the market potential for these user groups

and the availability of sourcing options and supply chain structures. This concerns, specifi-

cally, the positioning of the ports of the Rhine Port Group in the LNG market for bunkering,

(strategic) storages for regional distribution and loading facilities for transport. Furthermore,

the market analysis addresses the strategic choices to be made by the ports, in the fields of

investments, adjustments to regulations and other measures. As such, the market analysis

prepares the framework conditions for the strategic positioning of the Rhine Port group and

to stimulate the uptake of LNG.

1.2 Project Structure and Interaction

Figure 1.2 Framework approach LNG and market analysis

Source: BCI (2014)

As shown in figure 1.2, the project is structured in four sections; Status Quo Analysis, LNG

Supply Study, LNG Demand Study and Pace Global’s Dynamic LNG Fuel Model which pro-

vides, based on different scenarios, estimates of LNG adoption for the different end-user


sectors assessed. To build up the dynamic model, the model requires input from the other

sections, while the output from the model calculations is used for analyses within the other

sections.

Status Quo Analysis & Trends

In the first stage of this project, a status quo analysis and trend analysis has been per-

formed. This study has delivered the point of departure for the user markets of inland wa-

terway transport and sea going vessels. Furthermore, the status quo analysis identified the

macro- and microeconomic drivers for the future uptake of LNG beyond 2015. In this re-

gard, the status quo analysis provided direct input for the dynamic model, the demand study

and the supply study. The results from the dynamic model calculations will be compared

with the trend analyses from the status quo study. The results of this section are covered in

the report Status Quo Analysis & Trends.

LNG Supply Study

The LNG Supply reports the sourcing options and development of sourcing options within

the small scale LNG supply chains. Development of the supply chains require investments

in utilities and equipment for storage, loading and discharging of LNG and investments for

transport. The study discusses the stakeholders involved in developing the supply chain

and the drivers and considerations that are involved to develop them. Furthermore, for each

port a dedicated infrastructure and a high-level analysis of the potential investments are

provided. Based on the market potential per port, the supply chain options for the ports in

the Rhine Port Group have been evaluated. The results of this section are covered in the

report LNG Supply study.

LNG Demand Study

The objective of the demand study is to evaluate the future demand for LNG by 2020 and

2035 along the Rhine Corridor as an alternative fuel for power generation, industry, and

transport, and to assess the necessary infrastructure development required to support this

nascent market. The market demand study focuses on the main ports along the Rhine Cor-

ridor, namely: the ports of Rotterdam, Antwerp, Mannheim, Strasbourg, and Basel.The out-

put from the model calculations presents the LNG use per user group and the market poten-

tial for the ports in the Rhine Port Group. The results of this section are covered in this re-

port.


1.3 Objective and scope of the demand study

The objective of this demand study is to evaluate the future demand for LNG by 2020 and

2035 along the Rhine Corridor as a fuel alternative for industry and transport and to assess

the necessary infrastructure development required to support this nascent market in the

specific ports considered in this study.

Research questions

In particular the following questions, as outlined in Table 1.1 will be considered in this re-

port.

Table 1.1 Table Ascribing the Report Sections to the Research Questions

Research Questions Report Sections

What are the user categories in the

Rhine Corridor and where are they

situated?

Chapter 3 will describe the main four end-user categories

considered in this study for each port and the current and

forecasted associated fuel demand by each sector

What are the important drivers for

LNG uptake in the user catego-

ries?

Chapter 4 will describe the key drivers for LNG adoption,

how these differ by end-user category and their impact of

LNG uptake

How are the drivers expected to

develop in time?

Chapter 4 will describe how each of the key drivers are ex-

pected to develop over time and why

How will the demand of LNG de-

velop in time for the end user cat-

egories?

Chapter 5 will outline three LNG adoption scenarios; base

case, low adoption and high adoption.

Chapter 6 will describe for each end-user category and each

port the forecasted LNG demand in 2020 and 2035.

How will the demand for LNG

(bunker) infrastructure in Rhine

Corridor ports develop in time?

Chapter 7 will describe the required LNG infrastructure

needed to support the LNG bunkering and associated stor-

age at each port by 2020 and 2035

What are the opportunities and

hurdles for LNG uptake for Ports?

Chapter 6 will describe the opportunities and hurdles for

LNG uptake associated with each end-user based on the

information gained from the stakeholder meetings.

Geographical scope

The geographical scope for this study is the demand market for LNG. The demand market

in this study is related to the Rhine basin, as the transport corridor stretching from the North

Sea ports in Belgium and the Netherlands to the Rhine port in Switzerland.


Adjacent regions of the Rhine are considered as the main service area of this transport cor-

ridor because of the relation with the transport opportunities of LNG by barge to the ports in

this region. These regions include the Rhine Delta, including the Scheldt and IJssel rivers,

the regions that directly connect the River Rhine and the main affluent and the regions that

are within close range of these rivers.

Currently, LNG transports from the import terminals is mainly by road transport. Conse-

quently, the market area for the import terminals of LNG is much broader. When inland

shipping of LNG as a cargo becomes available, the geographic scope will narrow to inland

shipping transport and locations along the Rhine corridor. With this in mind, the geographic

scope has focused on the inland shipping activities of the affluent rivers. The Mosel and

Albert Canal have been included in the geographic scope, whereas the Dortmund-Ems Ca-

nal and the Main and Main-Danube basin have been excluded.

This market area is scoped based on the long term development of the supply chain for

LNG, including storage and transhipment opportunities in Rhine Ports. As a result of that,

the market area is focused on limited transport distances from the Rhine Ports. The scope

is a combination of the ports of Rotterdam, Antwerp, Mannheim, Strasbourg and Basel and

the surrounding adjacent regions as shown in and outlined in Table 3.5

For the purpose of this study the regional separation between the Lower Rhine and Upper

Rhine is as follow:

Lower Rhine Upper Rhine

Port of Rotterdam Port of Mannheim

Port of Antwerp Port of Strasbourg

Port of Basel

The figure below defines the scope of demand area for the supply structure in this study1.

1 For statistical reasons the definition of the Rhine corridor is defined at the level of NUTS 2.


Figure 1.3 Rhine Corridor Region

Source: BCI Note: NUTS 2: EU Nomenclature of territorial units for statistics for regions

Table 1.2 Table of the Specific Regions Considered Within the Geographic Scope of the Study

Code (NUTS 2) Region Code (NUTS 2) Region

Belgium

Switzerland

BE10 Région de Bruxelles-Capitale / Brussels

Hoofdstedelijk Gewest CH02 Espace Mittelland

BE21 Prov. Antwerpen CH03 Nordwestschweiz

BE22 Prov. Limburg (B) CH04 Zürich

BE23 Prov. Oost-Vlaanderen CH06 Zentralschweiz

BE24 Prov. Vlaams-Brabant Germany

BE25 Prov. West-Vlaanderen DE11 Stuttgart

BE33 Prov. Liège DE12 Karlsruhe

Netherlands DE13 Freiburg

NL21 Overijssel DE14 Tübingen

NL22 Gelderland DE26 Unterfranken

NL23 Flevoland DE71 Darmstadt

NL31 Utrecht DE72 Gießen

NL32 Noord-Holland DEA1 Düsseldorf

NL33 Zuid-Holland DEA2 Köln

NL34 Zeeland DEA3 Münster

NL41 Noord-Brabant DEA5 Arnsberg

NL42 Limburg (NL) DEB1 Koblenz



France

DEB2 Trier

FR42 Alsace DEB3 Rheinhessen-Pfalz

DEC0 Saarland

Source: BCI

The LNG demand evaluation will focus on the following sectors, identified to be the main

potential LNG end-users:

Short-Sea Shipping (SSS)

Inland Waterway Transport (IWT)

Light and Heavy-Duty Trucking (LHDV)

Industry

The LNG adoption was estimated for a Reference case, Low and High scenario (outlined in

chapter 5) to provide a range of the potential LNG demand in each sector in the Rhine cor-

ridor.

1.4 Structure of the demand study

The study initially describes the methodology applied to assess future LNG adoption and

demand. The methodology applied incorporates a description of the key drivers of LNG

adoption and the scenarios analysis process applied to the key drivers. The study then pre-

sents LNG adoption and demand by end-user group for each port which is then summa-

rized by the Lower and Upper Rhine region at the end of each end-user group section. Fi-

nally, the study evaluates the required infrastructure to support the LNG volume forecasted

for each port specified in this study. A separate appendix is available with further detail on

LNG adoption by end-users by ports. A specific outline is provided Table 1.3 below.


Table 1.3 Demand Report Chapters and Objectives

Chapters Objective

2 Methodology Describes the methodology used to assess the forecasted

incumbent fuel consumption and the forecasted LNG de-

mand adoption as well as the data sources used.

3 End-user Categories Describes the end-user categories by ports and the fore-

casted incumbent fuel consumption by 2020 and 2035.

4 Key LNG Adoption Drives Describes the key LNG adoption drivers, their ranking and

impact on LNG adoption volumes

5 LNG Demand Scenarios Describes the three scenarios applied to the data analy-

sis; base case, low adoption, high adoption and the fac-

tors adjusted within the key drivers for each scenario

6 LNG Adoption Presents the forecasted LNG demand by end-user cate-

gory and ports

7 Port Infrastructure Presents the associated infrastructure and storage re-

quired over time in each port to support the volumes fore-

casted


Chapter 2 Methodology

2.1 Incumbent fuel demand

The current and forecasted incumbent fuel demand has to be estimated to gain a perspec-

tive on the incumbent fuel demand in each of the sectors and ports before switching to LNG

is considered. The incumbent fuel demand for the shipping (SSS and IWT) and LHDV sec-

tors were estimated based on the current fleet size and the fuel demand forecasted was

based on GDP growth and trade growth. The SSS fleet size was estimated based on port

calls and the IWT fleet size and LHDV were sourced from previously published data.

Sources are presented in Table 2.1 at the end of this chapter.

For the purpose of this study the industry’s potential LNG adoption is based on the premise

of switching from petroleum fuel to LNG. The rationale for this approach is that industries

which are burning petroleum fuels are either located too far from a gas pipeline or the gas

volumes they would need are too small to justify a connection to the gas grid. The industry

incumbent fuel demand was based on current consumption of petroleum fuels in the indus-

tries identified in the regions outlined in Table 1.2. This study does not consider fuel switch-

ing to LNG from other industry energy sources such as nuclear, coal, renewables and hy-

droelectric as these energy sources are all cheaper than LNG, for different reasons, to the

industry end-user. Other potential off-takers of LNG include residential demand which is not

currently connected to the gas grid and gas operators who experience large swings in gas

demand and could mitigate exposure to demand volatility by having a small peak shaving

facility. These sectors were not part of the scope of this study and are therefore not consid-

ered.

Once the incumbent fuel demand is forecasted it serves as the starting point from which the

LNG adoption is forecasted.

2.2 LNG adoption and the Dynamic Fuel Model

LNG adoption is estimated by using Pace Global’s proprietary Dynamic Fuel Model. The

objective of the dynamic fuel model is to answer key business development questions con-

cerning the future potential market for LNG as a transport fuel and source of energy for in-

dustry and power plants. Figure 2.1 below shows an overview of the approach and key


components of the model. The model evaluates the essential components of market char-

acteristics, market dynamics, and economic principles to address both the demand and

supply side of the market. A scenario analysis is then performed to assess the adoption on

a geographical scope and assess the sensitivity of key variables for low and high LNG de-

mand.

Figure 2.1 Dynamic Fuel Model Overview

Source: Pace Global.

2.3 Description of the Dynamic Fuel Model

The potential for LNG fuel adoption is evaluated through a detailed understanding of LNG-

consumer and LNG-supplier economics. The key to estimating LNG adoption resides in the

economic advantage of switching to LNG for the end-user, presumably from a higher-priced

petroleum-derived fuel. Therefore, fuel-switching in very large part hinges on the price

spread between LNG and diesel or heavy fuel oil, and whether this spread is sufficient to

absorb the incremental costs of installing new LNG fuel consuming equipment and infra-

structure, while still leaving the consumer with a sufficient profit margin to absorb any other

potential costs and risks. While the LNG price may appear outwardly competitive compared

to the incumbent fuel price, the overall balance may not be so favorable once the full costs

of switching (in terms of both capital and operating expenses), combined with delivery and

transport charges, and are considered. Therefore, the LNG fuel price spread (i.e., the price

ceiling and floor) has to be determined in order to accurately evaluate whether LNG remains

competitive compared to incumbent petroleum fuels, once all supply chain and retail costs

are considered.


The LNG price range is estimated by defining the maximum price the LNG end-user would

be willing to pay (also known as the breakeven price) and the minimum LNG price the sup-

plier would be willing to sell the LNG for, as shown below in Figure 2.2.

Figure 2.2 End-User and Supplier Approach.


This price range is also termed the ‘LNG Price Negotiation Band,’ as the end-user will seek

to negotiate a discount to balance his risk in investing in a nascent fuel market and so will

naturally seek the minimum LNG price. On the other hand, the supplier will seek to capital-

ize on the price difference between the two commodities as much as possible. Suppliers are

likely to provide discounts to early adopters or large anchor customers in order to secure a

client base, but as the market matures such discounts are likely to disappear (or moderate)

and the negotiated LNG price is likely to move closer towards the breakeven price. The min-

imum LNG price at which the supplier will be willing to sell LNG includes the commodity

price of the landed LNG taxes, and the supply chain logistics costs required to deliver to the

end-user, as presented in Figure 2.2.

The end-user is faced with an initial profit margin based on the commodity price (tax inclu-

sive) differential and the costs associated with the new equipment. The end-user’s “Total

Cost of Ownership”, or TCO, is calculated based on the LNG equipment incremental capital

and operational expenditures (all vis-à-vis the incumbent fuel), operations efficiencies, ap-

plicable fiscal incentives.


However, there are additional factors beyond the difference in fuel prices to consider, which

could erode or strengthen LNG adoption as presented in Figure 2.3. These include the fol-

lowing:

1 Growth in overall fuel demand as evidenced through increased operating equipment (i.e.

vehicle numbers, ship fleet size, industrial fuel demand).

2 Availability of LNG supply infrastructure without which consumers will not trust that fuel

will be available at any price.

3 National regulatory policy which can either favor with grants, tax breaks, etc. or retard

LNG fuel switching through increased fuel taxes.

4 Technology innovation that can lower conversion and fuel delivery system costs ulti-

mately impacting the TCO, and

5 End-user’s risk perception which addresses the concerns about adapting to a slightly

different mode of operation.

Figure 2.3 Dynamic Fuel Demand Model Core Modules.


These factors are important drivers beyond the TCO assessment. They will influence the

end-user’s decision in terms of the adoption of LNG-fuelled equipment to expand or replace

his existing equipment or fleet. Some of the drivers are captured in the TCO calculation (i.e.

fuel demand growth, which is based on the fleet growth, fuel price spread and policy and

regulation), therefore changes in those drivers will impact the TCO directly.

The other drivers; Owner’s Risk Perception, Infrastructure Readiness and Equipment Inno-

vation are percentage factors (calculated independently) which are added to the TCO result

to refine the final cost of switching facing the end-user and the decision to purchase LNG

fuelled equipment. The decision to purchased LNG fuelled equipment will drive the LNG

demand. This analysis which reflects a ‘decision making process’ is modelled on a year-by-

year basis to capture the evolution of the drivers and how these affect the decision to switch

to LNG fuelled equipment from year to year.

The key drivers have different sensitivities towards the adoption and will impact LNG adop-

tion differently in the different sectors. Chapter 4 discusses in more detail the key drivers,

their ranking and impact on LNG adoption and Chapter 5 discusses the scenarios analysis

based on the variation in the key drivers


Table 2.1 Table of Sources Used in the LNG Demand Report

Data Sources

Sector specific data

SSS Vessel Count Port Calls provided by each individual ports. Ship count derived from port calls based on Lloyd's Intelligence data on North Sea shipping traffic.

IWT Vessel Count SAB, processed by BCI

LHDV count Statbel (2014), Transport statistiek. http://statbel.fgov.be

Centraal Bureau voor de Statistiek (2014), Statline

Ministère de l'écologie, du développement durable et de l'énergie (2014). Comptes des transports en 2013-51e rapport à la Commission - Tome 1

IMFEE (2014), Parc et parcours moyens des véhicules en service en 2012

Swiss Statistics (2014), Website

CE Delft (2011), Instruments to reduce pollutant emissions of the existing inland vessel fleet

Industry Sector Unit Count http://www.bfs.admin.ch/bfs/portal/de/index.html

Eurostat - SBS data by NUTS 2 regions and NACE Rev. 2 (from 2008 onwards) [sbs_r_nuts06_r2]

Industry Fuel Consumption http://www.bfs.admin.ch/bfs/portal/de/index.html

Eurostat - SBS data by NUTS 2 regions and NACE Rev. 2 (from 2008 onwards) [sbs_r_nuts06_r2]

Economic drivers

GDP Growth Eurostat (2014), Gross domestic product (GDP) at current market prices by NUTS 2 regions

Population Growth Eurostat (2014), Gross domestic product (GDP) at current market prices by NUTS 2 regions

Imports Growth IMF Forecast from 2014-2019

Exports Growth IMF Forecast from 2014-2020

Import & Export Growth Pace Calculation, Average of Imports and Exports Growth

Industrial Production Growth Eurostat (2014)

Travel & Tourism Direct Contribution to

GDP Growth Travel % Tourism Economic Impact 2014 - European Union

Change in Unemployment Rate Data derived based on IMF 2014 Economic Outlook Unemployement rate foreacast from 2013-2019.Long-term change average from 2014-2019

Crude Production Growth Derived based on BP Energy outlook 2035 European Oil production forecast

Inflation & Currencies Tradingeconomics.com / interpolation (General inflation / commodity prices) OECD (Exchange rates)

Marine Capex

HFO scrubber DMA (2012), North European LNG Infrastructure Project.A feasibility study for an LNG filling station infrastructure and test of recommendations

MGO SCR/EGR DMA (2012), North European LNG Infrastructure Project.A feasibility study for an LNG filling station infrastructure and test of recommendations

LNG: 2-stroke diesel dual fuel DMA (2012), North European LNG Infrastructure Project.A feasibility study for an LNG filling station infrastructure and test of recommendations

LNG: 4-stroke dual fuel DMA (2012), North European LNG Infrastructure Project.A feasibility study for an LNG filling station infrastructure and test of recommendations

LHDV Capex Pace Global in-house SSLNG Vehicle Database, which is based on analysis from information from the following sources:

Business Case for Compressed Natural Gas in Municipal Fleets, NREL, June 2010

http://www.dieselenginetrader.com/index.cfm

http://www.heavytruckparts.net/search.php?PartID=3000&ManufMake=Cummins&Model=ISX&qsearch=TRUE

The Life-Cycle Cost Advantage of NGVs in Delivery Fleet Applications, NGV America, 7/2007

Affecting Adoption of Natural Gas Fuel in Light- and Heavy-Duty Vehicles, DOE Pacific Northwest National Lab, September 2010

Natural Gas Powered Refuse Trucks, cleanenergyfuels.com, 1/2008

http://www.cat.com/cda/files/2221872/7/Truck_Spec_Training_Booklet.pdf

http://www.cat.com/cda/files/2221872/7/Truck_Spec_Training_Booklet.pdf

An Analysis of the Operational Costs of Trucking: 2011 Update, American Transportation Research Institute,

Energy Based Reporting, Driving Safe, Clean and Efficient mobility solutions, 23.11.2011

http://www.rasoenterprises.com/index.php/alternative-fuels/ngv/78-lng/178-lng-trucks?showall=1, 22 February 2011

http://www.worktruckonline.com/Article/Print/Story/2011/05/Are-Natural-Gas-Vehicles-Right-for-Your-Fleet.aspx

Business Case for Compressed Natural Gas in Municipal Fleets, NREL/TP-7A2-47919, June 2010

GE, February 14, 2013

Daimler, April 9, 2013

Industry Capex http://www.cibo.org/pubs/boiler-cost-review-aug2013.pdf

LNG Delivery costs Transport distances based on google maps

Brent Futures Bloomberg

LNG CIF costs Pace Global in-house LNG supply/demand model based on Argus and EIA data.

VAT

Netherlands http://ec.europa.eu/taxation_customs/resources/documents/taxation/excise_duties/energy

Belgium http://ec.europa.eu/taxation_customs/resources/documents/taxation/excise_duties/energy

Germany http://ec.europa.eu/taxation_customs/resources/documents/taxation/excise_duties/energy

France http://ec.europa.eu/taxation_customs/resources/documents/taxation/excise_duties/energy

Switzerland http://www.kpmg.com/global/en/issuesandinsights/articlespublications/vat-gst-essentials/pages/switzerland.aspx

Excise Tax

Switzerland

Currency Exchange As of Nov 2014, (€/CHF) 0.83

Diesel_ Industry http://www.ezv.admin.ch/zollinfo_firmen/04020/04256/04263/05019/index.html?lang=fr. Downloads/Merkblatt_Verbraucher_Dieseloel.

Diesel _ Road http://www.ezv.admin.ch/zollinfo_firmen/04020/04256/04263/05019/index.html?lang=fr. Downloads/Merkblatt_Verbraucher_Dieseloel.

Diesel _ SSS http://www.ezv.admin.ch/zollinfo_firmen/04020/04256/04263/05019/index.html?lang=fr. Downloads/Merkblatt_Verbraucher_Dieseloel.

EN590 _ IWT http://www.ezv.admin.ch/zollinfo_firmen/04020/04256/04263/05019/index.html?lang=fr. Downloads/Merkblatt_Verbraucher_Dieseloel.

LNG_Industry http://www.ezv.admin.ch/zollinfo_firmen/04020/04256/04265/index.html?lang=fr

LNG_Road http://www.bfe.admin.ch/themen/00486/00488/index.html?lang=fr

LNG_IWT http://www.bfe.admin.ch/themen/00486/00488/index.html?lang=fr

Netherlands, Belgium, Germany and

France

Diesel_ Industry EU Excise Tax Table (Shows Situation as of July 1st 2014)

Diesel _ Road EU Excise Tax Table (Shows Situation as of July 1st 2014)

Diesel _ SSS EU Report: An inventory of measures for internalisingexternal costs in transport

EN590 _ IWT EU Report: An inventory of measures for internalisingexternal costs in transport

LNG_Industry EU Excise Tax Table (Shows Situation as of July 1st 2014

LNG_Road EU Excise Tax Table (Shows Situation as of July 1st 2014

LNG_SSS EU Report: An inventory of measures for internalisingexternal costs in transport

LNG_IWT EU Report: An inventory of measures for internalisingexternal costs in transport


Chapter 3 LNG End-user Categories

3.1 LNG End-user Categories

This chapter presents and describes the LNG end-user categories assessed in this study

and the current and forecasted incumbent fuel demand by port location. These end-user

categories include:

Short-Sea Shipping (SSS)

Inland Waterway Transport (IWT)

Light and Heavy-Duty Vehicles (LHDV)

Industry

Each end-user category is described and reviewed individually in the following sections.

3.2 Northern Europe Seagoing Shipping Vessels

Of the global shipping fleet, approximately 14,000 travel in the Sulfur Emissions Control

Areas (SECA) of Northern Europe (North Sea, Baltic and English Channel), frequently

(Fout! Verwijzingsbron niet gevonden.)2. Of the 14,000 vessels, a large number of ships

will be spending sufficient time in the SECA that they may consider switching to LNG.

The SECA are maritime areas where sulfur emissions restrictions have been imposed by

the International Maritime Organization (IMO) to improve atmospheric emissions from ship-

ping. As of 1 January 2015, the IMO set the sulfur content in maritime fuel in the North Sea,

the English Channel and the Baltic Sea to 0.1 % (MARPOL, Annex I & V). For reference,

the same regulations took effect at the same time in North America impacting vessel opera-

tors in the U.S., Canada, and the Caribbean. There have been discussions of implementing

a similar regulatory arrangement in the Mediterranean, Japan, and Singapore. Further Hong

Kong is also incentivizing switching to lower sulfur fuels, though not with the same regulato-

ry mechanism.

Ship owners operating within the ECA now face three options to comply with the new IMO

requirements.

2 DMA (2012); North European LNG infrastructure project. See also section 2.2.2 in Status Quo Analysis re-

port


1 Continue using heavy fuel oil (HFO), which has a high sulphur content, and install a

scrubber.

2 Switch to fuel with a lower sulphur content, so called Marine Gas Oil (MGO).

3 Switch to LNG.

Switching to MGO requires only little investment costs, but will increase the operating costs

of the ship. Installing a scrubber requires an investment and will increase maintenance

costs, since scrubber produces waste products which need to be handled and disposed of.

The last option is to switch to LNG, which also requires a relatively higher upfront

investment costs, but allows ships to switch to a cheaper fuel type.

Figure 3.1 Emissions Control Area Covering the North Sea and Baltic

Source: ZVT, 2014.

The primary types of short sea vessels operating in Northern European waters include gen-

eral cargo ships (3,060) and bulk carriers (2,050) as shown figure 3.2. In addition, there are

1,546 chemical tankers and just over 1,000 container ships. Additional vessel types include

ferries, various offshore support vessels, and tugboats. These ships spend between 61%

and 100% of their time in the Northern European ECA3.

3 DMA (2012)


Figure 3.2 Type of Ships in the Northern European ECA in 2010 (active vessels)

Source: DMA 2012.

The Danish Maritime Authority (DMA) study presents fuel consumption by different ship

classes within the Northern European ECA. Specific fuel usage was calculated for each

ship class, as well as for different ships sizes. Fout! Verwijzingsbron niet gevonden. pre-

sents the total fuel consumption by main and auxiliary engines in 2010 for the various ship

classes and sizes.

Table 3.1 Total Fuel Use per Year for Ship Types and Size Categories in 2010 (in tonnes x 1,000 per year)

Ship type Total

Fuel Use

Large

Size

Medium

Size

Small

Size

Other

Tanker ex LNG 2,487 103 788 1,572 24

LNG Ranker 38 0 38 0 0

Bulker & General Cargo 2,343 19 404 1,675 245

Container & Ro-Ro 5,254 460 1,744 1,219 1831

Passenger Ship 416 0 0 0 416

Miscellaneous 902 0 0 0 902

Total in ECA – Northern

Europe 11,440 582 2,974 4,466 3418

Source: DMA 2012. Note: Specific DWT per size categories is not defined

This study focuses on Short-Sea Shipping vessels (SSS) and Inland Waterway Transport

vessels (IWT). As the terms imply, short sea ship generally ply the waters along the North

Sea, Baltic Sea, and English Channel carrying cargo and passengers. Inland waterway

vessels operate solely along the river systems. While short sea vessels may consume

heavy marine fuels, marine distillates, or blends of the two; inland waterway vessels operate

exclusively in diesel.

These two categories of ships; SSS and IWT, account for more than 75% of the shipping

traffic in the study area, as shown below in figure 3.3 which shows the percentage of each

ship category based on the number of SSS in the Rhine Corridor. The percentage of ves-

40%

22% 0.4%

14%

18%

5%

Bulker & General Cargo Tanker ex LNGLNG tanker Container & Roro


sels of each type operating in the region were derived from the number of ports calls by

vessel class received from each port. The derivation was based on Lloyds Intelligence ship-

ping traffic port call data in the North Sea, which was applied to determine a port call per

ship ratio by vessel class. For reference, all IWT vessels consume EN-590 diesel. It is un-

clear what portion of the short sea and deep sea fleets consume which fuel, though be-

cause of fuel expense and the size of the engines required, in general most deep sea and

short sea vessels have traditionally consumed heavy fuel oil or Marine Gasoil. However, to

meet the new IMO-ECA regulations, most have switched to MGO for sailing within the ECA.

Deep-sea vessels, which include crude oil and chemical tankers, large container ships, liq-

uid and dry bulk ships which bunker at the ports of Rotterdam and Antwerp are not consid-

ered in this study due to the relative limited time they spend in the ECA. Because of their

limited time in the ECA and exposure to the ECA IMO emissions restrictions, these ships do

not face the compliance requirements and necessity to switch fuels, or add a scrubber, in

the near future until the IMO restrictions become global in 2020 or 20254.

Figure 3.3 Shipping Vessel Types based on Ports Calls, in the Rhine Corridor (for all five ports) in 2014.

Source:Rhine Ports, Pace Global.

3.3 Short-Sea Shipping Vessels

Short-Sea Shipping (SSS) is limited to North Sea-facing ports of Rotterdam and Antwerp.

The ports of Mannheim, Strasbourg, and Basel do not harbor any SSS vessels as these

ports are located too far up the Rhine for sea-going vessels. SSS vessels in the ports of

4 IMO (2014). http://www.imo.org/OurWork/Environment/SpecialAreasUnderMARPOL

61%

22%

17%

IWT Deep sea Short sea


Rotterdam and Antwerp represent 20% and 12% respectively of the total number of vessels

in those ports, as shown below in figure 3.4.

Figure 3.4 Percentage Vessels Types in the Ports of Rotterdam and Antwerp based on Ports Calls in 2014.

Source: Rhine ports, Pace Global.

For the purposes of this study, the short-sea vessels within the ECA are assumed to fuel

along the North Sea, Baltic Sea, or English Channel. Vessels like offshore supply boats and

tugboats will operate entirely within the ECA, while others carrying cargo or passengers

may operate entirely with the ECA or could have routes to the Atlantic coast of France,

Spain, or Ireland and to the Mediterranean. Since marine fuel prices are typically lower with-

in the ECA than along the coast, because of large bunker volumes and refineries, and the

fact that these vessels carry sufficient fuel for round trip journeys, fueling typically takes

place within the ECA.

Vessels operating within the ECAs must comply with Annex VI of the MARPOL convention

on SOx, which stipulates a maximum sulfur emissions restriction of 1% as of 2010, a maxi-

mum sulfur emissions restriction of 1% which will be subsequently reduced to below 0.1%

from 1st January 2015. These ships are therefore good candidates to switch over to LNG for

propulsion fuel.

For the purpose of this study, the SSS vessels were further segmented into additional cate-

gories, as outlined in figure 3.5 below. The majority of these SSS vessels are ‘container

ships’, ‘container’ ships and ‘general cargo’ which together represent almost 80% of the

SSS vessels in the ports of Rotterdam and Antwerp.

9%

71%

20%

Rotterdam

Deep sea

IWT

Short sea

7%

81%

12%

Antwerp

Deep sea

IWT

Short sea


Figure 3.5 SSS Vessels Segmentation Based on the Numbers of Port Calls (Ports of Rotterdam and Antwerp)

2014.

Rotterdam Antwerp

Percentage total port calls between the two ports 67% 33%

Source: Rhine ports and Pace Global.

These two categories are further segmented into the following subclasses, as shown below

in Fout! Verwijzingsbron niet gevonden..

Table 3.2 Vessel Sub-Classes for General Cargo and Container Ships.

Vessel Class Size, Deadweight Tonnage

General cargo 5,000–9,999 dwt

0–4,999 dwt

5,000–9,999 dwt, 100+TEU

0–4,999 dwt, 100+TEU

Container 2,000–2,999 TEU

1,000–1,999 TEU

0–999TEU

Source: Pace Global. Note: TEU: Twenty Foot Equivalent Unit.

23%

26%

9%

0.5%

32%

5%

1% Rotterdam

26%

30%

6%

0.5%

30%

4%0.3%

Antwerp General Cargo

Container

Ro-Ro

Bulk

Oil & Chem Tank.

Passenger

Offshore/

Service/ Tugs


shows the current estimate of SSS vessels at the ports of Rotterdam and Antwerp. These

estimates were derived from the number of port calls provided by the Rhine ports combined

with Lloyd’s Register data on the number of port calls per ship in the ECA.


Figure 3.6 Number of SSS Vessels at the Ports of Rotterdam and Antwerp in 2014

Source: Rhine ports, Pace Global. These were derived from the number of ports calls by vessel class received

from each port. The derivation was based on data from Lloyds Intelligence Data on shipping traffic in

the North Sea, which allowed us to gain a ratio of port calls per ship by vessel class

3.3.1 Short-Sea Shipping Forecast in the Study Market

Potential future growth in short-sea shipping in the study area will depend on a number of

factors. Firstly, demand for short-sea shipping will remain dependent on the expansion of

international trade and the demand for goods. Important underlying factors for this devel-

opment include changes in production and consumption, population trends, and overall so-

cio-economic development.

There are two additional factors that are of specific relevance to demand growth in this sec-

tor:

Modal Split: The ability of short-sea shipping to compete with other modes of transport

such as road or rail transport; and

Trans-Shipments in the Study Area: There are expectations that due to economies of

scale, trans-shipments at the larger deep-sea ports will increase. A higher concentration

of deep sea vessels towards hubs will have a positive impact on short sea shipping (in-

crease of activity between the larger deep sea ports and the smaller ports in Europe)

This increase will, however, be dependent on ship-owner strategy and competition

among ports in Northwestern Europe.

No. of vessels General Cargo Chemical/Product tanker Container Offshore/ Service/ Tugs Ro-Ro Bulk

Rotterdam 868 415 172 119 29 9

Antwerp 495 249 99 18 9 4


Fout! Verwijzingsbron niet gevonden.7 shows the forecasted growth in the number of

SS vessels at the ports of Rotterdam and Antwerp in 2020 and 2035, and the associated

incumbent bunkering fuel demand. The growth forecast is based on forecasted GDP and

trade growth specific to the Netherlands and Belgium. As such these numbers differ from

the projections reported in the Status Quo which relate to broader European fleets. The

forecast shows a reference case projection which will be used as the basis for the LNG

adoption and LNG adoption scenario analysis. The bunker fuel demand is based on a com-

bination of the port calls and the vessel numbers.

It is from this growth in fleet numbers and the retirement of older vessels that new LNG-

fuelled vessels will capture market share (LNG adoption is discussed in Chapter 6). The

age of vessels 5depends on which vessel class the ships belong to. For the purpose of this

study, the typical age specific to each vessel class was used to calculate the retirement

age6. Further details on the approach are outlined in the Chapter 4.

Figure 3.7 Growth in the number of SSS Vessels and Associated Incumbent Bunker Fuel Demand by 2020

and 2035 (Reference case).

Source: Rhine ports, IMF World Economic Outlook 2014, Pace Global.

5 The age of a vessel is the number of years the vessel has been operating since it was launched.

6 The retirement age of a vessel is the age at which a vessel is taken out of operations. This can range from

15-30 years depending of vessel classes


3.4 Inland Waterway Transport

Inland Waterway Transport (IWT) is an important transport mode along the Rhine corridor.

In 2012, the total volume of goods transported was nearly 700 million tonnes.7 Inland Wa-

terway Transport is the primary mode of transport for the supply of iron ore to steel indus-

tries in Germany and for the supply of coal for the energy sector. Important other product

groups in terms of cargo volume include liquid fuels and petrochemical products, chemical

products, and building materials. Containerised cargo accounts for 9% of the total volume.

Fout! Verwijzingsbron niet gevonden.8 below presents the volume of products transport-

ed by IWT in the countries located along the Rhine corridor.

Figure 3.8 Transport of Product Groups by IWT in 2012

Source: CCNR, 2013.

The cargo-carrying fleet on the Rhine (11,546 ships) consists mainly of motor vessels and

convoys. Motor vessels (general cargo vessels and tank vessels) account for more than

70% of the fleet (8,372 ships). The convoys consist of a pusher and barges for dry bulk and

liquid bulk. The convoys, which include push-freight barges and push-tank barges, account

for almost 25% of this fleet (2,867 ships). IWT vessels for freight transport are categorised

according to their CEMT-classes. (For a more thorough description of the IWT fleet in the

Rhine corridor, please refer to the Status Quo Analysis Report, Chapter 2).

7 CCNR (2013), Market Observations 2013.

21%

18%

15%

14%

11%

9%

8%

4%

Ores and metal residues Solid mineral fuels (coal)

Petroleum and petrochemical products Crude minerals, construction

Chemical products Containerised goods

Agricultural products Food products and feed


9 presents the current segmentation of IWT vessels in the study area, showing that smaller

motor vessels (CEMT III) and medium large push barges (CEMT Va) comprise the two

largest categories in the IWT fleet.

Figure 3.9 Sub-Class Segmentation of IWT Vessels on the Rhine Corridor

Source: BCI 2014, (using SAB, IVR, and NEA), Pace Global.

Vessel segmentation at each port in the study area is presented in the following figures:

Fout! Verwijzingsbron niet gevonden.0, Fout! Verwijzingsbron niet gevonden. and

11%

11%

25%

15%

11%

1%

7%

18%

1%

Motorvessel CEMT I Motorvessel CEMT II Motorvessel CEMT III

Motorvessel CEMT IV Motorvessel CEMT Va Motorvessel CEMT Via

Push Barges IV Push Barges Va Push BargesVb +


2.

Figure 3.10 Number of Push Barges and Motor vessels by Port in the Rhine Corridor


Figure 3.11 Number of Motor Vessel by Sub-Classes at Major Rhine Ports in 2014 (unique vessels)

No. of Vessels Rotterdam Antwerp Mannheim Strasbourg Basel

Push Barges 1,214 267 830 548 6

Motorvessels 4,520 1,311 1,439 1,008 65




Motorvessel CEMT I 223 312 29 620 2

Motorvessel CEMT II 825 215 85 155 2

Motorvessel CEMT III 1,467 454 687 191 4

Motorvessel CEMT IV 940 198 443 35 24

Motorvessel CEMT Va 906 117 193 7 33

Motorvessel CEMT Via 159 15 2 0 0


Figure 3.12 Number of Push-Barge by Sub-Classes at Major Rhine Ports in 2014 (unique vessels)


The total fuel usage of IWT vessels depends on ship characteristics and the operational

profile of the ship. Important ship characteristics include the size of the vessel, the fuel effi-

ciency of the engine, the efficiency of propulsion, and the water resistance of the ship. Im-

portant factors influencing the operational profile include the fairway characteristics (such as

sailing on canals or rivers and water depth), the average payload of the vessel, and the op-

erational profile model of the vessel (i.e., the maximum hours per day the vessel is allowed

to operate). (Please refer to the Status Quo Analysis Report, chapter 2, for a more thorough

description).

The following table presents an overview of the total fuel usage of IWT ships in the Rhine

corridor segregated by operational modes. The average annual fuel use is expected to be

5.5 – 8.5 million tonnes8.

8 See section 2.1.4 of the Status quo analysis report for more details


Push Barges IV 335 51 278 137 6

Push Barges Va 846 196 552 394 0

Push BargesVb + 33 20 0 17 0


Table 3.3 IWT Annual Fuel Usage Based on Three Exploitation Modes (tonnes x 1,000)

IWT Vessels

No. of Ves-

sels

(2012)

Specific Fuel

Use (Li-

tres/Hour)

Day-trip

Basis (3,360

Hours)

Semi-

Continuous

(4,752 Hours)

Full Continu-

ous (8,064

Hours)

Motor Vessels

I 1,051 37 109 154 261

II 1,168 54 177 251 426

III 3,025 73 624 882 1,497

IVa 1,779 140 698 987 1,675

Va 1,202 241 814 1,151 1,953

VIa 146 327 134 190 322

Push Barges

IVa 811 124 283 400 678

Va 1,975 197 1,092 1,545 2,622

Vb+ 81 245 56 79 134

Total 11,238 123* 3,987 5,639 9,569

Source: BCI 2014, (using SAB, IVR, and NEA). *Average fuel use for all categories.

3.4.1 Inland Waterway Shipping Forecast in the Study Market

As with short-sea shipping, demand growth for IWT will depend on certain macro-economic

drivers such as international and regional growth in production and trade, population

changes, and overall socio-economic development. Specific factors affecting the future

growth of IWT in the Rhine corridor includes growth of the steel industry (coal and iron ore)

and power demand from coal generation, as well as the uptake of alternative fuels for road

transport (e.g. mineral oil).

Short term prognoses were reported in a study for the Dutch Ministry of Transport (STC

Nestra 2015)9. Based on the CCNR market observatory report of 2014, this study concludes

that in 2015 a slow recovery of the inland shipping market in the Rhine corridor will occur.

Factors influencing the modal split between road, rail, and IWT, as presented in Figure 3.13,

are also important in segregating potential demand growth. This modal split will depend on

a mix of transport price, fuel supply reliability, and lead time. The required service level for

each of these elements will differ for different types of goods. For instance, lead time is

much more important when transporting high-value goods such as container goods than for

low-value bulk goods such as coal and iron ore. The total modal split for the relevant coun-

tries is presented below.

9 Versterking van de marktstructuur in de binnenvaart, March 2015. Prognoses based on CCNR Market ob-

servation report N°18, The Inland Navigation Market in 2013 and perspective for 2014/2015


Figure 3.13 Modal Split of Freight Transport in the Countries Bordering the Rhine

Source: Eurostat, TNO.


14 displays the forecasted growth in the number of IWT vessels and consumed fuel at each

of the study ports in 2020 and 2035.

The growth forecast is based on forecasted GDP and trade growth specific to each study

country. The forecast is driven by the assumption that an increase in trade will require

greater numbers of vessels to transport goods. As such these numbers differ from the pro-

jections reported in the Status Quo which relate to broader European fleets. The forecast

shows a base case projection which will be used as the basis for the LNG demand calcula-

tion and LNG adoption scenario analysis.

It is this growth in fleet numbers and the retirement of older vessels, that initially drives fuel

demand. New LNG-fuelled vessels will capture market share based on favorable economics

to switch from the incumbent fuel to LNG (LNG adoption is discussed in Chapter 6). Be-

cause it is impossible to gauge where ships will bunker for fuel, the bunker fuel demand is

based on the total number of IWT ships visiting the five study ports specific to each port.

The age of vessels depends on which vessel class the ships belong to. For the purpose of

this study, the typical age specific to each vessel class was used to calculate the retirement

age. Further details on the approach are outlined in the Chapter 4.


Figure 3.14 Growth in the Bunker Fuel Demand by 2020 and 2035 and total number of ships (table below)

(Reference case).

Source: IMF World Economic Outlook 2014, Pace Global.

3.5 Light and Heavy Duty Vehicles

In general, LNG fuel is best suited for road vehicles with a high mileage and therefore high

fuel consumption, which may accumulate sufficient fuel savings to offset the incremental

cost of an LNG fueled vehicle. Thus passenger cars, most small vans/utility vehicles, and

many city buses with low mileage are unlikely to adopt LNG fuel. Thus for the purpose of

this study, only road vehicles with a high fuel consumption profile were considered. The

analysis focuses on:

Light Duty Vehicles (vans): mainly used for urban and service delivery.

Bunker fuel demand (thousand tonnes) 2015 2020 2035 Port Call Ratio

Rotterdam 2,591 2,766 3,278 47%

Antwerp 2,264 2,417 2,865 41%

Mannheim 251 268 317 5%

Strasbourg 200 214 253 4%

Basel 250 268 320 3%

2015 2020 2035

Total SSS number of vessels 11,344 12,095 14,327


Buses and Coaches10: used for public and private passenger transport.

Heavy Duty Vehicles (ridged and articulated trucks): used for regional delivery and long

haul transport.

The above list of LHDV vehicles will include some percentage of vehicles, which based on

their small mileage, will be more likely to convert to CNG. This is taken into account in the

model with the following assumption that Light Duty Vans represent 70% CNG and 30%

LNG. For Buses and Coaches will assume a 40% CNG and 60% LNG and for Heavy Duty

Vehicles we assumed a 75% LNG and 25% CNG. Only the LNG adopters are considered in

this study. Fout! Verwijzingsbron niet gevonden. below presents an overview of the total

nergy usage per market segment and the number of vehicles that are used in each class.

Figure 3.15 Vehicles Energy Consumption and Numbers by Category in Europe.

Source: TNO (2014), Global potential of small-scale LNG distribution.

10

Coach is a bus used for long distance travel


summarizes the total fleet of light duty and heavy duty road vehicles in the Rhine bordering

countries. These vehicles are expected to mostly fuel within their respective countries,

though many will travel to and ultimately fuel in other countries. By the same token, vehicles

from countries with large international fleets like Poland and Romania, will travel to and fuel

in the subject countries. Specific data about where vehicles fuel is not available.


Table 3.4 Number of Light and Heavy Duty Vehicles at the Country Level.

Belgium France Germany Netherlands Switzerland

Van 652,000 5,911,400 2,045,436 815,169 320,000

Bus 16,000 90,900 76,000 9,922 5,500

Heavy duty rigid truck 100,266 279,908 533,131 65,046 41,000

Heavy duty articulated

trucks 44,693 279,908 1,380,500 71,063 9,400

Source TNO (2014), CBS (2014), Statbel (2014), Kraftfahrt-Bundesamt (2014), INSEE (2014), SFSO (2014).

The number of vehicles pertinent to the study region and each port specifically was based

on the GDP ratio of the NUTS region bordering the Rhine at each port location to the corre-

sponding overall country. The usage of the vehicle types differ significantly:

Vans are used both as a transport means for the service economy, for the transporta-

tion of persons (i.e. in construction or as taxi) and for freight delivery (especially the par-

cel market and retail) (CBS 2012). Most of these vehicles are fuelled with diesel. The

typical distance a day is limited, and the vehicles are used in a ‘back-to-base’ usage.

For buses two markets can be distinguished: public transport market and private

coaches. Typically, public transport busses have a small geographical area in which

they operate, make many stops, have a lower rated engine power, and a (relative) low

average velocity (TNO, CE Delft & ECN, 2013). This leads to a relatively high fuel con-

sumption. Private coaches are generally used for long(er) distance transport in a relative

wide geographic area. No clear statistics are available on the distinction of the busses

between public transport and private coaches on a European market level. As an indica-

tion: figures by KNV show that about 45% of the Dutch busses are private coaches.

Heavy duty rigid trucks Two-axle, rigid trucks are commonly used in urban and re-

gional distribution. Typical weight of such vehicles is 12 to 25 ton maximal gross vehicle

weight (TNO, CE Delft & ECN, 2013). Heavier rigid trucks (up to 50 tons maximum

gross weight) are typically used for either long distance transport (just as articulated

trucks below) or transport of bulk goods over shorter distances. . No clear statistics are

available on an (Northwest) European level. Research by Ecorys for the Dutch market

that 70% of trucks are of relative small size and 30% can be considered as large trucks

(Ecorys 2010).

Heavy duty articulated trucks are typically used for transport over larger distances. A

typical tractor-trailer combination weighs 30.5 tons, which is not a full load.

The maximal gross vehicle weight is 40-50 tons.


Figure 3.16 2014 Estimate of LHDV in the Regions Associated with Each Port.

Source: TNO, Pace Global.

To estimate the average fuel consumption per vehicle class, the following assumptions,

presented in

Vehicle Class Rotterdam Antwerp Strasbourg Mannheim Basel

Van 723,568 498,367 403,865 204,544 96,000

Bus 8,807 12,230 6,210 7,600 1,650

Heavy Duty Rigid Trucks (<32t) 57,737 76,640 19,123 53,313 12,300

Heavy Duty Articulated Trucks (>32t) 63,078 34,162 19,123 138,050 2,820


17, were made on the average number of kilometers undertaken per annum within the

Rhine corridor by each vehicle class. These estimates were based on the overall average

kilometers driven per vehicle class (TNO 2014) and statistics on kilometers driven inside

and outside of the area. This share was based on detailed statistics for Dutch trucks (kilo-

meters driven in the Netherlands and kilometers driven abroad) and an estimation based on

the geographical distribution of transport from the EtisPlus11 model.

11

ETISplus is a European Transport policy Information System, combining data, analytical modelling with maps (GIS), it includes data on passenger and freight flows for the years 2005 and 2010. The database was developed under the FP7 program of the European Commission.


Figure 3.17 Average km per Annum within the Rhine Corridor by Vehicle Class

Source: TNO (2014), Truck van de toekomst. CBS 2014, ETISplus model

3.5.1 Light and Heavy Duty Vehicle Forecast in the Study Market

The growth of the light and heavy duty vehicle fleet, and fuel demand mainly depend on

macro-economic parameters such as regional economic growth and socio-economic devel-

opment. However, within the different sub segment specific drivers can be distinguished:

For vans:

‒ Development of the service economy and of construction.

‒ Developments in city logistics (delivery of webshop products, impact of 3D printing).

For busses and coaches:

‒ Development of modal split of passenger transport, both for public transport on short

distances (competition with car and slow transport) and private long distance

transport (competition with car, train and airlines).

For Heavy duty vehicles:

‒ Developments in regional and city distribution.

For the purpose of this study the growth in LHDV is forecasted based on the GDP forecasts

and trade growths specific to each study country.

Expected numbers of LHDV will reach approximately 3 million by 2020 and almost 4 million

by 2035, 70% of which will be vans. The growth forecast is based on forecasted GDP and

trade growth specific to each study country. The forecast is driven by the assumption that

an increase in trade will require greater numbers of trucks and vans to transport goods. The

forecast shows a base case projection which will be used as the basis for the LNG demand

calculation and LNG adoption scenario analysis.

Fout! Verwijzingsbron niet gevonden.18 shows that the growth is balance between the

ower Rhine (Rotterdam and Antwerp) and the Upper Rhine (Strasbourg, Mannheim and

Basel). For the whole of the study region, the Compounded Annual Growth Rate (CAGR)

per vehicle class ranges from 1-2% per year. Of this overall market, LNG adoption will be

considered by the new vehicles in the market and those vehicles which are replacing retired

0 10,000 20,000 30,000 40,000 50,000 60,000 70,000

Heavy Duty Articulated Trucks (>32t)

Bus

Heavy Duty Rigid Truck (<32t)

Van

Average km per annum


one having come to the end of their life cycle. The same methodology as applied to the

growth in vessel numbers is used and is further outlined in Chapter 4.

Figure 3.18 Growth in LHDV and Fuel Demand in the Rhine Corridor by 2020 and 2035 (Reference case).

Source: TNO, IMF World Economic Outlook 2014, Pace Global.

3.6 Industry

The purpose of this study is to consider the potential of LNG as an alternative cheaper and

green fuel than current incumbent fuels. In the industry sector, this only applies to petroleum

fuels, since the following alternatives, which include coal, nuclear, electricity and renewa-

bles are either cheaper or greener or both than LNG12. Biodiesel is not considered in this

study as it is not perceived yet as a viable economic alternative based on current technolo-

gy, scalability and funding constraints. Competition with pipeline gas is neither considered in

this study as pipeline gas is cheaper than LNG. It is cheaper because the baseline com-

modity is cheaper than LNG as it is traded in a more liquid market (i.e. NBP13, TTF14) it does

not bear liquefaction costs and pipeline transportation costs are cheaper than any other

mode of transporting gas.

12

http://www.renewableenergyworld.com. Clean Energy and the Challenge of Low-Cost Natural Gas 13

NBP: National Balancing Point is a virtual trading location for the sale and purchase and exchange of UK

natural gas. 14

TTF: Title Transfer Facility, more commonly known as TTF, is a virtual trading point for natural gas in the

Netherlands

http://www.renewableenergyworld.com/


There is a strong opportunity for LNG to replace petroleum fuels used to power industry

processes. Petroleum fuels (heavy and light fuel oil, diesel, Liquid Petroleum Gas) are typi-

cally used in industry in locations with no access to pipeline gas or to power auxiliary

equipment. This study will consider both as data availability is not sufficiently granular to

differentiate between industries which are not linked to the national gas grid and those

which are but consume petroleum fuels for auxiliary requirements.

Fout! Verwijzingsbron niet gevonden. presents an overview of the total energy con-

sumed by industry in the countries bordering the Rhine Area. On average, less than 3% of

the total energy consumption by industry is petroleum oil. Other energies consumed include

electricity, coal, biomass etc., however, these were not the focus of this study since con-

sumed electricity cannot be converted to LNG and conversion of solid fueled steam and

heat generating equipment like boilers to liquid fuel is generally uneconomic. The share of

total consumption is the highest in the Switzerland (around 17%) and lowest in the Nether-

lands (0.4%).

Figure 3.19 Total Energy Consumption by Industry in the Study Countries in 2013 (Petajoules).

Source: Eurostat, Pace Global.

There are three major industries that consume petroleum fuels in the study area:

Industry Consumption (PJ) Total Energy Petroleum

Germany 2,543 72

France 1,272 43

Netherlands 569 5

Belgium 438 8

Switzerland 240 14


The petrochemical industry. The share of this industry is especially large in the Nether-

lands (95% of total oil powered demand) and in France (60% of total demand)15. The

relevance of LNG as a substitute power source may be less relevant in this sector as oil

is both a power source and a process input material.

Manufacture of other non-metallic mineral products. This mainly involves production of

building materials such as glass and cement.

Manufacturing of basic metal products.

Petroleum fuels consumed by industry along the Rhine corridor are estimated based on the

volumes consumed by industry at a national level and the number of industrial facilities in

the Rhine corridor regions associated with each of the study countries, as outlined in Table

3.5 3.5. Based on the petroleum fuels consumed by industry segment at a national

level and the number of facilities by industry segment at a national level, a ratio was derived

and applied to the number of facilities at a regional level to gain petroleum volumes con-

sumed by industry segment at a regional level.

As presented in Fout! Verwijzingsbron niet gevonden.0, the majority of the Rhine corridor

s surrounded by urban regions with a slightly higher urban density in the Lower Rhine than

in the Upper Rhine region.

Figure 3.20 Urban Rural Typology of NUTS 3 Regions.

Source: Eurostat, BCI, Pace Global.

15

http://ec.europa.eu/eurostat/data/database?node_code=tsdpc320


Table 3.5 Table of the Specific Regions Considered Within the Geographic Scope of the Study.


Belgium

Switzerland


Hoofdstedelijk Gewest CH02 Espace Mittelland




BE24 Prov. Vlaams-Brabant Germany



Netherlands DE13 Freiburg










France

DEB2 Trier

FR42 Alsace DEB3 Rheinhessen-Pfalz

DEC0 Saarland

Source: BCI

Figure 3.21 shows that 70% of petroleum fuel consumption (in volumes) by industry along

the Rhine corridor consists of chemical/ petrochemical and food/tobacco, metal products

and other industries.


Figure 3.21 Petroleum Fuel Consumption (volumes) by Type of Industry along the Rhine Corridor in 2014.

Source: Eurostat, TNO, Pace Global.

Figure 3.22 shows the petroleum fuel consumption by industries and aggregated by regions

associated to the corresponding port of that country, based on Table 3.5 .

The industries located in the Mannheim region offer the largest petroleum fuel consumption

among the Rhine ports, mainly driven by the chemical and petrochemical industries.


Figure 3.22 Petroleum Fuel Consumption by the Regional Areas along the Rhine Corridor in 2014 (MMBtu).

Source: Eurostat, TNO, Pace Global.

3.6.1 Industry Forecast in the Study Market

As described earlier on, petroleum fuels consumed by industry along the Rhine corridor are

estimated based on the volumes consumed by industry at a national level and the number

of industrial facilities in the Rhine corridor regions associated with each of the study coun-

tries, as outlined in Table 3.5 . Based on the petroleum fuels consumed by industry segment

at a national level and the number of facilities by industry segment at a national level, a ratio

was derived and applied to the number of facilities at a regional level to gain petroleum vol-

umes consumed by industry segment at a regional level.

Petroleum fuel consumption in industry will be driven by a variety of factors; different indus-

tries will have different fuel consumption drivers, furthermore petroleum fueled processes

are different by industry and also have different consumption drivers. It is therefore difficult

to capture the variety of petroleum specific consumption drivers specific to each industry.

Therefore for the purpose of this study, we chose to use the GDP growth specific to each

country as a proxy for industry growth to forecast petroleum fuel consumption in the regions

adjacent to the study ports.

Sector Mannheim Antwerp Rotterdam Basel Strasbourg

Iron and Steel / non-ferrous and Mining 907,815 325,616 435,996 22,261 267,943

Chemical and Petrochemical 7,510,868 1,592,929 1,601,811 411,629 378,890

Food and Tobacco 2,833,732 984,239 407,561 508,785 568,561

Paper, Pulp and Print 257,196 241,074 28,435 188,380 130,840

Non-Metallic Minerals 2,228,848 857,980 1,052,077 394,976 628,692

Metal products, machinery 4,351,245 702,825 398,083 932,195 99,031

Textile and Leather 62,922 74,862 0 120,791 10,385

Other industries 2,289,262 1,154,134 1,222,684 1,030,619 164,076

Diesel & Fuel Oil consumption - Local Level, MMBtu


The impact of the increase use of renewables; industry gradually switching away from

petroleum fuels to renewables.

Increase efficiency of industry processes which over time are reducing the consump-

tion of petroleum fuels.

The impact of those two factors will be different by industry, country and region and those

factors will reduce the historical correlation between industry and GDP. Unfortunately, data

on the replacement of petroleum fuels by renewables and petroleum fuel process improve-

ment by industry and region was not available for this study. We considered that any at-

tempts to model such detail without robust information would introduce entirely subjective

error and hence those impacts, while understood, are not taken into consideration in the

modelling. Therefore, the increase in petroleum fuel shown in the graphic is a reflection of

the gradual increase of GDP, in a paradigm with no switching to renewables and increase in

efficiency.


shows the forecasted petroleum fuel consumption in the Rhine corridor study regions. It

shows a growth to 44 million MMBtu by 2020 and 51 million MMBtu by 2035. This base

case projection will be used as the basis for the LNG demand calculation and LNG adoption

scenario analysis presented in Chapter 6.

The forecasts shows the demand growth of petroleum fuel consumption based on GDP

growth, however, it does not take into consideration the following two points:

The impact of the increase use of renewables; industry gradually switching away

from petroleum fuels to renewables.

Increase efficiency of industry processes which over time are reducing the consump-

tion of petroleum fuels.

The impact of those two factors will be different by industry, country and region and those

factors will reduce the historical correlation between industry and GDP. Unfortunately, data

on the replacement of petroleum fuels by renewables and petroleum fuel process improve-

ment by industry and region was not available for this study. We considered that any at-

tempts to model such detail without robust information would introduce entirely subjective

error and hence those impacts, while understood, are not taken into consideration in the

modelling. Therefore, the increase in petroleum fuel shown in the graphic is a reflection of

the gradual increase of GDP, in a paradigm with no switching to renewables and increase in

efficiency.


Figure 3.23 Industry Petroleum Fuels Consumption in the Study Area by 2020 and 2035 (Reference case).

Source: IMF World Economic Outlook 2014, TNO, Pace Global.

Petroleum Fuel Consumption (MMBtu) 2015 2020 2035

Mannheim 20,460,876 21,718,348 24,113,978

Strasbourg 2,286,641 2,487,727 3,251,019

Rotterdam 4,891,930 5,244,088 6,179,272

Antwerp 9,753,102 10,506,861 13,136,014

Basel 3,652,953 3,877,454 4,305,154


Chapter 4 LNG Demand Key Drivers

4.1 Overview of Key Drivers

There are broadly two types of LNG adoption drivers; those that drive the ultimate volumes

of LNG fuel adopted and those that impact the timing of LNG fuel adoption.

Energy prices, or more specifically the difference between fuel prices also known as

“spreads” significantly impact switching economics and therefore impact LNG volumes. In-

creases in the amount of fuel consuming equipment (i.e. vessel and truck fleets, industry

growth, etc.), discussed as “fleet growth” also impact the ultimate volume of LNG sales.

Other drivers more directly impact the timing of adoption. The timing of national policy initia-

tives (i.e. grants, taxes, etc.), the readiness of LNG infrastructure to reliably provide LNG

fuel to customers, the timing of new equipment technologies and cost reductions, and the

consumer’s perception of risk all impact adoption can either push/pull the adoption curve as

shown in Fout! Verwijzingsbron niet gevonden.1.

Figure 4.1 LNG Adoption Curve



4.2 Key LNG Adoption Drivers

The following section reviews each of the key LNG adoption drivers and how they impact

the adoption of LNG volumes and the timing of such adoption. As discussed above, table

4.1 depicts the LNG adoption drivers, the key input variables, the associated dependent

variable, and their linkage to the LNG fuel adoption calculations. As evidenced below each

driver impacts the calculation differently and these impacts further vary by end-user sector.

For example, the sensitivity analysis results, which are discussed later in this Chapter indi-

cate a different priority of the key drivers. The main key driver for each sector, is displayed

below:

Vehicle – Policy and Infrastructure Readiness.

IWT – Fuel Prices and Infrastructure Readiness.

SSS – Fuel Prices and Fleet Growth.

Industry – Fleet Growth and Infrastructure Readiness.

Table 4.1 Key Drivers Inputs and Factors, in no particular order.


4.2.1 Energy Price

One of the main drivers is the energy price and more specifically the price spread between

Brent crude derived petroleum products like diesel and heavy fuel, and LNG. This price

spread drives the overarching economic savings that can be gained by switching from pe-

troleum derived fuels to LNG. For a consumer to switch to LNG, the fuel cost savings must

be sufficient to pay for the additional fuel delivery cost to the customer, fuel taxation, and


the cost of equipment conversion. Additional operating costs are not taken into account, as

Pace Global considers that the LNG related operating costs will simply replace the Incum-

bent fuel operating costs. It is true however, that there will be an element of training to han-

dle the new fuel, but those costs are considered insignificant in relation to the other costs.

Furthermore the investment must also provide a reasonable payback or investment return

to warrant taking the risk of conversion.

Fout! Verwijzingsbron niet gevonden. provides a forecast of the LNG price spread be-

tween the two commodities: Brent Crude and LNG CIF, the data is from Bloomberg Brent

Futures (Nov. 2014) and Pace Global’s in-house LNG forecast. It shows the commodity

prices without taxation and delivery costs. Based on this Nov. 2014 data, the price spread is

expected to decline by 16% by 2020, and grow by 12%, relative to 2014, by 2035.

Figure 4.2 LNG CIF at Zeebrugge and Brent Crude Price Forecasts to 2035 (Real 2013)

Source: Bloomberg, Pace Global.

While the price differential at the wholesale level as indicated in figure 4.2 is a critical driver,

this is not the price consumers ultimately pay since the fuel must be delivered and taxes

paid. For the purpose of this study, it was assumed that LNG would be delivered to each

individual port by barge and then transshipped inland via truck. While in the short term, LNG

cannot be barged up the Rhine, in the medium to long term barge delivery with transship-

ment will offer the best economics of scale and thus the least cost means to deliver LNG

inland. The increased costs of truck delivered LNG over long distances can erode the eco-

nomic benefit and business case for adoption.


Table 4.2 Delivery Cost by Barge Up the Rhine

Location Unit 2014

Antwerp €/MMBtu 0.03

Strasbourg €/MMBtu 0.17

Mannheim €/MMBtu 0.15

Rotterdam €/MMBtu 0.03

Basel €/MMBtu 0.20

Source: Pace Global

The fuel price spreads between the different incumbent fuels and LNG in the Lower Rhine

and Upper Rhine are presented in figure 4.3 and figure 4.4. The figures show the Low, High

and Reference Case for each fuel spread (incumbent fuel – LNG). These figures include

applicable fuel taxes which are presented later on in


Shows the Incumbent fuel taxes and LNG fuel taxes used in this study for each sector.


Additional figures on the fuel prices spreads by fuel and port are included in the Appendix.

The spread specific to each port don’t differ much from the average represented in the Up-

per Rhine and Lower Rhine graphics showed here. Any variation will come the differences

in fuel tax, CO2 tax and VAT between each country.

Figure 4.3 indicates that the most beneficial price spread is between LNG and on-road die-

sel. This is driven primarily by the high tax applied to on-road diesel, which adds to the dif-

ferential in pricing between LNG and diesel. Figure 4.5 shows a negative spread between

LNG and HFO. This is because HFO is the cheapest fuel and cheaper than LNG. The dif-

ference in spreads between the Lower Rhine and Upper Rhine is a reflection of the differ-

ence in excise taxes and VAT in the countries associated with each region16 in this study

and the fuel delivery costs.

The MGO/MDO forecast is derived from its historical trend and was adjusted to reflect the

recent and gradual increase in MGO/MDO perceived in Nov 2014 price driven by compli-

ance to the MARPOL emissions restrictions. While there is no clarity as to exactly how

much the MGO/MDO pricing will increase, some estimate that, based on high demand and

limited refinery capacity, it could double by 202017. To reflect this new dynamic, that the

price of the MGO/MDO could double in the next 5 years; a premium to the MGO/MDO pric-

ing of approximately 50% up to 2019 was added which then tappers off to 40% over the

long term as the market adjusts. This assumption was made following early market com-

mentary in Nov 2014.

In late 2014 and early into 2015 crude oil prices, and therefore those of refined products like

MGO/MDO declined precipitously. Despite this overall market decline, MGO/MDO price did

jump just before and after the IMO regulations went into effect, however, this impact is

masked by the broader global oil price decline, as discussed in section 4.2.1.1.

16

For the purpose of the study: Lower Rhine: Netherlands, Belgium. Upper Rhine: Germany, France, Swit-

zerland. While this is not the exact delimitation, for analysis purpose is considered the most appropriate sep-

aration, for additional explanation, see section 1.3. 17

http://www.2wglobal.com/news-and-insights/articles/features/Dramatic-increase-in-fuel-prices/

http://www.downstreambusiness.com/item/Marine-Bunker-Fuel-Costs-Soar-Part-I_138559

http://www.2wglobal.com/news-and-insights/articles/features/Dramatic-increase-in-fuel-prices/

http://www.downstreambusiness.com/item/Marine-Bunker-Fuel-Costs-Soar-Part-I_138559


Figure 4.3 Fuel Price Spreads in the Lower and Upper Rhine (Delivered Price, Nominal 2013)

Source: Bloomberg, Pace Global: Note: Dark Blue line is the Low case scenario, Red line is the Reference case

scenario and Light Blue line is the High case scenario. Scenarios are outlined in Chapter 5.

v

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25

2015 2020 2025 2030 2035

€/M

MB

tu

Lower Rhine_Industry Diesel - LNG Spread


0

5

10

15

20

25

2015 2020 2025 2030 2035

€/M

MB

tu

Upper Rhine_Industry Diesel - LNG Spread



Figure 4.4 SSS Marine Fuel Price Spreads in the Lower Rhine and Upper Rhine (Delivered Nominal 2013)

-7

-6

-5

-4

-3

-2

-1

0

2015 2020 2025 2030 2035

€/M

MB

tu

Lower Rhine_ HFO- LNG Spread


0

5

10

15

20

25

2015 2020 2025 2030 2035

€/M

MB

tu

Lower Rhine_MDO/MGO- LNG Spread



Source: Bloomberg, Pace Global. Note: High Case and Low Case Scenarios are

outlined in Chapter 5.

Lo

w C

ase

Sce

na

rio

Low

er

Rhin

eU

nit

2015

2016

2017

2018

2019

2020

2021

2022

2023

2024

2025

2026

2027

2028

2029

2030

2031

2032

2033

2034

2035

MD

O/M

GO

- L

NG

Spre

ad

€/M

MB

tu6.2

38.2

49.9

710.5

611.3

110.6

610.1

79.3

39.1

78.6

68.7

08.7

68.8

99.3

99.9

010.5

410.6

711.3

211.4

912.1

212.7

9

HF

O -

LN

G S

pre

ad

€/M

MB

tu-4

.21

-4.1

0-4

.14

-4.4

8-4

.67

-5.1

9-5

.51

-5.8

5-6

.00

-6.1

6-6

.27

-6.3

6-6

.37

-6.1

6-5

.96

-5.6

0-5

.60

-5.2

4-5

.19

-4.8

3-4

.44

EN

590 -

LN

G S

pre

ad

€/M

MB

tu10.3

110.2

410.0

59.6

39.2

78.6

78.2

47.8

07.6

17.4

17.3

37.2

67.3

87.6

98.1

08.5

68.7

19.2

99.3

99.9

710.6

0

On-r

oad D

iesel -

LN

G S

pre

ad

€/M

MB

tu19.2

919.2

319.0

318.6

218.2

617.6

517.2

316.7

916.5

916.4

016.3

116.2

516.3

716.6

817.0

817.5

517.6

918.2

818.3

718.9

619.5

9

Industr

y D

iesel -

LN

G S

pre

ad

€/M

MB

tu15.3

915.3

215.1

314.7

214.3

513.7

513.3

212.8

812.6

912.4

912.4

112.3

512.4

712.7

713.1

813.6

513.7

914.3

714.4

715.0

615.6

9

Upper

Rhin

eU

nit

2015

2016

2017

2018

2019

2020

2021

2022

2023

2024

2025

2026

2027

2028

2029

2030

2031

2032

2033

2034

2035

EN

590 -

LN

G S

pre

ad

€/M

MB

tu12.3

412.1

011.7

511.1

610.7

09.9

79.4

78.9

08.7

08.4

48.3

68.2

58.3

38.6

49.0

29.4

99.6

610.2

110.3

110.9

211.5

8

On-r

oad D

iesel -

LN

G S

pre

ad

€/M

MB

tu18.2

217.9

917.6

317.0

416.5

815.8

515.3

514.7

914.5

814.3

214.2

414.1

314.2

114.5

214.9

015.3

715.5

416.0

916.1

916.8

017.4

6

Industr

y D

iesel -

LN

G S

pre

ad

€/M

MB

tu15.1

714.9

414.5

913.9

913.5

312.8

112.3

111.7

411.5

411.2

811.2

011.0

811.1

611.4

811.8

512.3

212.4

913.0

513.1

513.7

614.4

2

Re

fere

nce

Ca

se S

ce

na

rio

Low

er

Rhin

eU

nit

2015

2016

2017

2018

2019

2020

2021

2022

2023

2024

2025

2026

2027

2028

2029

2030

2031

2032

2033

2034

2035

MD

O/M

GO

- L

NG

Spre

ad

€/M

MB

tu8.2

910.5

312.4

613.1

514.0

013.3

512.8

413.0

212.5

312.0

611.7

911.8

511.6

611.8

712.3

613.0

313.5

614.2

014.7

915.4

416.1

0

HF

O -

LN

G S

pre

ad

€/M

MB

tu-2

.93

-2.7

7-2

.79

-3.1

3-3

.30

-3.8

2-4

.14

-4.2

0-4

.27

-4.3

3-4

.59

-4.6

8-4

.85

-4.7

9-4

.59

-4.2

0-3

.96

-3.6

0-3

.30

-2.9

1-2

.51

EN

590 -

LN

G S

pre

ad

€/M

MB

tu12.0

212.0

111.8

411.4

411.1

310.5

710.4

310.2

810.1

29.8

59.5

69.5

09.4

19.5

19.9

210.4

210.8

811.4

711.9

012.5

213.1

6

On-r

oad D

iesel -

LN

G S

pre

ad

€/M

MB

tu21.0

121.0

020.8

320.4

320.1

219.5

619.4

219.2

719.1

118.8

318.5

418.4

918.3

918.5

018.9

119.4

119.8

720.4

620.8

921.5

122.1

5

Industr

y D

iesel -

LN

G S

pre

ad

€/M

MB

tu17.1

017.1

016.9

216.5

216.2

215.6

615.5

115.3

615.2

014.9

314.6

414.5

914.4

914.6

015.0

115.5

015.9

616.5

516.9

817.6

118.2

5

Upper

Rhin

eU

nit

2015

2016

2017

2018

2019

2020

2021

2022

2023

2024

2025

2026

2027

2028

2029

2030

2031

2032

2033

2034

2035

EN

590 -

LN

G S

pre

ad

€/M

MB

tu14.0

813.9

113.5

813.0

012.5

511.9

211.7

111.4

911.2

610.9

210.6

410.5

310.3

910.5

010.8

811.3

811.8

712.4

312.8

713.5

214.1

9

On-r

oad D

iesel -

LN

G S

pre

ad

€/M

MB

tu19.9

619.7

919.4

618.8

818.4

317.8

017.5

917.3

717.1

416.8

016.5

216.4

116.2

716.3

816.7

617.2

617.7

518.3

118.7

519.4

020.0

7

Industr

y D

iesel -

LN

G S

pre

ad

€/M

MB

tu16.9

216.7

416.4

115.8

315.3

914.7

614.5

414.3

214.0

913.7

613.4

713.3

613.2

313.3

413.7

214.2

114.7

115.2

715.7

116.3

617.0

3

Hig

h C

ase

Sce

na

rio

Low

er

Rhin

eU

nit

2015

2016

2017

2018

2019

2020

2021

2022

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2031

2032

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2034

2035

MD

O/M

GO

- L

NG

Spre

ad

€/M

MB

tu9.4

211.8

713.9

914.7

815.7

315.0

614.5

414.4

714.7

214.6

014.3

514.4

614.2

914.5

615.1

315.8

916.5

117.2

417.9

118.6

619.4

1

HF

O -

LN

G S

pre

ad

€/M

MB

tu-1

.62

-1.4

1-1

.42

-1.7

4-1

.91

-2.4

2-2

.74

-2.8

2-2

.74

-2.8

5-3

.08

-3.1

3-3

.28

-3.1

7-2

.91

-2.4

6-2

.15

-1.7

2-1

.35

-0.8

9-0

.42

EN

590 -

LN

G S

pre

ad

€/M

MB

tu13.7

613.8

213.6

613.2

812.9

512.3

511.9

311.8

311.9

511.8

211.5

611.5

611.4

911.6

612.1

612.7

413.2

913.9

714.4

915.2

115.9

5

On-r

oad D

iesel -

LN

G S

pre

ad

€/M

MB

tu22.7

522.8

022.6

522.2

721.9

321.3

420.9

220.8

120.9

420.8

120.5

520.5

520.4

820.6

521.1

421.7

222.2

822.9

623.4

824.2

024.9

3

Industr

y D

iesel -

LN

G S

pre

ad

€/M

MB

tu18.8

518.9

018.7

518.3

718.0

317.4

417.0

116.9

117.0

316.9

016.6

416.6

416.5

816.7

417.2

417.8

218.3

719.0

519.5

820.2

921.0

3

Upper

Rhin

eU

nit

2015

2016

2017

2018

2019

2020

2021

2022

2023

2024

2025

2026

2027

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2031

2032

2033

2034

2035

EN

590 -

LN

G S

pre

ad

€/M

MB

tu15.8

615.7

515.4

414.8

714.4

413.7

313.2

313.0

113.1

312.9

312.6

812.6

212.5

212.6

913.1

513.7

414.3

314.9

815.5

116.2

617.0

3

On-r

oad D

iesel -

LN

G S

pre

ad

€/M

MB

tu21.7

421.6

321.3

220.7

520.3

219.6

119.1

118.8

919.0

118.8

218.5

618.5

018.4

018.5

719.0

419.6

220.2

120.8

621.3

922.1

422.9

1

Industr

y D

iesel -

LN

G S

pre

ad

€/M

MB

tu18.7

018.5

818.2

717.7

117.2

816.5

616.0

715.8

415.9

715.7

715.5

115.4

615.3

515.5

215.9

916.5

717.1

617.8

118.3

519.0

919.8

6


4.2.1.1 Impact of Oil Crash on LNG Adoption

The fuel pricing analysis of this study was undertaken in June 2014 before the full collapse

of crude prices, as such the study fuel forecasts are now seemingly out of date since the

market balance and pricing have changed so much since the analysis was done. This fol-

lowing subsection is a description of the recent world crude oil collapse, the current crude

forecast, how it differs from the study’s initial forecast and the impact on LNG adoption.

World crude oil prices plummeted since the summer of 2014 and as of early March 2015,

Brent crude priced in US dollars is less than half that of June 2014. As explained below,

new U.S. capacity and a change in OPEC strategy left the world with an excess of oil to

meet demand. In the fall of 2014 world markets recognized this oversupply and rebalanced

prices and by early 2015 prices stabilized and even recovered somewhat.

Figure 4.5 Brent and WTI (West Texas Intermediate) crude prices March 2014- March 2015 (€/bbl)

Source: Bloomberg, Pace Global

Sustained high oil prices up to the recent crash, coupled with lower production costs, stimu-

lated and accelerated non-OPEC exploration and production, most notably in the U.S.

(shale oil increased 4.5 MMbbl/d since 2012) and Canada (tar sands increased 0.5 MMbbl/d

since 2011). Almost all of this marginal oil development would not have occurred at prices

below $50/bbl.

Increasing US production displaced previous US crude imports from higher priced sources

forcing suppliers to seek alternative markets. Suppliers turned to Asia, and specifically Chi-

na, to backfill U.S. demand, and as competition increased, prices fell. Other petro states

and most notably Saudi Arabia viewed this as a threat to market share and reacted to retain

that share.


Traditionally OPEC would have curtailed production in such situations to support prices, in a

late November 2014 meeting, OPEC decided it would no longer balance the global market

by withholding capacity, and prices collapsed below $70/bbl. Such low prices erode petro-

state revenues, as prices fall below levels needed to support state operations and social

commitments.

Figure 4.6 WTI Crude 2014 Collapse ($/barrel)

Source: Pace Global

Until now, OPEC had been the world’s swing producer, in essence controlling global oil

prices by changing production. However, by OPEC not freezing production, that role ap-

pears to be passing to the U.S. Note that OPEC’s spare production capacity is about 2

MMbbl/d, but the U.S. will have added 3 MMbbl/d in 3 years.

Such market oversupply might have been met over time with increased demand, but a weak

global economic recovery and increased efforts to improve fuel economy have tampered

down demand. With crude production continuing above demand, crude inventories are

surging causing market participants to question when this capacity will reach markets and

depress prices further.

While some industry analysts envisioned the growing supply-demand imbalance resulting in

$70/bbl oil, none expected sub-$50/bbl oil. As late as December 2014, the U.S. Energy In-


formation Administration (EIA) provided a downside 95% confidence interval WTI crude

price for February 2015 of $54.76/bbl, and prices have fallen even below that forecast.

Further, a deal with Iran to curtail its nuclear ambitions has the potential to throw oil markets

into a further tailspin. Press reports indicate that a deal to limit Iranian nuclear activity would

require an easing of sanctions, the most onerous of which is a restriction on crude oil ex-

ports. It is estimated that such a deal could add another 800 thousand barrels of crude per

day, within a year of sanctions being lifted, to an already oversupplied world market.

For this study, oil price forecasts were developed in June 2014, at the beginning of the price

collapse and before Iranian negotiations appeared viable. Three Brent oil price scenarios

were provided with a low case of $77.42/bbl in 2015 as evidenced in Fout! Verwijzings-

bron niet gevonden..

Figure 4.7 Study Brent Oil High, Low and Reference Case Forecasts ($/bbl)

Source: Pace Global. Note: Brent_R: Reference Case. Brent_L: Low Case. Brent_H: High Case.

Since June 2014, industry experts, including Pace Global, have updated their forecasts to

incorporate the price decline. As


8 below indicates, there is considerable divergence amongst industry experts in the average

oil price forecasts. Pace Global’s current global average oil price forecast, while lower than

some, aligns well with other expert views. Of these forecasts, that of GLJ is the oldest, hav-

ing been published in December 2014.


Figure 4.8 Oil and Gas Industry Expert Average Oil Price (Brent, WTI, OPEC) Forecasts, ($/ bbl)

Sources: WB: World Bank, IMF: International Monetary Fund, EIU: Economist Intelligence Unit, EIA: U.S. En-

ergy Information Administration, GLJ Petroleum Consultants, Bloomberg, Pace Global.

Falling oil prices also impact US oil producer economics and US producers are retreating.

Bankruptcies and fire sales are underway amongst some of the small less capitalized drill-

ers, and operating rig counts are rapidly declining. However, this is mostly a flight to quality

as production shifts to lower cost wells. Some drillers continue are pursuing with their drill-

ing programs, though at lower rates, only to maintain lease hold rights which are relin-

quished if activity ceases and in so doing they maintain an option on future production. Fur-

thermore, rapid declines in production costs allow economic production even at lowered oil

prices. As a result, wells remain economical even at lower crude prices and production is

expected to continue climbing, though at a slower rate, for at least a few years. U.S. exports

of oil would help to equilibrate markets. Though export restrictions remain, though excep-

tions have increased recently.

The combination of already excessive inventories with continued production, and weak de-

mand could drive crude prices further down. Some speculate that high inventories must

clear before price can rebound, but a recently improving US economy could serve that pur-

pose.

With regards to Europe, while US crude inventories and production directly impact US crude

demand and importing, they do not directly impact global markets, since the US is not legal-

ly permitted to export crude oil. Instead, US refiners export refined products, most notably

diesel, primarily to Europe and Latin America. Low oil prices, especially in the U.S. result in

attractive refinery margins causing refiners to increase production and export diesel to high

priced countries.


As mentioned above, Pace Global updated its Brent price forecast in March 2015 to better

reflect the global crude oil situation. A comparison of the Brent forecast applied in this study

with the updated Brent price is presented in Fout! Verwijzingsbron niet gevonden.9 be-

low. While the current forecast is 10-15% lower than the forecast applied in this analysis

from 2015-2020, by 2021 the difference between the forecasts is minimal. This lower fore-

cast will squeeze fuel spreads mostly during the next four years challenging the low case

adoption scenario in these years. However, owners of long lived assets like ships and in-

dustrial equipment, must consider the LNG fuel decision economics over the life of the as-

set to evaluate the assets’ total cost of ownership. The life of such assets is typically 15

years or more.

Figure 4.9 Pace Global Brent Crude Price Forecasts, ($/bbl)


For fuel consumers which might consider switching to LNG fuel, the oil products pricing and

more specifically the diesel pricing is a critical factor. While diesel prices have also fallen

precipitously since last summer, their fall has been less steep and volatile than crude. This

result in partly because products markets, while related to crude, are not the same, and

crude is not the only determinant of diesel prices. Local supply and demand pressures and

competition must also be considered. As evidenced in


10 below, since June 2014, Rotterdam heavy fuel (180 cst) and ULSD each declined 27%,

and each are showing stabilization and some recovery.


Figure 4.10 Rotterdam Fuel Prices, (€/Metric Tonnes)

Source: Pace Global. Note: In this graphic HFO = IFO 180.

As a result, historic relationships between crude and diesel, for example, can break down

as they last did in the fall of 2008. However, as evidenced in Fout! Verwijzingsbron niet

evonden.11 below, after the Great Recession shock, diesel-crude differentials returned to

historic patterns and they are expected to once again. Note that since June 2014, Brent has

declined 39% while ULSD has declined 28%.

Figure 4.11 Brent and Diesel Price Differentials, (€/bbl)



Unlike crude where the current inventory overhang is holding down prices, middle distillate

inventories like diesel are near five year lows in both Europe and U.S. providing price sup-

port.

While the global crude oil crash has garnered much attention, few recognize that natural

gas prices, especially in Europe, have fallen similarly and somewhat decoupled from oil.

Historically, European LNG contracts were typically tied to Brent oil and Japanese LNG was

priced to global basket of oil products which resulted in stable, predictable prices. However,

starting on 2009 in the aftermath of the great recession, oil prices began a strong run taking

global LNG and gas price with it. At the same time Japanese demand increased as the nu-

clear power industry was closed, and significant new U.S. supply in the form of shale gas

restrained price growth in Henry Hub pricing. The combination of these factors led many in

Europe and Asia to seek LNG indexed to natural gas rather than oil in an effort to dampen

price increases and limit price exposure to apparently ever increasing oil prices. Increased

demand led global LNG producers to develop liquefaction projects primarily to serve high

priced Asian markets seeking a US Henry Hub index to lower prices and manage volatility.

Through 2014 and early 2015, the global demand recovery remained tepid, restraining both

demand growth and prices. Nowhere is demand expected to fall further than in Japan,

where the Japanese are planning to restart portions of nuclear power program over several

years. In Europe, the Ukrainian controversy is not flowing though in natural gas prices, but

interest in LNG to secure supply is apparent, and the decoupling of European gas from

Brent is beginning, as prices no longer move in lockstep. As figure 4.12 below indicates, the

high NBP-to-Brent differentials seen during summer of 2014, which were a strong driver for

LNG fuel switching, collapsed by year end. However, by February 2015 spreads are show-

ing signs of opening as Brent begins recovery and the winter heating season for natural gas

abates.

Figure 4.12 Average Global Fuel Prices, (USD/MMBtu)


$0

$5

$10

$15

$20

$25

199

6

199

7

199

8

199

9

200

0

200

1

200

2

200

3

200

4

200

5

200

6

200

7

200

8

200

9

201

0

201

1

201

2

201

3

201

4

Japan cif UK (Heren NBP Index) US Henry Hub Brent

Jan

-14

Ma

r-1

4

Ma

y-1

4

Ju

l-14

Sep

-14

No

v-1

4

Jan

-15

1996 – 2014 Annual 2014-2015 Monthly


Such dramatic gas price movements leave open the possibility of price arbitrage through

LNG trade. Should Japanese and European prices close within $3.00-$4.00/ MMBtu, LNG

cargos once destined for Japan might be routed to European import terminals. To prepare

for just such a possibility, in the summer of 2014 several holders of LNG supply contracts

met with European import terminals to ink import agreements.

Not surprisingly, narrowing petroleum fuel-to-LNG fuel price spreads are expected to slow

LNG fuel adoption. Some fuel consumers will take a ‘wait and see’ approach, while others

will continue considering LNG, though perhaps with more care. The impact of cheap oil will

vary by sector; those where fuel switching economics were strong before the oil price col-

lapse are more likely to continue as the economics remain solid, though less strong. Exam-

ples in this study include the trucking and industry where on-road diesel prices are support-

ed by substantial taxes and equipment conversion costs were already sufficiently low to

spur switching economics for many industrials.

The impact of lower fuel price spreads on adoption is revealed by the sensitivity analysis we

undertook on the LNG adoption key drivers. For example, when the price spreads were

reduced by 25% demand declined in each sector as displayed in Fout! Verwijzingsbron

iet gevonden.below. As mentioned above, the impact of declining fuel price spreads is

muted in the vehicle/LHDV sector because diesel prices are maintained at an elevated level

through fuel taxes, which supports switching economics. While diesel fuel taxes are low for

industry resulting in a low spread, the low cost of conversion is sufficient to overcome the

declining spreads. The impact on IWT adoption is modest because there are no diesel tax-

es, but the cost of conversion and perceived risk is higher than for industry, resulting in sig-

nificantly weaker switching economics.

As Fout! Verwijzingsbron niet gevonden.13 indicates, the impacts of declining fuel price

preads are particularly pronounced in short sea shipping. This is mainly because of the al-

ternative technology choices, short sea ship operators face to meet the IMO emissions re-

strictions. For SSS operators already consuming HFO, switching to MGO/MDO is the easi-

est and least expensive solution in the short term, though this increases fuel costs relative

to HFO based operations. If these increased costs are easily passed through to customers

so that the ship owner does not bear the price increase directly or through the loss of com-

petitive position, this may be a viable longer term strategy. However, for ship owners which

cannot pass along the increased fuel costs of MGO/MDO and thus bear the full weight of

increased fuel prices, fuel choice will be based on the lowest total cost of ownership. For

existing vessels with sufficient remaining life, adding a scrubber to permit consumption of

HFO is generally less expensive than converting to LNG and permits the consumption of

the cheapest fuel available. Therefore, while pending NOx regulations are not a concern,

LNG is unlikely to compete and the LNG market potential is small. As such, tightening of

fuel price spreads only hinders LNG adoption further.


Figure 4.13 Impact on Sector LNG Fuel Adoption for 25% Reduction in Fuel Price Spread,(%)


Despite the strong decline in Brent and refined products pricing, the spreads between LNG

and diesel fuel remain similar to those in the study’s low case forecast as evidenced in

Fout! Verwijzingsbron niet gevonden..These result from the fact that significant amounts

f European LNG contracts are indexed to Brent crude, so as Brent declined, so did LNG

contract prices and distillate prices. Revised forecasts for Brent and LNG suggest that over

the first 10 years of the study, fuel spreads will on average be 7.3% lower than the low case

spread and 27.6% below the reference case spread applied in the analysis, see section 5.3.

Note that for this study the Brent-to-LNG price spread is equal to the Brent crude price mi-

nus the LNG fuel price, and so a low spread indicates either a low Brent price, and high

LNG price, or some combination of the two. Thus the low case forecast represents a nar-

rowing of the price difference between the fuels, while the upper case suggests the differ-

ence between the Brent and LNG prices is greater than the reference case. Therefore in

light of this, and the sensitivity analysis showed above, it is fairly safe to state that the re-

cent change in Crude-LNG spread will have insignificant impact on the LHDV and industry

sectors and very little impact on SSS and IWT sectors. A change in 25% of the spread

drives a reduction of -63% in the SSS LNG adoption (Fout! Verwijzingsbron niet gevon-

den.13), then a change of 7.3% is likely to drive a reduction of about 18%.

-6.2%

-17.5%

-63.0%

-0.3%

Vehicles IWT SSS Industry


Figure 4.14 Brent-to-LNG Price Spreads, ($/MMBtu)


4.2.2 Fleet Growth

Fleet growth is a critical driver as it drives the decision to convert new additions to the fleet

to LNG. If the fleet doesn’t grow, the only conversions will be based on the retirement rate

of aged trucks or vessels. The age of trucks and vessels are considered in the adoption of

LNG but it is not considered a key driver in relation to those outlined in Table 4.1 .

The age of the trucks is a driver for considering LNG but not a driver for LNG adoption. For

example: a truck owner has to replace his truck because it’s old. The owner now faces the

choice between diesel or LNG. The age of the truck will not drive the decision to switch to

LNG, the price difference between the two fuel/ technologies will. The age of the truck

drives the need to consider LNG, not adopting LNG.

The forecast in the growth of truck fleets, vessels fleets and industry petroleum fuel con-

sumption is based on country specific GDP growth, import and export growth, population

growth and tourism. Fout! Verwijzingsbron niet gevonden. shows the forecasted GDP

nd additional economic factors from Eurostat and the IMF used for each sector by each

country

Table 4.3 Economic Factors Driving Fleet Growth and Fuel Consumption Growth (Average 2015-2035).

Reference Case

Switzerland Germany France Belgium Netherlands

GDP Growth 0.9% 0.9% 1.8% 1.5% 1.2%

Population Growth 0.8% -0.5% 0.2% 0.3% 0.2%

Import & Export Growth 5.7% 6.4% 4.1% 3.4% 4.3%

Industrial Production

Growth 3.5% 3.3% 3.3% 4.3% 3.2%

Travel & Tourism Con- 3.3% 3.3% 3.3% 3.3% 3.3%


tribution to GDP Growth

Low Case


GDP Growth 0.7% 0.7% 1.7% 1.5% 1.1%

Population Growth 0.0% 0.0% 0.0% 0.0% 0.0%



Growth 0.5% -0.5% -2.0% -1.1% 1.4%

Travel & Tourism Con-

tribution to GDP Growth 3.3% 3.3% 3.3% 3.3% 3.3%

High Case


GDP Growth 1.2% 1.2% 1.8% 1.5% 1.4%




Growth 4.0% 4.0% 4.0% 5.0% 3.9%

Travel & Tourism Con-

tribution to GDP Growth 3.3% 3.3% 3.3% 3.3% 3.3%

Source: Eurostat (2014), IMF (2014).

4.2.3 Infrastructure Readiness

Small scale LNG supply chain infrastructure facility varies from import terminal, depots and

storages, bunker facilities for ships, fuel loading stations for heavy good vehicles and

equipment for LNG transport. The closest LNG import terminals to the Lower Rhine corridor

are located in Zeebrugge (Belgium), Rotterdam (the Netherlands) and, in the near future,

Dunkirk (France). The ports in the Upper Rhine region could also be served from the ports

in Marseille Fos-sur-Mer (France) or La Spezia (Italy).

The necessary infrastructure for LNG supply depends per user group. For sea going ves-

sels, the port-bye laws in, for example, Rotterdam and Antwerp, allow LNG bunker proce-

dures. The table below presents the relevant developments for the LNG supply in the Rhine

corridor for the bunkering of seagoing vessels:

Table 4.4 Bunker vessels for seagoing vessels in Rhine corridor area

Country Name Location Status Year

Belgium Bunker vessel GDF Zeebrugge Under construction 2016

Netherlands Bunker vessel SHELL Rotterdam Under construction 2016

France Bunker vessel Dunkerque LNG Dunkirk Planned N.a.

Source: GLE, desk research BCI

For IWT, locations are available for truck-to-ship bunkering of LNG, but various hinterland

locations develop more structural bunkering solutions, for example via intermediate bunker


installations and shore-to-ship bunkering facilities. The table below gives an overview of the

current developments in the Rhine corridor:

Table 4.5 Bunker facilities for IWT

Country Location City Status Year Type of facility

Belgium Port of Antwerp Antwerp Operational 2013 Truck-to-ship

Germany Port of Mannheim Mannheim Operational 2013 Truck-to-ship

Netherlands Port of Rotterdam (Seinehaven) Rotterdam Operational 2013 Truck-to-ship

Netherlands Port of Amsterdam (Amerikahaven) Amsterdam Operational 2013 Truck-to-ship

Netherlands Port of Moerdijk Moerdijk Operational 2014 Truck-to-ship

Netherlands Rotra Doesburg Doesburg Under construction 2016 Shore-to-ship

Germany Port of Duisburg Duisburg Planned 2014 N.a.

Belgium Port of Antwerp Antwerp Operational 2016 Shore-to-ship

Netherlands Electrabel - Nijmegen Nijmegen Planned 2016 Shore-to-ship

France Port of Strasbourg Strasbourg Potential location LNG Masterplan

Switzerland Port of Switzerland Basel Potential location LNG Masterplan

Source: GLE, desk research BCI

LNG tank carriers are under construction, for hinterland transport via inland shipping. Cur-

rent developments are displayed below:

Table 4.6 Inland LNG carriers and bunker vessels in Antwerp-Rotterdam-Amsterdam region

Name Owner Year Function Size (m3)

Argos bunkering Argos Oil 2016 Transport and bunkering of LNG N.a.

VEKA Group - Deen (LNG PRIME) Deen 2016 Transport and bunkering of LNG 2,470

Source: LNG Masterplan, VEKA

The infrastructure readiness for HGV depends on the availability of fuelling stations. Most

developments of LNG fuelling stations take place in Belgium and the Netherlands, while

developments in France and Germany do not emerge, yet. The table below gives an over-

view of the LNG fuelling stations for HGV:

Table 4.7 LNG filling stations in the Rhine corridor

Country Status Start-up year Name of installation Owner

Netherlands in operation 2012 Zwolle LNG24

Netherlands in operation 2013 Berkel-Enschot (Tilburg) Rolande LNG B.V.

Netherlands in operation 2013 Duiven GDF Suez

Netherlands in operation 2013 Oss, Rolande LNG Rolande LNG B.V.

Netherlands in operation 2013 Borculo Brand Oil-tankstation

Netherlands in operation 2014 Utrecht Rolande LNG B.V.

Netherlands in operation 2014 Pijnacker, Delfgauw Rolande LNG B.V.

Switzerland in operation 2014 AGROLA Bubendorf AGROLA

Belgium in operation 2014 Drive Kallo-Antwerp LNG Drive

Belgium in operation 2014 Veurne Fluxys

Netherlands in operation 2015 Rotterdam - Waalhaven SHELL


Country Status Start-up year Name of installation Owner

Netherlands in operation N.a. Simon Loos, Amsterdam Simon Loos

Netherlands in operation N.a. Oss, LNG Europe LNG Europe

Netherlands under construction 2015 Pesse, Green Planet Green Planet

Netherlands planned 2015 Roosendaal DCB Energy

Netherlands planned 2015 Rotterdam DCB Energy

Netherlands planned 2015 Rotterdam (Botlek) IDS-tankstation

Netherlands announced 2015 Nijmegen Cornelissen transport, BCTN

Germany announced 2015 Munster N.a.

Source: GIE Small Scale LNG dataset (June 2014), desk research BCI

Finally, in the industry sector, most developments of equipment is initiated by the industrial

partners in cooperation with LNG suppliers. These developments are, in most cases, for

private use only. The most appealing development for this sector is the development of a

LNG rail tank car for railway transport. VTG, a well-known developer of rail tank cars, has

developed a prototype for rail tank cars for LNG18. The capacity of the tank cars is 30 m3,

double the LNG load of a LNG tank vehicle. Therefore, LNG rail tank car offers high volume

railroad transport, at a competitive price. The main hurdle, today, is that the LNG import

terminals do not facilitate reloading of the rail wagons.

The Dynamic Fuel Model considers Infrastructure readiness in relation to the incumbent fuel

structure. Pace Global worked out a 5 tiers ranking of the “infrastructure Readiness” based

on existing LNG infrastructure. To assign an Infrastructure Readiness ranking to each coun-

try/port, existing infrastructure from various sources was reviewed and listed as outlined in

Fout! Verwijzingsbron niet gevonden.8.

18

VTG (2014) press release May 26, 2014 (http://www.vtg.com)


Table 4.8 LNG and SSLNG Infrastructure in 2014 in the countries bordering the Rhine

Sources: GIE LNG Infrastructure 2014, GIE SSLNG infrastructure 2014, Pace Global

Based on Fout! Verwijzingsbron niet gevonden.8, Pace Global then assigned an Infra-

structure Readiness ranking. Rank 1 is the highest ranking showcasing the highest level of

SSLNG infrastructure readiness and Rank 5 is the lowest.

CountryTYPE

of installationStatus

Start-up

Year

NAME

of installationOwner

Service

offered

in operation 2011 Rotterdam (Gate) LNG Terminal Gasunie, Vopakreloading, truck

loading

planned 2015 Rotterdam LNG Break Bulk Vopak

transhipment,

reloading,

bunkership +

truck loading

Liquefaction plant in operation 1977 Maasvlakte Peakshaver Gasunie

in operation 2013 Amsterdam fuel loading ship Port of Amsterdam n.a.

in operation 2013 Rotterdam LNG24 fuel loading ship LNG24 n.a.

announced 2015 Rotterdam BominLinde fuel loading ship Bomin Linde LNG n.a.

in operation 2012 Zwolle fuel loading road LNG24 n.a.

in operation 2013 Berkel-Enschot (Tilburg) fuel loading road Rolande LNG B.V. n.a.

in operation 2013 Duiven fuel loading road GDF Suez n.a.

in operation 2013 Oss fuel loading road Rolande LNG Rolande LNG B.V. n.a.

in operation 2014 Utrecht fuel loading road Rolande LNG B.V. n.a.

in operation 2014 Delfgauw Rolande LNG B.V. n.a.

in operation Simon Loos fuel loading road Amsterdam Simon Loos n.a.

in operation Oss fuel loading road LNG Europe LNG Europe n.a.

under

construction2014 Pesse fuel loading road Green Planet Green Planet n.a.

announced 2014 Nijmegen fuel loading road Cornelissen transport, BCTN n.a.

planned 2014 Roosendaal fuel loading road DCB Energy n.a.

planned 2014 Rotterdam fuel loading road DCB Energy n.a.

Import terminal in operation 1987 Zeebrugge LNG Terminal Fluxys

reloading,

bunkership +

truck loading

Fuel loading ship in operation 2013 Bunkering LNG in Antwerp Port of Antwerp n.a.

Bunkership planned 2014 Antwerp fuel loading ship (by bunkership) Exmar, Port of Antwerp n.a.

under

construction2014 Drive Kallo-Antwerp Drive n.a.

under

construction2014 Veurne fuel loading road Fluxys n.a.

in operation 1972 Fos-Tonkin LNG Terminal Elengy

reloading,

bunkership +

truck loading

in operation 1980 Montoir-de-Bretagne LNG Terminal Elengy

reloading,

transhipment,

bunkership +

truck loading

in operation 2010 Fos Cavaou LNG Terminal Fosmax LNG

reloading,

bunkership

loadingunder

construction2015 Dunkerque LNG Terminal Dunkerque LNG reloading

in operation Gablingen

Bayernwerk AG / Erdgas Sudbayern

Gmbh

in operation Stuttgart Peakshaver EnBW Kraftwerke Stutgart

in operation Nievenheim Peakshaver RWE

planned 2014 Brunsbuttel fuel loading ship Elbehafen Brunsbuttel, Gasnor n.a.

planned 2015 Bremerhaven fuel loading ship Bomin Linde LNG n.a.

planned 2015 Hamburg fuel loading ship Bomin Linde LNG n.a.

planned Lubeck fuel loading shipLubeck Port Authority, Stadtwerke

Lubeckn.a.

planned 2016 LNG Multigas Carrier (21.000 cbm) Harpain Shipping n.a.




Switzerland Fuel loading road in operation 2014 AGROLA Bubendorf AGROLA n.a.

Netherlands

Belgium

France

Germany

Import terminal

Fuel loading ship

Fuel loading road

Fuel loading road

Import terminal

Liquefaction plant

Fuel loading ship

Bunkership


Table 4.9 Infrastructure Readiness Ranking in 2014 by Port

Ports Ranking Score in 2014

Rotterdam 2

Antwerp 3

Strasbourg 4

Mannheim 3

Basel 5

Source: Pace Global

Pace Global assumed a 3 year development cycle for most ports and qualitatively evaluated

the existing infrastructure and specific situation along the Rhine. For example, Pace Global

considered that the LNG infrastructure development in Switzerland may develop at a slow

pace than the other ports because of an overall smaller demand and higher cost of delivery.

This is theoretical and will be subject to variation as development progresses, but in the

absence of more concrete information, we considered this a reasonable proxy of infrastruc-

ture readiness.

Figure 4.15 Theoretical Infrastructure Readiness Development Cycle

Source: Pace Global. The forecast is based on the assumption of a 3 year development cycle.


Each Infrastructure readiness ranking is associated with an “LNG Switching Rate” which is

sector specific. This rate is applied following the TCO calculation to refine the actual adop-

tion based on the supply infrastructure.

4.2.4 Policy

Important policy instruments that will be of influence for the demand of LNG include:

Regulations concerning air quality.

Regulations concerning CO2 emissions.

EU and national regulations on technical requirements for shipment and handling of

dangerous cargo.

Fuel taxes.

Subsidies and discounts.

The policy instruments which may directly or indirectly influence the LNG fuel switching de-

cision are discussed in further depth below. In general, societies drive to improve air quality

has spurred interest in alternative fuels, but air quality emission limits in and of themselves

generally do not have direct economic impacts for equipment owners, rather the different

fuels and technologies employed to meet regulations have costs, which are captured in the

TCO calculations. Thus for the purpose of this study only VAT, fuel and CO2 taxes were

considered to be sufficiently significant and predictable to include as direct “Policy” drivers.

For example, while road transport emissions will face stricter limits by 2016 (see Table 4.9),

this will only impact exhaust emissions of new vehicles sold in the EU from 2016 onwards.

Thus this policy does not impact existing vehicles, rather it impacts the cost of new 2016

trucks which must be compliant with the new Euro IV emissions limits. When it’s time to

replace a truck, LHDV truck owners may consider an LNG or a new Euro IV compliant vehi-

cle. Thus the owner’s ultimate decision driver is not the emissions regulation, but the differ-

ence in TCO between a EURO VI compliant diesel truck and an LNG truck, and the eco-

nomics of this choice are captured in the TCO calculations.

Regarding IWT, the fuel EN590 is compliant with the current emissions restrictions. There

are new proposed emissions restrictions, as outlined in further in this section, but at this

stage it is impossible to predict when and to what degree such legislation might impact the

industry, and how and when proposed EU emission standards might be applied by each

individual country. Any attempt to model such uncertainties would introduce entirely subjec-

tive error. Furthermore, any new regulations would be applied only to new engines not op-

erating ones, which brings us back to the same situation as the LHDV truck owner dis-

cussed above.

For SSS, the IMO emissions restrictions for the European SECA are now in place driving

owners of existing ships to change fuel and technology to comply and in so doing, at least

consider LNG as an alternative fuel. But here again there are several viable means to com-

ply with these new restrictions, outlined further below. Since the owner must change fuel

and technology, the decision between alternatives options will again be driven by the differ-

ence in TCO between the different options and the economics of each alternative includes


the complete cost of the regulatory compliant option. The IMO emissions restriction may

become global by 2018 or 2020, which will drive additional ship owners to consider LNG as

an alternative fuel and in concept, their decision will be similar to that currently faced by

those operating within the ECA. Since the restrictions will be global, they will impact ocean-

going/ deep sea vessels. This could drive additional LNG adoption in the ports of Rotterdam

and Antwerp, however, these ships were not considered in the scope of this study.

Regarding industry, the emissions restrictions directly impacting costs are captured in the

CO2 taxes which we have captured in our analysis. Any attempt to include an additional en-

vironmental driver would be entirely speculative.

The above discussion shows that emissions restrictions, once in place, ultimately drive to a

choice between technologies and therefore it is the TCO difference between the technolo-

gies which will drive adoption. As the TCO calculation for each viable option necessarily

includes the cost of emissions equipment necessary to make the option meet the environ-

mental regulations, the impact of such legislation is accounted for in the analysis. Thus

emission regulations themselves may, as in the marine case, directly force fuel consumers

to consider alternative fuels and technologies, but the regulations will not be a direct driver

of LNG adoption; the difference in cost between the different options to comply will be.

Therefore, the analysis focused on VAT, fuel taxes and CO2 taxes as these directly impact

the TCO. A high diesel fuel tax, for example, will increase the TCO for diesel-fueled equip-

ment, perhaps above the TCO of LNG making LNG by comparison a better option. If that

high diesel tax is reduced the different in diesel and LNG fuel prices declines impacting the

TCO for each option, and if the TCO of the diesel option is below that of the LNG option, the

economics will no longer favor switching to LNG.

Subsidies are discussed in this section, and do have some influence on the decision making

process as they directly impact the TCO by reducing the cost of conversion. However, the

most common ‘subsidy’ currently in place is a reduction in port tariffs at a few ports for LNG

fueled vessels, and these ‘subsidies’ are a mere fraction of vessel operating costs. As a

result, port tariffs are not a key economic driver. Assistance from the EU in the form of cost

sharing for pilot projects is another form of subsidy. Such cost sharing directly impacts TCO

and owner economics and is thus a driver of the LNG decision. But such subsidies are not

widespread systematic efforts which will impact large numbers of fuel consumers. Thus they

are not a key direct driver of LNG adoption, though they certainly provide significant support

for a few test projects which will indirectly support the market

Air Quality Regulations

The basis for air quality regulations in Europe is Directive 2008/50/EC, which presents the

maximum concentration levels for air pollutants permitted (see Fout! Verwijzingsbron niet

evonden.10). Recently, the Commission has made propositions to further lower these max-

imum concentration levels (COM (2013) 918).


Table 4.10 Overview Of Maximum Allowed Concentration Levels for Air Pollutants

Air pollutant Limit value per calendar year

NO2 40 µg per m3

PM10 40 µg per m3

PM 2.5 25 µg per m3

Source: Directive 2008/50/EC

The air quality regulations have been translated into specific air quality legislation for

transport modes. The regulations are mode specific.

In maritime shipping, regulations of the International Maritime Organization (IMO) demand

that the sulphur content in maritime fuel for use in the North Sea, the English Channel and

the Baltic Sea (Emission Control Areas or ECA) be decreased from 1.0 % to 0.1 % after 1

January 2015. In literature, three major strategies for compliance are distinguished:19

1 Remain using heavy fuel oil (HFO), which has a high sulphur content, and install a

scrubber installation.

2 Switch to fuel with a lower sulphur content, so called Marine Gasoline (MGO).

3 Switch to LNG.

For IWT, legislation of the Central Committee of the Rhine (CCNR) is applicable for the pol-

lutants in exhaust gases of engines. CCNR II is the latest and final step in this legislation.

For the future, the emission legislation for inland ships in Europe will be brought under the

Directive 97/68/EC for non-road mobile machinery, within a separate paragraph. Decisions

on non-road mobile machinery (NRMM) emission regulation are the responsibility of the

European Commission. An overview of the current CCNR legislation is presented in Fout!

erwijzingsbron niet gevonden.11 below for engines with more than 560 kW engine power.

Table 4.11 Overview of Rhine Vessel ‘Rhine Vessel Inspection Regulations’ Emission Limits.

Date Stage Max Power

(kW)

CO

(g/kWh)

HC

(g/kWh)

NOx

(g/kWh)

PM

(g/kWh)

2003 CCNR 1 130 - 560 5.0 1.3 9.2 0.54

>560 5.0 1.3 9.2 -12.5 0.54

2007 CCNR 2 130 - 560 3.5 1.0 6.0 0.2

>560 3.5 1.0 6 - 9.5 0.2

Source: CCNR

Future emission limits under directive 97/68/EC have been under discussion for quite some

time. In September 2014 the European Commission published the proposed for Stage V

emissions limits for Non Road Mobile Machinery. For inland shipping this result in stricter

limits on emissions compared to CCNR 2 for new engines from 2019 onwards. The limit

values for Inland Waterway vessels, as part of this proposal, are presented in Table 4.8.

19

DMA (2012), TNO (2013) Natural Gas in Transport


For engines above 130 kW power output, the NOx limits are in the range of 2.1 to 0.4

g/kWh and the PM limits are in the range of 0.11 to 0.01 g/kWh. Especially for engines

above 1000 kW, the proposed limit values are very stringent, comparable to Euro VI for

heavy-duty vehicles.

Table 4.12 Proposed emission limits for Inland Waterway Propulsion (IWT) by the European Commission

Date Stage Max Power

(kW)

CO

(g/kWh)

HC

(g/kWh)

NOx

(g/kWh)

PM

(g/kWh)

2019 Stage V 130 - 300 3.5 1.0 2.1 0.11

2020 Stage V 300 - 1000 3.5 0.19 1.20 0.02

2021 Stage V >1000 3.5 0.19 0.40 0.01

Source: proposal European Commission Sept 2014

For road transport, European emission standards define the acceptable limits for exhaust

emissions of new vehicles sold in EU member states. The emission standard for Light Duty

Vehicles is arranged under regulation 692/2008. LDVs are currently subjected to Euro V,

but the standards will become stricter in 2016 under Euro VI. Buses and heavy duty vehi-

cles are currently subjected to Euro VI limits under regulation 64/2012. The emission stand-

ards are evaluated on a regular basis.

Table 4.13 Overview of Emission Limits for Road Transport

Vehicle type Date Stage

CO

(g/kWh)

NOx

(g/kWh)

PM

(g/kWh)

Light Duty Vehicle (CL

3)

2014 Euro Vb 0.74 0.28 0.005

2016 Euro VI 0.74 0.125 0.0045

Busses and Heavy Duty

Vehicle 2013 Euro VI 4.0 0.460

0.01

Source: Delphi 2014

CO2 Emissions Regulations

Just as with air quality, the European Commission has ambitious goals for reducing

greenhouse gas emissions. The goals for the European transport system are set in its

Roadmap for 2050. Transport sector emissions are planned to reduce sharply. For the year

2050 emissions need to be cut by 60% century. To achieve this reduction of emissions in

the transport sector, the Roadmap 2050 proposes a number of key objectives to reach by

2050, including:

Half the use of ‘conventionally fuelled’ cars in urban transport by 2030; phase them out

in cities by 2050; achieve essentially CO2-free movement of goods in major urban

centers by 2030.

Shift to 40% low carbon fuels in aviation and a 40% reduction in maritime bunker fuel

emissions.


By 2030, realise a 30% and by 2050, realise a 50% shift of medium distance intercity

passenger and freight journeys from road onto rail or waterborne transport.

Deliver a fully functional and EU-wide core network of transport corridors, ensuring

facilities for efficient transfer between transport modes (TEN-T core network) by 2030,

with a high-quality high-capacity network by 2050 and a corresponding set of multimodal

information services.

Move towards a full ‘user pays’ and ‘polluter pays’ principle for the private transport

sector to eliminate distortions, generate revenues and enable transport funding.

Specific measures that are proposed to reduce GHG emissions include:

The goal of an Emission Trading System (ETS) proposal is to set a price on each

tonnes of carbon dioxide emitted by international shipping and industry. If it would be

implemented, a cap on emissions would be defined and an amount of emission rights

(allowances) equal to the cap sold/auctioned. The revenues generated by

selling/auctioning the allowances are to be spent in line with priorities established under

the United Nations Framework Convention on Climate Change (UNFCCC) for

adaptation, mitigation, capacity building, technology development and transfer, as well

as for research and development in the shipping sector. The ETS as a driver is currently

to be regarded as a ‘theoretical one as it is depending on the current discussion within

the IMO and between the EU Commission. The latter one has been discussing an EU

internal ETS for the shipping sector in case that the IMO decision would not meet the

expectations of the EU Commission. In 2013, the Commission put forward a proposal to

establish an EU system for monitoring, reporting and verifying (MRV) emissions from

large ships using EU ports (COM(2013) 480). The Commission proposes that the MRV

system applies to shipping activities carried out from 1 January 2018.

The Ship Energy Efficiency Management Plan (SEEMP) is an operational fleet

management measure that establishes a mechanism to improve the energy efficiency of

a ship in a cost but also environmental-effective manner as it includes also guidance for

fuel efficient ship operation. The SEEMP became binding from 1st of January 2013

according to an IMO regulation for all ships in operation and is therefore allocated to the

‘policy & regulation’ clusters although it affects clearly ship operational measures.

Closely related to the SEEMP is the Energy Efficiency Operational Indicator (EEOI) as a

monitoring tool. The EEOI shall allow operators to measure the fuel efficiency of a ship

in operation and to estimate impacts from any changes in operation, e.g. improved

voyage planning or more frequent propeller cleaning, or introduction of technical

measures such as waste heat recovery systems or a new propeller.

The Energy Efficiency Design Index (EEDI) is also a mandatory IMO regulation but for

new ships with keel laying from 1st of January 2013. The EEDI for new ships aims to

promote the use of more energy efficient (less polluting) equipment and engines and

requires a minimum energy efficiency level per capacity mile (e.g. tonne mile) for

different ship type and size segments – currently for tanker, bulker and container

vessels.

Methane slip: For LNG engines, requirements on methane or total hydrocarbon

emissions may have a strong impact. If these would be very stringent, such as with

trucks Euro VI, these will hinder the availability of engines enormously. Current LNG

engine technology is based on stationary gas engines for which relatively mild (National)

methane emissions requirements are applicable (for instance, in the Netherlands the


level is 1,500 mg/m3, which corresponds to approximately 4 gr/kWh20. As a comparison:

for Euro 6 trucks the requirement is 0.5 g/kwh)21.

EU and national regulations on technical requirements for shipment and handling of

dangerous cargo

Especially in the case of IWT, current legislation on transport of dangerous cargo may limit

uptake. Directive 2006/87 lays down the technical requirements for inland waterway vessels

and Directive 2 arranges inland transport of dangerous goods. Both Directives prescribe

that only internal-combustion engines burning fuels with a flashpoint of more than 55°C may

be installed. Vessels currently using LNG as a fuel have been individually exempted for

both directives. This case by case approach is not sustainable for long term employment.

Furthermore, the Panteia study mentions that due to safety issues, Directive 2006/87 ex-

cludes certain types of vessels from using LNG:

Passenger vessels and vessels carrying dangerous goods.

Vessels not being built according to classification rules.

Taxation

Fuel taxes and VAT have an important impact on the energy price for end users. The table

below presents an overview of the excise taxes and VAT level for each country.

Excise taxes are not applicable for IWT transport. Due to the Mannheim Convention it is not

allowed to have direct charges for IWT on the Rhine. This applies for both infrastructure

charges and fuel charges.22 Stimulating measures in fuel taxes for LNG therefore have no

impact on Inland Shipping. The convention allow for fees on services (for instance port

dues) and taxation on other bases (such as VAT). Maritime transport is exempted for excise

taxes in the excise laws of Belgium and the Netherlands.

20

Ministry of Infrastructure and Environment (2012), Activiteitenbesluit. 21

EC 88/77/EC 22

CE Delft ea. (2012), An inventory of measures for internalising external costs in transport


Shows the Incumbent fuel taxes and LNG fuel taxes used in this study for each sector.


Table 4.14 Incumbent Fuel and LNG Excise taxes in the Countries bordering the Rhine

Excise Tax Fuel Unit Netherlands Belgium Germany France Switzerland

Incumbent fuel

IWT EN590 €/MMBtu 0 0 0 0 0

LHDV EN590 €/MMBtu 13.97 12.5 13.74 12.52 17.5

Industry

(incl.

CO2

tax)*

EN590 €/MMBtu 13.97 0.66 0 2.1 20.46

LNG

LHDV €/MMBtu 4.16 0.12 4.07 0.41 7.99

Industry €/MMBtu 1.96 0.12 0 0 2.55

SSS €/MMBtu 0 0 0 0 7.99

IWT €/MMBtu 0 0 0 0 7.99

Source: See Chapter 2.

Subsidies

Some ports have differentiated tariffs based on the environmental performance of vessels.

In the Rhine Corridor, such an environmental discount is only applicable in three seaports:

Amsterdam, Rotterdam, and Antwerp. For all ports, discounts are based on compliance with

CCRII for IWT and on the Environmental Shipping Index (ESI) for maritime shipping.

Several programmes from EU and national governments are currently subsidising LNG

pilots. Examples include the Norwegian NOX fund and the LNG Masterplan of the EU.

4.2.5 Equipment Innovation

Incumbent technologies are mature with large volumes sold. Most of the equipment effi-

ciencies have been gained and the marginal costs are as low as they can potential be, thus

they are not expected to decline significantly. On the other hand LNG technology which

comprises spark-ignited and dual-fuel engines, on-board storage, bulk storage, transport

trailers, dispensers, etc. is relatively new and relatively expensive in relation to the incum-

bent technologies. Over time manufacturing and product efficiencies could be gained as

well as economies of scale which will push the unit price down, thereby reducing the ‘delta’

in costs between technologies as shown in


4.16.


Figure 4.16 Technology Innovation Cost Differential

Source: Pace Global

4.2.6 End-user’s Risk

The equipment owner’s risk perception reflects the inertia to change to a new and unknown

paradigm. LNG fuel will require new equipment, which will require some changes in opera-

tions and adjustments in training staff. In addition, small scale LNG is a nascent market so

LNG fuel and fuelling infrastructure is not as ubiquitous as the incumbent petroleum fuel,

which generates concerns by the owner on LNG supply reliability for its operations.

These concerns are typically high for early adopters which are the first to face the change

and therefore confront early market challenges, such as inefficient technology, lack of sup-

ply infrastructure. These concerns are viewed as risks to equipment owners as they could

disrupt the smooth running of their existing operations more than the benefits gained by

switching to LNG. Therefore the owner’s risk perception creates an element of inertia to

LNG adoption. In time, as the market matures, the number of adopter’s increases, innova-

tion improves, infrastructure network expands, this inertia will decline to the point where it

merely represents the pure element of change from an old to a new operating paradigm.

The owner’s risk factor is a combination of the fuel price driver, the infrastructure readiness,

impact on operations and the technology innovation factor. It is integrated in the dynamic

fuel model as an additional percentage cost to the TCO analysis. In effect the TCO analysis

is a discounted cash flow analysis and the Owner’s risk factor is an added percentage point

to the Weighted Average Cost of Capital (WACC). Thereby, increasing the WACC increas-

es the Net Present Value, in effect the TCO, of the discounted cash flow analysis.


We assigned different ranges of risk factors specific to each sector to reflect the different

risks and obstacles of each sector.

Furthermore, for the purpose of this study because the access to capital to IWT ship owners

is understood to be a significant constraining factor in this sector23, we slightly increased the

Owner’s risk factor to account for this.

Access to capital was not considered for the other sectors as there is not sufficient available

information to gain a sector specific view.

LHDV and Industry: Owner’s risk ranges from 2%-6%.

IWT: Owner’s risk ranges from 2%-12%.

SSS: Owner’s risk ranges from 2%-10%.

The LHDV and industry sectors reflects a low range of risk as the investment Capex is

smaller, the technology, in the case of the industry is well established (i.e. gas turbines),

there is greater spread certainty (in the case of LHDV) support by high fuel taxes.

4.2.7 Assumptions

End-user’s perceived risk. An algorithm was developed to take into account the ele-

ments outlined in section 4.2.6 and entered as a premium into the Total Cost of Owner-

ship.

Vessel retirement. The retirement cycle is based on the average age per vessel class

and the assumption that every year ‘1/(vessel class average age)’ vessel will retire. For

example; if the average age per vessel class if 15 years, every year ‘1/15’ vessels are

retired. This approach was chosen as data on the exact age of every vessel in a specific

fleet by port was not available. However, the average age of vessels by vessel class is

known. Yet, if one assumes that all vessels are of the same age, it means that they

would all retire at the same time, which we know is not the case, since they are not all

the same age. So in the absence of an exact age profile of the fleet we developed the

proxy calculation as explained above.

Heavy and Light Duty truck retirement. Due to the unavailability of information on the

average age the vehicle fleets across the study region. An assumption was made that

1/20 trucks would retire very year from 2015-2035.

LNG fueling infrastructure readiness. A ‘5-stage’ ranking system on the current de-

velopment status of LNG supply and fuelling infrastructure in each of the study regions

was developed. Development was assumed to progress on a 3 year basis, in the refer-

ence case, 4 years in the low case and 2year in the fast case. See section 4.2.3 for

more details.

Innovation technology. The assumption was made that diesel engine technology and

LNG engine technology Capex will both decline with time. Each technology associated

with each sector was associated a rate of decline between 0-2% which varied with the

high and low case.

23

BCI interview with ABN AMRO bank


Number of SSS vessels per port. This is based on the number of ports calls provided

by the Rhine ports and data from Lloyds Register on the average number of port calls by

ships in the Northern European ECA.

4.3 Key LNG Adoption Drivers Ranking

The following section discusses the ranking of the key drivers in each of the sectors and the

sensitivity of the LNG adoption to the key drivers in the Dynamic Model. The rankings show

the relative importance of each driver to the LNG adoption calculation in the different sec-

tors. The rankings are presented in Fout! Verwijzingsbron niet gevonden. 4.15.

The rankings were not assigned but derived from a sensitivity analysis. A sensitivity analy-

sis was undertaken, where each driver was varied, by the same percentage and in isolation

of one another, to capture the impact of that change on the adoption volumes and under-

stand the influence of the driver on the adoption of LNG volumes. The change will either

impact the TCO calculation directly or the adoption growth as in the case of the infrastruc-

ture readiness and outlined in section 4.2.3.Each driver will influence the TCO differently to

a lesser or greater extent based on its contribution to the TCO. For example; fuel taxes for

on-road diesel are relatively high, any changes in the tax will have a strong impact on the

spread between LNG and on-road diesel since much of that specific spread is borne from

the tax difference between on-road diesel and LNG. The case will not be the same for the

IWT sector since there are no fuel taxes, so a change in fuel taxes will have no influence in

that particular sector. Furthermore, the cost of conversion of an LHDV is


Table 4.15 Ranking of Key LNG Adoption Drivers by Sector.

Source: Pace Global. Note: Fuel Price Delta, is the delta between the commodity prices (LNG and the incum-

bent fuel). The ranking of the key drivers are relative to one another

The key driver in the SSS sector is the commodity fuel price delta which dwarfs the impact

of the other key drivers. The reason for this is the large fuel consumption of ships, as any

change in fuel price will have a magnified impact on the operating cost of the ship. The im-

pact of that operating cost on the TCO is much stronger than any differential in price gained

from equipment innovation.

The policy driver is 0%, this is because as outlined earlier on in section 4.2.4, while emis-

sions regulations are a policy instrument that will influence the consideration of LNG as an

alternative fuel, regulations themselves are not the key direct driver of LNG adoption. It is

the different fuels and technologies employed to meet the regulations and their associated

costs which will directly influence whether a ship owner will decide to adopt LNG as an al-

ternative fuel. The policy driver here is represented by fuel taxes, VAT and CO2 tax and

since bunkering is not taxed, has no CO2 tax and VAT is not foreseen the change, the im-

pact is zero. The same applies for IWT vessels.

The key drivers in the IWT sectors are the commodity fuel price and the infrastructure read-

iness. The reason LNG adoption in the IWT is so sensitive to the commodity fuel price is for

the same reasons as explained above for the SSS sector. However, fleet growth is not such

an important drivers and that is because the growth in IWT is not that strong and as strong

as in the SSS. Infrastructure readiness is important as without any supply, the ships cannot

refuel. Owner’s risk is high as well, as the investment cost is high and the owner requires

reliable savings to gain a return on the investment.

Driver

Weighted %

Impact on

Adoption Driver

Weighted %

Impact on

Adoption

1 Fuel Price Delta 90% Fuel Price Delta 41%

2 Fleet Growth 5% Infra. Readiness 33%

3 Owner's Risk 2.5% Owner's Risk 20%

4 Infra. Readiness 2% Fleet Growth 3.5%

5 Equipment Innovation 0.5% Equipment Innovation 3%

6 Policy (Excise Tax Delta) 0% Policy (Excise Tax Delta) 0%

Driver

Weighted %

Impact on

Adoption Driver

Weighted %

Impact on

Adoption

1 Policy (Excise Tax Delta) 53% Demand Growth 54%

2 Infra. Readiness 33% Infra. Readiness 44%

3 Fleet Growth 9% Policy (Excise Tax Delta) 1.5%

4 Fuel Price Delta 3.5% Fuel Price Delta 0.5%

5 Owner's Risk 1% Equipment Innovation 0%

6 Equipment Innovation 0.5% Owner's Risk 0%

Ranking

Ranking

LHDV

IWTSSS

Industry


The ranking in key drivers is very different for LHDV. The tax policy has a strong impact and

this is because of the high level of taxation for on-road diesel. Infrastructure readiness is

high mostly because the other drivers in this sector have a weaker sensitivity impact on the

LNG adoption. Fleet growth is not that strong as it relates to the growth in GDP and trade.

The key drivers in the industry sector are the demand growth / industry performance and

infrastructure readiness. The reason for this is mainly the weakness of the other drivers in

comparison. The level of taxation is fairly low, equipment innovation will be minimal as the

technology of gas turbines is very well developed and already at the bottom of the technol-

ogy innovation development curve as shown in Figure 4.15. The owner’s perceived risk is

fairly small as the investment is relatively small and the economics straight forward as long

as there is a supply source.

Fout! Verwijzingsbron niet gevonden.6 shows the key factors driving the Owner’s risk

erception and the different ranking in each sector. SSS and IWT share the same ranking

score and sensitivity in the key drivers this is because ship owners in both sectors will value

their respective risk in the same way. In addition and specific to this study we are aware the

IWT vessels are capital constrained, while this does not affect the ranking and the sensitivi-

ty, this specific element is taken into account in the final attributed risk factor. LHDV the

infrastructure and the impact on operation are strong risk factors in the owner’s perception

and in the industry sector, the infrastructure and fuel price differential are strong factors af-

fecting the Owner’s risk perception, the impact on operations is not such a concern as the

gas fuel equipment is a known technology in industry. The uncertainty with regards to future

emissions restrictions is not included as a separate factor in the Owner’s Risk Perception,

as the future potential restrictions as discussed in section 4.2.4 will impact new vessels or

trucks and not existing ones. This means that the owner will only face the new restriction if

the owner buys a new ship or truck, in which case the unknown or the risk is with the oper-

ating performance of that ship or truck, which is considered in the analysis.


Table 4.16 Ranking of Owner’s Risk Perception Key Drivers

Source: Pace Global

Driver

Weighted %

Impact on

Owner's Risk

Perception Driver

Weighted %

Impact on

Owner's Risk

Perception

1 Fuel Price and Taxes 50% Fuel Price and Taxes 50%

2 Infrastructure 25% Infrastructure 25%

3 Impact on Operation 20% Impact on Operation 20%

4 Technology Innovation 5% Technology Innovation 5%

Driver

Weighted %

Impact on

Owner's Risk

Perception Driver

Weighted %

Impact on

Owner's Risk

Perception

1 Infrastructure 35% Infrastructure 50%

2 Impact on Operation 30% Fuel Price and Taxes 30%

3 Fuel Price and Taxes 30% Impact on Operation 20%

4 Technology Innovation 5% Technology Innovation 0%

Ranking

Ranking

LHDV

IWTSSS

Industry


Chapter 5 LNG Demand Scenarios

5.1 Scenario Development

Three scenarios were developed to identify what the volumes would be in a business as

usual market (Reference Case), a low LNG demand market and a high LNG demand mar-

ket across the Lower and Upper Rhine region. On that basis we worked backwards to de-

fine low and high parameters for each of the key driver’s indexes to gain a high demand

market and a low demand market. Iterations of various scenarios with difference low and

high indexes were not undertaken for this study, as the stated objective was to define a low

LNG fuel adoption and high LNG fuel adoption.

For each of the three scenarios, the key adoption drivers defined and discussed in Chapter

4 were adjusted such that the combination of them would result in higher or lower LNG fuel

adoption. The values applied in the reference case scenario were developed earlier in the

project and were defined in the Status Quo report. With that foundation, drivers were ad-

justed to either favor or constrain LNG adoption based on a review of key driver histories

and expert knowledge of the industry sourced from stakeholder interviews and public

sources. Combining drivers with adjustments favorable to LNG adoption resulted in the High

Demand Scenario, and combining those with adjustments that would restrain LGN adoption

resulted in the Low Demand Scenario. Below is a detailed description for each scenario.

5.2 Reference Case

The reference case considers the LNG adoption based on a ‘status quo’ evolution of the

key drivers. Thus energy prices and the resultant spreads follow the reference case fore-

cast, GDP and trade growth are set to align with current expectations, LNG infrastructure

continues to take about three years to develop, no great technological leaps are made ra-

ther continuous improvement efforts and increased sales result in somewhat lower costs,

and the Owner’s risk factor is set at the mid-point specific to that sector as outlined in sec-

tion 4.2.6.


Table 5.1 Reference Case Scenario Key Drivers and Indexes.

Reference Case Key Drivers Factors Indexes

Evolution to

remain as it is

progressing in

2014

Energy Price • LNG price

• Brent price

Brent Ref. Case, LNG Ref

Case. See figure 5.1

Fleet Growth • GDP & Trade Growth See table 5.2

Infrastructure

Readiness

• Existing & planned infra-

structure

3 year development cycle,

typical for LNG infrastruc-

ture projects

Policy • Tax

• Subsidy No changes

Equipment Inno-

vation

• Incremental equipment

CAPEX

-1% decline in CAPEX

per year (learning effects

from continuous im-

provement efforts)

Owner’s Risk

• Price Spread

• Infrastructure Readiness

• Technology Innovation

6% _ SSS and IWT

4%_ LHDV and Industry


Table 5.2 Reference Case Fleet Growth Economic Drivers (Average 2015-2035).


GDP Growth 0.9% 0.9% 1.8% 1.5% 1.2%

Population Growth 0.8% -0.5% 0.2% 0.3% 0.2%


Industrial Production Growth 3.5% 3.3% 3.3% 4.3% 3.2%

Travel & Tourism Contribution

to GDP Growth 3.3% 3.3% 3.3% 3.3% 3.3%

Source: Eurostat, IFM, Pace Global.

Figure 5.1 shows the Reference Case of the spread between LNG and Brent Crude at a

commodities level before VAT and taxes are applied. Applicable, fuel taxes, VAT and CO2

are then applied specific to each country and sector to gain the specific retail fuel spread for

each country and sector.


Figure 5.1 LNG CIF at Zeebrugge and Brent Crude Price Forecasts (June 2014) Reference Case (Real 2013).

Source: Bloomberg, Pace Global.

5.3 Low Demand Scenario

The Low Demand scenario shows a slow LNG demand development. To reflect this, the

key drivers, see


Table 5.3, were depressed or increased to reflect the inertia that will reduce LNG adoption

across all sectors. No change in the tax policy was modelled as realistically it is not viewed

as a driver that is likely to change in the medium future and if does change it is difficult to

estimate the percentage change and when this would happen.


Table 5.3 Low Demand Scenario Key Drivers and Indexes

Low Case Key Drivers Factors Indexes

• Low economic forecast

results in low trade

growth and little need

for new equipment

• Low economic demand

translates to lower en-

ergy demand and pric-

ing

• Infrastructure develop-

ment slowed by uncer-

tainty

• Policy favours LNG

adoption to speed in-

vestment & growth

• Technology innovation

slowed in weak econo-

my

• Owner’s perceived risk

high due to weak econ-

omy & lack of available

supply infrastructure


• Brent price

Brent Low Case, LNG Ref.

Case, see table 5.2

Fleet Growth • GDP & Trade Growth See table 5.4

Infrastructure

Readiness

• Existing & planned

infrastructure

4 year development cy-

cle

Policy • Tax


Equipment

Innovation

• Incremental equipment

CAPEX

0 % decline in CAPEX

per year

Owner’s Risk

• Price Spread

• Infrastructure Readi-

ness

• Technology Innovation

2% for all sectors


Table 5.4 Low Case Fleet Growth Economic Drivers (Average 2015-2035)


GDP Growth 0.7% 0.7% 1.7% 1.5% 1.1%



Industrial Production Growth 0.5% -0.5% -2.0% -1.1% 1.4%


to GDP Growth 3.3% 3.3% 3.3% 3.3% 3.3%

Source: Eurostat, IFM, Pace Global.

The economic factors of the ‘Fleet Growth’ are entered into an algorithm specific to each

sector which calculates a weighted percentage ‘Fleet Growth’ for each sector and country.

The energy price spread is based on the Low Brent case and the Reference LNG case as

shown in Fout! Ongeldige bladwijzerverwijzing.2 and represents approx. 25% discount to

the ‘Reference Case’ price spread. This spread was considered more realistic than factoring

the high LNG case and Low Brent case. The spread shows the commodities before VAT

and taxes are applied. Applicable, fuel taxes, VAT and CO2 are then applied specific to

each country and sector to gain the specific retail fuel spread for each country and sector.


Figure 5.2 LNG CIF at Zeebrugge and Brent Crude Price Forecasts (June 2014) Low Case (Real 2013).

Source: Bloomberg, Pace Global. Note: Spread 2015: 3.4 €/MMBtu; Spread 2020: 2.7 €/MMBtu, Spread

2035: 3.9 €/MMBtu.

5.4 High Demand Scenario

The High Demand scenario shows a strong development of LNG demand. The key drivers,

as shown below in Fout! Verwijzingsbron niet gevonden., were depressed or increased

o reflect the stimulus that will accelerate LNG adoption across all sectors. No change in the

tax policy was modelled as realistically it is not viewed as a driver that is likely to change in

the medium future and if does change it is difficult to estimate the percentage change and

when this would happen.

0

2

4

6

8

10

12

14

16

18

20

2015 2020 2025 2030 2035

€/M

MB

tu

Brent_Ref Brent_Low Brent_High

LNG CIF_Ref LNG CIF_Low LNG CIF_High


Table 5.5 High Demand Scenario Key Drivers and Indices

High Case Key Drivers Factors Indexes

• High economic forecast re-

sults in strong trade growth

and robust demand for

equipment

• High economic demand

translates into higher energy

demand and pricing

• Infrastructure development

accelerated by certainty

• Governments see adoption

and increase policy drivers

but seek to gain from the

LNG demand growth

• Strong market provided capi-

tal and risk appetite for tech-

nology innovation

• Strong economy and devel-

oping infrastructure lessen

Owner’s perceived risk.


• Brent price

Brent High Case

and LNG Ref.

Case, see Figure

5.3

Fleet Growth • GDP & Trade

Growth See table 5.6

Infrastructure

Readiness

• Existing & planned

infrastructure

2 year development

cycle

Policy • Tax


Equipment

Innovation

• Incremental equip-

ment CAPEX

-3 % decline in

CAPEX per year

Owner’s Risk

• Price Spread

• Infrastructure

Readiness

• Technology Innova-

tion

10% _ SSS and IWT

6%_ LHDV and In-

dustry

Source: Pace Global

Table 5.6 High Case Fleet Growth Economic Drivers (Average 2015-2035)


GDP Growth 1.2% 1.2% 1.8% 1.5% 1.4%



Industrial Production Growth 4.0% 4.0% 4.0% 5.0% 3.9%


to GDP Growth 3.3% 3.3% 3.3% 3.3% 3.3%

Source: Eurostat, IFM, Pace Global

The economic factors of the ‘Fleet Growth’ are entered into an algorithm specific to each

sector which calculates a weighted percentage ‘ fleet growth’ for each sector and country.

The energy price spread is based on the High Brent case and the Reference LNG case,

shown in Fout! Verwijzingsbron niet gevonden.5, and represents an approximate 40%

ncrease on the ‘Reference Case’ price spread. This spread was considered more realistic

than factoring the High LNG case and Low Brent case. The spread shows the commodities

before VAT and taxes are applied. Applicable, fuel taxes, VAT and CO2 are then applied

specific to each country and sector to gain the specific retail fuel spread for each country

and sector.


Figure 5.3 LNG CIF at Zeebrugge and Brent Crude Price Forecasts High Case (Real 2013).

Source: Bloomberg, Pace Global. Note: Spread 2015: 6.4 €/MMBtu; Spread 2020: 5.7 €/MMBtu, Spread

2035: 8.6 €/MMBtu.

0

2

4

6

8

10

12

14

16

18

20

2015 2020 2025 2030 2035

€/M

MB

tu

Brent_Ref Brent_Low Brent_High

LNG CIF_Ref LNG CIF_Low LNG CIF_High


Chapter 6 LNG Adoption

6.1 Summary

This chapter presents the forecasted LNG demand for the Upper and Lower Rhine in 2020

and 2035 for the following end-user categories:

Short Sea Shipping Vessels

Inland Waterway Transport Vessels

Light and Heavy Duty Vehicles and

Industry

The forecasted LNG demand are based on the growth of the incumbent fuel demand as

presented in Chapter 3, then modelled according to the LNG drivers outlined in Chapter 4

and the scenarios described in Chapter 5.

The results are presented by end-user category and then in the annexes by ports within

each end-user category. Results show LNG volumes and LNG adoption rates. The LNG

adoption rates reflect the uptake of LNG versus the incumbent fuel (e.g. 5 % adoption rate,

means that LNG will represent 5 % of the fuel demand, and 95% remains the incumbent

fuel).

A summary agglomerating the overall LNG demand per port and Rhine region is presented

at the end of this chapter for each scenario. The Appendix includes specific graphics per

port as well as the price spread (LNG-incumbent fuel) by fuel and ports.

6.1.1 LNG Demand Overview in the Upper Rhine and Lower Rhine

by 2020 and 2035

Figure 6.1 shows the forecasted reference case for LNG demand by 2020, by end-user

sector for the Lower Rhine and Upper Rhine. It shows that the Lower Rhine the total LNG

demand could reach up to 449,000 metric tonnes in the Lower Rhine and 147,000 metric

tonnes in the Upper Rhine region. The end user categories with the greatest LNG demand

are expected to be vehicles (LHDV) and Inland Waterway Transport Vessels for both the

Lower and Upper Rhine24.

24

24

Lower Rhine: Netherlands (Port of Rotterdam), Belgium (Port of Antwerp).

Upper Rhine: Germany (Port of Mannheim), France (Port of Strasbourg), Switzerland (Port of Basel).


Figure 6.2 shows that by 2035, total LNG fuel demand could potentially reach to 3.5

million metric tonnes in the Lower Rhine region and 1.5 million metric tonnes in the Upper

Rhine region.

Figure 6.1 2020 Forecasted LNG Demand in the Upper and Lower Rhine in Thousand Metric Tonnes

(Reference Case).

Source: Pace Global

Figure 6.2 2035 Forecasted LNG Demand in the Upper and Lower Rhine in Thousand Metric Tonnes

(Reference Case).

Source: Pace Global


6.1.2 LNG Aggregated Demand in 2020

Figure 6.3 shows that the vehicle sector (LHDV) and IWT sector have the highest LNG

demand amongst all for end-user groups. This is attributed to a number of reasons specific

to each of those two sectors.

While all four sectors will have the same exposure to energy price, infrastructure readiness,

GDP, trade growth, each sector will have a different growth in incumbent fuel demand

based on the existing demand. Secondly, each sector will have different fuel taxes, so while

they are exposed to the same commodity energy spread (Incumbent fuel- LNG), the retail

spread (which includes tax and transport costs) by sector and location will vary (Price

spreads by fuel and location are presented in the Appendix). This in turn will render some

sectors more favorable to adoption than others. For example, the LHDV sector is subject to

high diesel tax, this in turn broadens the spread between LNG and diesel (making diesel

more expensive) and thereby LNG for favorable. This is not the case for the IWT sector

which is not subject to fuel taxes, therefore the retail spread between LNG and EN590 is not

as broad as in the LHDV sector. This also applies to the industry sector which has lower

fuel taxes than the LHDV sector.

Furthermore, the IWT sector in comparison to the SSS sector faces a much more straight

forward decision making process in terms of adopting LNG or not. SSS owners as outlined

further in this chapter face three alternative choice to comply with the SECA emissions re-

strictions. The SECA emissions restrictions will drive the consideration of LNG but not the

adoption, this is an important distinction to make. The LNG technology will compete on price

with two other technologies. The adoption the LNG technology will be related to its TCO

competitive pricing in relation to the other two. This reduces the potential rate of LNG adop-

tion, not including the fact that some ship owners may decide not to comply with the new

restrictions further reducing potential adoption. Recent press releases indicate that this may

be more prevalent than anticipated due to the lack of financing for proper law enforcement.

Whereas IWT ship owners only face the one alternative technology; switching to LNG if the

economics are favorable.

The five study ports also harbors more IWT vessels than SSS (only Rotterdam and Antwerp

host SSS), whereas IWT vessels are present in all five ports providing a higher fuel de-

mand.

Industry is the lowest of all sectors and this can be attributed to the fact that there is little

petroleum fuel consumption relative to other energies by industry in the Rhine region, as

presented in Chapter 3. The Rhine region is very well connected to the gas grid as such

industries already connected to the gas grid will have the necessity to switch to LNG, as

pipeline gas is cheaper than LNG, since it comes from a much more liquid market (TTF or

NBP) and does not require process and pipeline transport costs are cheaper than LNG

transport costs.

The high level of difference between the Low and High Case is a reflection of the difference

between the Low and High Case of each key driver and the sensitivity of each sector to


specific key drivers. This is discussed in more detail in the following sections specific to

each sector.

Figure 6.3 Lower Rhine LNG Demand by End-User Category in 2020, Thousand Metric Tonnes.

Source: Pace Global

The tables below present the specific LNG demand for the ports in the Lower Rhine, e.g.

Rotterdam and Antwerp:

Table 6.1 Rotterdam, 2020: LNG demand per user group for the Low, Reference and High scenario

(in tonnes x 1000)

User group Low Reference Case High

SSS 1 2 86

IWT 50 112 333

HGV 32 177 275

Industry 2 3 6

Total inbound volume 84 294 701

Table 6.2 Antwerp, 2020: LNG demand per user group for the Low, Reference and High scenario

(in tonnes x 1000)


SSS 0 1 40

IWT 44 98 291

HGV 28 89 203

Industry 2 4 11


LNG Demand (Thousand MT) Industry IWT SSS Vehicle

High 35 360 127 595

Low 5 9 1 43

Reference Case 12 126 3 308

2020 Lower Rhine


The same description as outlined for figure 6.3 holds true for figure 6.4, with the exception

that there are no SSS vessels in the Upper Rhine region.


Figure 6.4 Upper Rhine LNG Demand by End-User Category in 2020, Thousand Metric Tonnes.

Source: Pace Global

The tables below present the specific LNG demand for the ports in the Upper Rhine, e.g.

Mannheim, Strasbourg and Basel:

Table 6.3 Mannheim, 2020: LNG demand per user group for the Low, Reference and High scenario

(in tonnes x 1000)


SSS 0 0 0

IWT 7 15 34

HGV 18 120 334

Industry 3 10 30


Table 6.4 Strasbourg, 2020: LNG demand per user group for the Low, Reference and High scenario

(in tonnes x 1000)


SSS 0 0 0

IWT 6 13 28

HGV 5 17 43

Industry 0 0 1


LNG Demand (Thousand MT) Industry IWT Vehicle

High 42 76 312

Low 4 2 17

Reference Case 13 30 104

2020 Upper Rhine


Table 6.5 Basel, 2020: LNG demand per user group for the Low, Reference and High scenario

(in tonnes x 1000)


SSS 0 0 0

IWT 7 16 34

HGV 0 9 52

Industry 1 3 8


6.1.3 LNG Aggregated Demand in 2035

LNG aggregated demand in 2035 shows the same trends than described in the previous

section on the 2020 data (Figure 6.5 and Figure 6.6). Though the numbers are greater

which is attributed to a more favorable commodity spread between the incumbent fuel and

LNG, GDP growth which will affect every sector and LNG supply infrastructure, which is

expected be much more mature by then in comparison to 2020.

Figure 6.5 Lower Rhine LNG Demand by End-User Category in 2035.

Source: Pace Global

LNG Demand (Thousand MT) Industry IWT SSS Vehicle

High 181 2,147 1,276 2,483

Low 76 379 28 1,296

Reference Case 128 1,149 138 2,114

2035 Lower Rhine


The tables below present the specific LNG demand for the ports in the Lower Rhine, e.g.

Rotterdam and Antwerp:

Table 6.6 Rotterdam, 2035: LNG demand per user group for the Low, Reference and High scenario

(in tonnes x 1000)


SSS 19 94 872

IWT 473 849 1,744

HGV 562 922 1,044

Industry 14 17 23

Total inbound volume 1,068 1,882 3,683

Table 6.7 Antwerp, 2035: LNG demand per user group for the Low, Reference and High scenario

(in tonnes x 1000)


SSS 9 44 404

IWT 413 742 1,524

HGV 578 763 904

Industry 36 45 54

Total inbound volume 1,036 1,594 2,886

Figure 6.6 Upper Rhine LNG Demand by End-User Category in 2035.

Source: Pace Global

LNG Demand (Thousand MT) Industry IWT Vehicle

High 222 385 1,417

Low 87 84 667

Reference Case 145 241 1,137

2035 Upper Rhine


The tables below present the specific LNG demand for the ports in the Upper Rhine, e.g.

Mannheim, Strasbourg and Basel:

Table 6.8 Mannheim, 2035: LNG demand per user group for the Low, Reference and High scenario

(in tonnes x 1000)


SSS 0 0 0

IWT 62 104 174

HGV 797 1,227 1,530

Industry 61 81 147

Total inbound volume 921 1,412 1,851

Table 6.9 Strasbourg, 2035: LNG demand per user group for the Low, Reference and High scenario

(in tonnes x 1000)


SSS 0 0 0

IWT 57 93 141

HGV 111 164 194

Industry 5 6 8


Table 6.10 Basel, 2035: LNG demand per user group for Low, Reference and High scenario

(in tonnes x 1000)


SSS 0 0 0

IWT 68 109 172

HGV 37 175 229

Industry 15 20 37


6.2 Current and planned Short Sea Shipping LNG

Fuelled Vessels

According to recent figures from DNV (2014), the current global LNG fleet in operation con-

sists of 48 vessels, with another 50 vessels scheduled for delivery by the end of 2018. The

largest share of this fleet is dominated by regional ferries, patrol vessels and Platform Sup-

ply Vessels (PSV). By 2018, it is expected according to DNV’s projections that 60% of the

LNG-fuelled vessels will be PSV, with a growing share of container ships, general cargo

ships, chemical tanker as well as Ro-Ro and Ro-Pax.

Table 6.11 shows an extrapolation on data from a DNV study (DNV 2014) on the potential

number of LNG fuelled short sea shipping (SSS) vessels that could be expected in Europe

based on information in the DNV report.


Table 6.11 Current and Potential LNG Fuelled SSS Vessels Relevant to Europe

Current Potential by 2018

Car/passenger ferry

4

Ro-Ro

4

General Cargo 2 2

LPG carrier

3

Chemical tanker

2

Gas carrier

2

Container Ship

2

Product tanker

1

Total 2 20

Source: TNO assumption based on DNV 2014

6.2.2 Short Sea Shipping LNG Adoption Drivers

The main drivers for LNG adoption by Short Sea Shipping vessels in the study area are the

MARPOL SOx emissions restrictions in the study area and the economic benefits arising

from the spread between crude oil and natural gas. The MARPOL restriction drives the ship

owner to consider alternative fuels with lower sulphur content than Heavy Fuel Oil (HFO) in

order to meet the regulations restrictions. The owner is faced with various alternatives; such

as switching to LNG or running its vessel on Marine Diesel Oil (MDO) or Marine Gasoil

(MGO) and installing a Selective Catalytic Reduction (SCR) device or remaining with HFO

and installing a scrubber device. Additional secondary drivers include LNG supply infra-

structure, engine technology, and the ship owner’s perceived risk of switching to a new fuel

and associated mode of operations. Both main and secondary drivers will influence the

adoption volumes and speed of LNG fuel adoption.

The economics will drive the demand but the unavailability of LNG supply infrastructure

could hinder the speed of LNG adoption, since ships will have limited locations to bunker. In

2025 ships should be able to bunker LNG fuel in all major European ports under the Clean

Power for Transport Act. However, if this doesn’t happen, LNG adoption will be hindered. In

the case of Short Sea Shipping Vessels, the LNG supply infrastructure is a positive driver

as the port of Rotterdam has ship to ship bunker facilities for SSS vessels in place since

July 201425. The port of Antwerp established LNG bunkering procedures for ship to ship,

truck to ship and terminal to ship in 2014 and is currently working with Exmar to jointly build

and LNG bunker vessel26. Although truck to ship LNG bunkering facilities at both ports have

been available to inland vessels for a few years.

Vessel engine technology is also a driver which will influence the speed of adoption. Current

LNG engine technologies may not be as cost competitive as existing HFO or diesel engine,

and the additional space required for the LNG tank reduces the available space for cargo,

which poses a slight barrier to adoption, but with innovation that barrier will erode and in

25

http://www.portofrotterdam.com/ 26

How the Port of Antwerp is moving towards an LNG future presentation. Port of Antwerp 2015.


time engine technology could become a positive driver. The technology innovation driver is

accounted for in the TCO analysis as a percentage point on the technology cost. The as-

sumption is that every year the technology is a percentage cheaper than the previous year

due to innovation. This is further outlined in chapter 4.

6.2.3 Short Sea Shipping LNG Fuel Demand

Figure 6.7 shows the LNG fuel demand (Reference Case) from Short Sea Shipping vessels

(SSS) in the study region, more specifically the ports of Rotterdam and Antwerp. LNG fuel

demand from SSS grows from very limited volumes in 2015 (the results show “0” as there

was no available data at the time of writing this report, although there may be anecdotal

evidence of one or two ships bunkering in Rotterdam for LNG, however the volumes are

insignificant) to approx. 138 thousand metric tonnes in 2035. LNG fuel adoption from SSS

vessels really starts to grow after 2020. LNG demand in the port of Rotterdam shows great-

er volumes than at the port of Antwerp, this is related to the larger number of port calls rec-

orded in Rotterdam (Figure 6.8), which indicates that the port of Rotterdam receives a sig-

nificant larger number of port calls compared to the port of Antwerp.

Figure 6.7 SSS Vessels LNG Fuel Demand (Reference Case).

LNG Demand (thousand MT) 2015 2020 2035

Rotterdam 0.0 1.9 94.2

Antwerp 0.0 0.9 43.7

Source: Pace Global


Figure 6.8 Number of Port Calls per Year and Port Calls Ratios in the Ports of Rotterdam and Antwerp

Source: Ports of Rotterdam and Antwerp

LNG adoption for SSS vessel is much more tempered in the short term as shown in figure

6.9 and as one would anticipate in consideration on the IMO/MARPOL emissions re-

strictions.

Port Call Ratio (%) Rotterdam Antwerp

Bulk 1% 1%

Container 23% 28%

Ro-Ro 13% 9%

Oil & Chem tank. 19% 16%

General cargo 32% 38%

Passenger 8% 6%

Offshore/Service/Tugs 5% 2%


Figure 6.9 SSS Vessels LNG Fuel Adoptions (Reference Case).

Source: Pace Global

This is mainly due to the three alternatives available to SSS vessel fleet owners to comply

with the MARPOL restriction. These options include:

1 Install on-board scrubbing device that allows for the continued combustion of HFO.

2 Switch to low-sulphur MDO/MGO.

3 Replace or convert a ship to run on relatively low cost LNG.

SSS vessel owners will generally choose the option bearing the least cost to minimize im-

pact on profit margins and remain competitive in a tight market27 and our analysis shows

that currently retrofitting vessels with a scrubber device or switch to MDO/MGO is more cost

effective than adopting LNG as shown in Fout! Verwijzingsbron niet gevonden. . This is

riven partly by the relatively high capital investment for LNG ships, the lack of widespread

LNG fueling infrastructure, the hesitation regarding the current technology and the uncer-

tainty on fuel price differentials.

27

http://shipandbunker.com/news/features/industry-insight/661764-industry-insight-the-shipping-industrys-

response-to-eca-2015

LNG Adoption Rate (%) 2015 2020 2035

Rotterdam 0.00% 0.05% 1.70%

Antwerp 0.00% 0.05% 1.70%

http://shipandbunker.com/news/features/industry-insight/661764-industry-insight-the-shipping-industrys-response-to-eca-2015

http://shipandbunker.com/news/features/industry-insight/661764-industry-insight-the-shipping-industrys-response-to-eca-2015


Figure 6.10 TCO Analysis Example between HFO, MDO/MGO and LNG for a General Cargo Ship

Source: Pace Global. TCO includes cost associated with investment for engine parts, scrubbers, fuels, and

operation expenses. TCO is calculated based on 28 year operating life of the vessel

In February 2014 Platts reported that MEC Intelligence estimated a total of 160 vessels had

scrubbers installed by the end of January28. MEC Intelligence also reported the order book

for scrubbers was 190 as of the same time29. The same MEC Intelligence report indicated

90 LNG fueled vessels on order as of December 2014.

Scrubbers are proving easier to retrofit in existing vessels than converting to LNG, and for

some vessels, the loss of cargo/ passenger space to LNG tankage is a significant issue. As

a result, converting to LNG sometimes requires a complete vessel redesign.

Exhaust gas scrubbers are offered in open loop, closed loop, or hybrid configurations. In

each configuration sulfur is extracted from the engine exhaust. Open loop scrubbers allow

the vessel operator to discharge the sulfurous waste into the sea, while closed loop scrub-

bers require the waste be stored aboard for later disposal. Since there is a risk that open

loop scrubbers might be prohibited in some areas, hybrid scrubbers are becoming more

common. They allow operators to discharge the waste where permitted or to retain it for

land based storage. Each of the major scrubber vendors offers open, closed, or hybrid sys-

tems to accommodate different operating needs.

Figure 6.9 shows the same adoption rate of SSS vessels adopting LNG for the ports of Rot-

terdam and Antwerp, this is because the LNG adoption key driver, the energy price spread,

is the same at both ports and we assume will remain as such throughout the forecasted

28

http://www.platts.com/latest-news/shipping/houston/oil-price-collapse-hits-sales-of-exhaust-gas-26016024 29

Shipping Industry’s response to ECA 2015, MEC Intelligence, February, 2015

€ 0

€ 10

€ 20

€ 30

€ 40

€ 50

€ 60

€ 70

€ 80

IFO 180 IFO 380 MDO MGO LNG

Mil

lio

n E

uro

Total Cost of Ownership for General Cargo with 5,000-9,999 dwt


period. As our analysis showed in section 4.3 the energy price spread has a 90% weighted

impact on LNG adoption, dwarfing the other key drivers. The figure below shows that the

majority of vessels will not switch to LNG by 2035 and will remain on HFO or MGD/MDO.

Other published forecasts offer a more aggressive LNG adoption, based on a completely

different methodology. A DNV analysis shows a different forecast which is based on hy-

pothesized scenario paradigms with several key inputs and then assess fuel switching on

that basis without testing the hypothetical assumptions. While such analysis is just as valid

as this one presented here, the methodology used here evaluates the total cost of owner-

ship of the technical solutions and weighs the economics against one another to determine

if LNG makes economic sense or not from the ship owner’s perspective, so it is not based

on a hypothesis. The DMA30 study accounts for the TCO between the various technologies,

but doesn’t account for infrastructure readiness nor the end-user’s risk perception. It is diffi-

cult to compare out results with any other study as similar studies have different geograph-

ical scopes, different methodologies and assumptions, rendering a like for like comparison

difficult. The demand volumes as each port will reflect the ship traffic at each port, assuming

ships bunker at every port call.

6.2.4 Short Sea Shipping Summary

SSS vessels LNG fuel demand along the Lower Rhine could reach between 28,000 metric

tonnes and 1,275, 000 metric tonnes by 2035 based on the Low and High Case. The ma-

jority of SSS vessel LNG fuel demand will come from the Port of Rotterdam as shown in

Figure 6.11. As outlined above the SSS adoption is highly sensitive to the price spread and

the difference in spread between the Low and High Case, which is why there is such a jump

between the Low Case and the High Case. The Low Case and High Case spread are out-

lined below:

Low Case Spread 2020: 2.7 €/MMBtu, Spread 2035: 3.9 €/MMBtu.

High Case Spread 2020: 5.7 €/MMBtu, Spread 2035: 8.6 €/MMBtu.

The forecasted number of LNG fuelled ships shown in Figure 6.11 shows the total ships for

both ports in 2020 and 2035. It is not possible to exactly define which ships belong to which

ports since the LNG adoption was based on port calls and not ships registered at the port. A

ship registered at one port may not necessarily bunker at that port, but is more likely to bun-

ker where it calls. Hence the ship count could only be presented as a total.

30

Danish Maritime Authority on North European LNG Infrastructure Project 2014.


Figure 6.11 SSS Vessels Fuel Demand and Numbers per Port in 2020 And 2035 (all cases).

Rotterdam LNG Demand (thousand MT) 2020 2035

Reference Case 1.9 94.2

High Case 86.4 871.5

Low Case 0.6 19.2

Antwerp LNG Demand (thousand MT) 2020 2035

Reference Case 0.9 43.7

High Case 40.1 404.2

Low Case 0.3 8.9

Ship Count (Rotterdam & Antwerp) 2020 2035

Reference Case 3 184

High Case 121 662

Low Case 1 31

Source: Pace Global

Fout! Verwijzingsbron niet gevonden. shows that by 2020, the majority of vessels adopt-

ing LNG are Offshore/ Service/ Tugs. By 2035, with the development of LNG fueling infra-

structure, improved engine technologies and a more favorable fuel price spread, general

cargo, and oil and chemical product tanker will also adopt LNG, with General cargo repre-

senting up to 73% of total LNG-fueled SSS vessels.

The analysis shows no adoption for ro-ro, ro-pax vessels or passenger vessels this is be-

cause of the total cost of ownership for these classes to switch to LNG fuelled vessels is

higher than the fuel savings they would gain from switching to LNG. The fuel savings are

based on the spread between the incumbent fuel and LNG, multiplied by the fuel consump-

tion over the life time of the vessel. If the fuel savings are not sufficient to compensate for

the incremental cost of the investment, the ship class will not convert. Ship classes differ in

the model by fuel consumption and cost of conversion (based on the engine size) to the

different technologies. Those ship classes with a high cost of conversion and insufficient

fuel consumption to gain the savings required over the remaining life time or full life time (if

new build) will not adopt LNG according to the model.

-

0.1

0.2

0.3

0.4

0.5

0.6

0.7

0.8

0.9

1.0

Rotterdam Antwerp Rotterdam Antwerp

2020 2035

Th

ou

san

d L

NG

MT

Reference Case

-

100

200

300

400

500

600

700

2020 2035

# o

f L

NG

Fu

ele

d S

hip

s

Reference CaseHigh Case Low Case High Case Low Case


Furthermore, the results represent potential adoption based on economic modeling of the

current fleet. The results take into account existing operating LNG vessels, if there are any.

However, they do not take into account announced public initiatives of vessel retrofit or new

LNG vessel builds. The reason for this, is that one risks double counting conversions and

secondly announcement do not necessarily materialize as planned. There have been a

number of cases of LNG vessels announcements, which have ended not being converted to

LNG but instead have been retro-fitted with a scrubber31.

Figure 6.12 LNG-Fuelled SSS Vessel Segmentation Lower and Upper Rhine in 2020 (Reference Case)

Source: Pace Global

As presented in the Status Quo Report there are a couple of previous analyses on LNG

adoption by SSS vessels in Europe. The following table presents an overview of different

forecasts for LNG uptake in 2015, 2025 and 2035 based on LNG penetration in shipping by

weight (dwt) from DNV (2012), SER (2014) and.

Table 6.12 Scenarios for LNG uptake until 2030 for short sea shipping

2015 2025 2035

Minimum (PWC, 2012 frozen scenario) 0% 3% 4%

Maximum (DMA) 0% 28% 40%

Average 0% 14% - 18% 20% - 26%

Sources: TNO calculations based on DNV (2012), Lloyds (2012), PWC (2013), SER (2014).

Fout! Verwijzingsbron niet gevonden. shows the LNG adoption based on the analysis presented

n this section. Our analysis shows significantly lower adoption rates for all cases in 2020

and 2035 than those put forward by the previous studies shown in Fout! Verwijzingsbron

iet gevonden..

31

http://ngvtoday.org/2015/01/22/low-bunker-oil-prices-deterring-shipping-firms-from-investing-in-lng-for-

marine-propulsion, http://shippingwatch.com/carriers/article6374879.ece; 31

http://www.seatrade-insider.com 31

http://www.marinelink.com

http://ngvtoday.org/2015/01/22/low-bunker-oil-prices-deterring-shipping-firms-from-investing-in-lng-for-marine-propulsion

http://ngvtoday.org/2015/01/22/low-bunker-oil-prices-deterring-shipping-firms-from-investing-in-lng-for-marine-propulsion

http://shippingwatch.com/carriers/article6374879.ece


Figure 6.13 SSS Adoption Rate in the Lower Rhine in 2020 and 2035.

LNG Adoption Rate (%) Lower Rhine

2020 2035

Low Case 0.02% 0.24%

High Case 2 % 15 %

Reference Case 0.05% 1.7%

Source: Pace Global

The difference in adoption rates between our results and those from previous studies will

come from a number of factors which include: the methodology (discounted Cash flow anal-

ysis based on a TCO analysis or hypothesized adoption rates based on a scenario para-

digm), the initial input data on the fleet numbers and port calls, the growth factors used, the

prices spread, the assumptions on capex, bunkering frequency, vessel age, etc. and the

geographical range. And so the comparison is not exactly “Apples to Apples” but it does

provide a ball park perspective. In addition our analysis includes the owner’s risk perspec-

tive and infrastructure readiness which further impacts the results as discussed in chapter 4.

The owner’s risk perspective in particular can reduce adoption rate significantly. All other

factors remaining the same removing the owner’s risk perspective factor from the LNG

adoption algorithm can increase adoption by 30%. The owner’ risk factor is particularly rele-

vant in the current climate as the crude commodity crash has reduced the spread between

LNG and petroleum fuels increasing the risk of return on investment from ship owners. This

risk is real and has already been reflected in the market as we have observed a number of

ship owner’s cancelling plans to retrofit to LNG and install scrubbers instead (e.g. Brittany

Ferries have cancelled 3 planed retrofits and one new LNG build following the failure to re-

ceive expected exemptions which would have rendered the economics more favourable).

However, there are some early adopters who have progressed to FID for example:

Offshore ship of Heerema for which a Letter of Intent has been signed, MOL develops

LNG ready ships (for retrofitting), Containerships (FI) ordered 6 LNG fuelled container

vessels (1,400 TEU).

6.3 Inland Waterway Transport Shipping

6.3.1 Inland Waterway Transport LNG Fueled Vessels

By 2015, there are five LNG fuelled Inland Waterway Transport (IWT) vessels recorded

operating in the Rhine and Belgian and Dutch Inland Waterways. Though, fourteen and

more are understood to be in production/planning, nine of which will operate on the Rhine

and the other five ships on the Northern German Waterways or on the Danube. The existing

LNG fuelled vessels in operation on the Rhine include:


Sirocco. Chemical tanker that transports conventional gasses for customers through-

out the Rhine basin. Bunkering is done in Rotterdam and Antwerp.

MS Argonon. It is the first barge in Europe to sail on LNG. Its two dual-fuel Caterpillar

3512 engines run on a mixture of 80% LNG and 20% diesel. With 30m3 LNG, the MS

Argonon can travel from Rotterdam to Basel, Switzerland without bunkering, a round

trip of 1,600 km. Bunkering is done in Rotterdam and Antwerp and Amsterdam.

Greenstream and Green Rhine. These vessels are the first two fully LNG-fuelled in-

land tankers. They have four LNG-powered SI-engines generating 285 kW each. Both

barges are chartered by Shell to transport liquid fuels along the Rhine up to Basel.

Bunkering is done in Rotterdam, Antwerp and Mannheim and Amsterdam.

MS Eiger-Nordwand, is the first retrofit in IWT and first container vessel in IWT to run

on LNG. It sails between the ports in the upper Rhine area (Mannheim, Strasbourg /

Kehl, Ottmarsheim and Basel / Weil) and the seaports Antwerp and Rotterdam. Bunker-

ing is done in Rotterdam and Antwerp.

Three out of the five existing LNG fuelled IWT vessels are chemical tankers. Planned LNG

IWT vessels are more diverse, with 50% being tankers, as presented Fout! Verwijzings-

bron niet gevonden.. All current vessels and most of the planned vessels are partly fi-

nanced and public private partnerships.32

Table 6.13 Currently Operating And Planned IWT Vessels With LNG

Ship Ship type Engine type Engine power Completion

Delivered by 2015 [kW]

MTS Argonon Chemical Tanker 2x Caterpillar 2,500 2011

Greenstream Chemical Tanker 4x Scania 300 kW 1,200 2013

Green Rhine Chemical Tanker 4x Scania 300 kW 1,200 2013

Eiger Container Vessel 2x Wärtsilä 6L20DF 2,200 2014

Sirocco Chemical Tanker Unspecified 1,320 2014

Planned/ in production

Damen River Tanker 1145 EcoLiner 1x Caterpillar 1,250 Q3 3015

Multi-purpose Ro-Ro Ro-Ro Unspecified 1,200 Unspecified

I-Tankers 1403 Chemical Tanker Unspecified 1,320 Unspecified

I-Tankers 1404 Chemical Tanker Unspecified 1,320 Unspecified

Combined tanker LNG-MGO Tanker Unspecified 1,320 Q3 2015

LNG Tanker Chemical Tanker 1 x Wärtsilä 8L20DF 1,400 Unspecified

LNG Inland Tankers Chemical Tanker 1 x Wärtsilä 8L20DF 1,320 Unspecified

LNG Future Pusher Pusher Unspecified 1,320 Unspecified

Gas-electric Container Vessel LNG SI-electric 1,200 Unspecified

Source: CCNR (2014)

32

Source: CCNR 2014. It is unknown for which part of the total investments were financed by public sources.


6.3.2 Inland Waterway Transport LNG Adoption Drivers

The main drivers for LNG adoption by IWT vessels in the study area includes the economic

benefits arising from the spread between crude oil and natural gas at the commodity level

(which then relates to EN590 and delivered LNG at the retail level), LNG supply infrastruc-

ture, and the ship owner’s perceived risk of switching to new fuel. All these drivers will influ-

ence the volume and speed of LNG adoption as outlined in Chapter 4, section 4.3.

The price spread will drive the demand but the unavailability of LNG supply infrastructure

could hinder LNG adoption, since ships will have no or limited locations to bunker. In this

case, for Inland Waterway Shipping, the LNG supply infrastructure is a positive driver as the

ports of Rotterdam, Antwerp and Mannheim offer bunker locations for truck-to-ship bunker-

ing and are developing plans more permanent bunkering options such as short to ship..

Furthermore, the Clean Power for Transport act will ensure that all major IWT ports will

have LNG bunkering infrastructure by 2030, please refer to chapter 4 of the Supply Study

for additional details.

The initial incumbent fuel demand growth of the IWT fleet is based on GDP and trade

growth data as outlined in Chapter 3. Further, the growth rates were applied on the base

assumption that in each sector those consuming fuel face neither significant over or unbuilt

capacity to serve their respective markets. However, we acknowledge that the Rhine IWT

vessel capacity is currently overbuilt and may no growth as forecasted in this study for the

next 5 years, as such we’ve adjusted the IWT growth driver to reflect this in the model and

have assumed no growth in next five years after which growth will resume as per outlined

above.

The numbers of vessels adopting LNG are not reported by port but are reported for the

overall Rhine study ports and presented in the summary subsection 6.3.9. The reason the

vessel numbers are not presented by port is because the LNG adoption is based on the port

calls information received from the Port of Rhine Group. We assumed that vessels will bun-

ker during port calls regardless of which port it is, rather than a vessel bunkering at the port

where it is registered. On that basis the growth in the fleet vessel was undertaken for each

individual port based on growth factors as outlined in chapter 3. The total volume of incum-

bent fuel growth for all of the ports was then summed up, as one fleet. The LNG adoption

model was run on the “one fleet”, the adoption rates and volumes was then allocated to

each port based on the port calls by ship classes.


6.3.3 IWT LNG Fuel Demand

Fout! Verwijzingsbron niet gevonden.4 shows LNG fuel demand by IWT vessels in the

tudy region will grow to 16,000 metric tonnes in 2020 and 1,390,000 metric tonnes by 2035.

Figure 6.14 IWT LNG Fuel Demand (Reference Case).

Source: Pace Global. Note: The results are based on an economic model. We acknowledge that based on inter-

views the LNG demand for bunkering in Basel and Strasbourg in 2015 is “0” in reality. The model simply ind i-

cates that based on the inputs, the economics are favourable for the conversion of a number of ships across the

five ports which would result in an LNG demand of 1000MT in Strasbourg and Basel.

LNG fuel adoption from IWT starts relatively sooner than the adoption by SSS vessels. This

is mainly because of a more favorable price spread between EN590 and LNG and the fact

that there are less fuel switching options available to inland waterway ship owners. Today,

fuel options for inland waterway shippers are limited. The options for IWT are EN590 and

LNG (as opposed to three options in the SSS sector), as discussed in the previous section.

As such there is less competition between fuel (in the SSS sector, LNG is competing with

HFO and MGO/MDO) in the IWT sector, LNG is only competing with EN590. So the deci-

sion making from a ship owner’s perspective is more straight forward.

While Fout! Verwijzingsbron niet gevonden. shows high LNG volumes for the ports of

otterdam and Antwerp, Fout! Verwijzingsbron niet gevonden. shows that the LNG adop-

tion rates (Reference Case) for the ports in the Upper Rhine; Mannheim, Strasbourg and


Mannheim 1 9 79

Strasbourg 1 8 71

Rotterdam 7 67 613

Antwerp 6 59 536

Basel 1 13 91


Basel have a general fast adoption, compared to the ports in the Lower Rhine (Rotterdam

and Antwerp). The reason for the high volumes shown in Fout! Verwijzingsbron niet ge-

vonden. relates to the number of ports calls as shown in Fout! Verwijzingsbron niet ge-

vonden.. The ports of Rotterdam and Antwerp show a significantly higher number of port

calls than the other ports and consequently, assuming ships bunker at every call, a higher

demand for fuel. The faster adoption shown in Fout! Verwijzingsbron niet gevonden. re-

lates to the class of vessels bunkering at each port. Fout! Verwijzingsbron niet gevon-

den., shows that the calls in the Upper Rhine ports are mostly from Motorvessels CEMT II,

III, IV and Va and the percentage of port calls from those vessels in the Upper Rhine ports

are higher than in the Lower Rhine ports. This means that relatively there are more ports

calls from ships with higher fuel consumption in the Upper Rhine than in the Lower Rhine.

Ships with high fuel consumptions are more favorable to adopting LNG that ships with lower

fuel consumption, since they can recover the fuel savings faster than ships with lower fuel

consumption.

Figure 6.15 IWT LNG Fuel Adoption Rates based on Fuel Volumes (Reference Case)

Source: Pace Global


Mannheim 0.5% 4.3% 31.1%

Strasbourg 0.5% 4.7% 35.0%

Rotterdam 0.3% 3.0% 23.3%

Antwerp 0.3% 3.0% 23.3%

Basel 0.4% 6.0% 35.4%


Figure 6.16 IWT Port Call Numbers by Port and Vessel Type in 2013.

Source: Port of Rhine Group

Table 6.14 Percentage Ratio of Port Calls by Vessel Type at Each Port, 2013

Category Rotterdam Antwerp Mannheim Strasbourg Basel

Motorvessel CEMT I 9% 9% 5% 12% 0%

Motorvessel CEMT II 10% 10% 12% 14% 0%

Motorvessel CEMT III 27% 27% 32% 35% 10%

Motorvessel CEMT IV 16% 16% 22% 21% 20%

Motorvessel CEMT Va 11% 11% 16% 14% 60%

Motorvessel CEMT Via 1% 1% 2% 2% 1%

Push Barges IV 7% 7% 3% 1% 1%

Push Barges Va 18% 18% 8% 2% 4%

Push Barges Vb + 1% 1% 0% 0% 4%


6.3.9 Inland Waterway Shipping Summary

Fout! Verwijzingsbron niet gevonden. shows that LNG fuel demand from IWT vessels

long Rhine corridor could reach up to 156,000 in 2020 and 1,399,000 metric tonnes by 2035

(Reference Case). While the Upper Rhine ports indicate a faster adoption because of the

class of vessels calling at those ports, the Lower Rhine ports show higher LNG volumes

because of the number of port calls.

The difference in adoption rates by vessel class reflects the fuel consumption of that par-

ticular class. Higher fuel consumption means more favorable economics to cover the incre-

mental cost of investing in LNG technology. The number of port calls by vessel class will

also drive LNG adoption. For example push barges in the ports of Antwerp and Rotterdam

show a greater volume of adoption versus those in the Upper Rhine ports. This is because

push barges in the ports of Rotterdam and Antwerp show a greater number of ports calls

(and therefore fuel consumption) than in the Upper Rhine ports. And consequently a higher

fuel consumption favors the push barges in the Lower Rhine better than those in the Upper

Rhine.

Furthermore, the low adoption associated with larger vessel e.g. Motorvessel CEMT Via is

also due to the higher initial investment associated with switching from diesel to LNG. Even

though large vessels consumes more fuel and may generate more fuel savings than a

smaller vessel, the incremental investment associated with a larger vessel is significant.

The switching economics is calculated based on initial investment and fuel savings for the

full life of the vessel. A large fuel consumption but relatively low port calls will not drive suffi-

cient fuel savings to cover the investment. The unit capex cost for a smaller ship may be

relative high compared to that of large ship, but the total capex investment cost is higher for

a larger ship than a smaller one due to size and larger engine size. LNG adoption will show

in some vessel classes in the High Case scenario (e.g. push barges) and not in the Refer-

ence Case or Low Case, this is because the High Case scenario show a more favorable

LNG – EN590 spread and therefore improved fuel savings.

For the purpose of this report, Pace Global used the marine capex information on ships

from the report published by Danish Maritime Authority regarding North European LNG In-

frastructure Project.

Figure 6.17 IWT Vessels Fuel Demand per Port in 2020 and 2035 (All cases).

-

50

100

150

200

250

Rotterdam Antwerp Mannheim Strasbourg Basel

Th

ou

san

ds

LN

G M

T

Reference Case High Case Low Case

-

0.2

0.4

0.6

0.8

1.0

1.2

1.4


Millio

ns

LN

G M

T


2020 2035


Source: Pace Global

Fout! Verwijzingsbron niet gevonden.8 shows the number of IWT LNG fuelled vessels in

he Rhine in 2020 and 2035. It shows a strong growth in the number of IWT fueled ships

which are attributed to GDP, trade growth and the availability of supply infrastructure along

the Rhine corridor.

Figure 6.18 IWT Vessels Numbers in 2020 and 2035 (All cases).

Source: Pace Global

9 shows the LNG fueled IWT vessels segmentation in 2020. The segmentation by 2035

varies insignificantly from 2020 and is therefore not shown here. The figure shows that the

main LNG fuel adopters overall are Motor vessel ‘CEMT Va’, Motor vessel ‘CEMT IV’ and

Motorvessel CEMT III ‘as outlined above this is a result the higher frequency of port calls

Antwerp Rotterdam Mannheim Strasbourg Basel

LNG Demand (thousand MT) 2020 2020 2020 2020 2020

High Case 192 168 25 23 28

Low Case 5 4 1 1 0

Reference Case 67 59 9 8 13

Antwerp Rotterdam Mannheim Strasbourg Basel

LNG Demand (thousand MT) 2035 2035 2035 2035 2035

High Case 1,160 1,014 132 115 138

Low Case 202 177 27 24 33

Reference Case 613 536 79 71 91

Ship Counts 2020 2035

High Case 1,126 6,298

Low Case 14 1,078

Reference Case 319 3,396


and fuel consumption from these specific vessel classes which render the switching eco-

nomics favorable.

Figure 6.19 LNG-fuelled IWT Vessel Segmentation in the Lower and Upper Rhine in 2020 (Reference Case).

Source: Pace Global

As presented in the Status Quo Report there are a couple of previous analyses on LNG

adoption by IWT in Europe. The following table presents an overview of different forecasts

for LNG uptake in 2015, 2025 and 2035 based on those studies. Please note that most

forecasts only take into account shares for the years 2020 and 2030. The numbers present-

ed in the table below therefore consist of intra and extrapolations of forecasts mentioned in

the studies.

Table 6.15 Scenarios for LNG uptake in 2015, 2025 and 2035

LNG share 2015 2025 2035

Minimum 0% 6% 12%

Maximum 0% 33% 50%

Average 0% 17% 34%

Source: Calculations TNO based on CCNR 2014, SER (2014), Panteia ea. (2013) and DLR ea.

(2014)

Fout! Verwijzingsbron niet gevonden.16 shows the LNG adoption based on the analysis

resented in this section. It shows a difference between the Upper Rhine and Lower Rhine

ports which will be reflective of the port call ratio and types of ship calling at those ports, as

discussed previously. Our analysis shows lower adoption rates than those put forward by

the previous studies shown in Fout! Verwijzingsbron niet gevonden. for all cases in 2020.

owever, our overall adoption rates for 2035 seem fairly well aligned with the adoption rates

for 2035 presented in Fout! Verwijzingsbron niet gevonden.. The difference in adoption

ates between our results and those from previous studies will come from a number of fac-

tors which include: the methodology, the initial input data on the fleet numbers and port

calls, the growth factors used, the prices spread, the assumptions on capex, bunkering fre-


quency, vessel age, etc. and the geographical range. And so the comparison is not exactly

“Apples to Apples” but it does provide a ball park perspective.


Table 6.16 IWT Adoption Rate in the Lower and Upper Rhine in 2020 and 2035.

LNG Adoption Rate (%) Lower & Upper Rhine

2020 2035

Low Case 0.2-0.3% 3-5%

High Case 9-13% 43-53%

Reference Case 3-5% 23-34%

Source: Pace Global

6.4 Light and Heavy Duty Vehicles

6.4.1 Light and Heavy Duty LNG Fueled Vehicles

Research from the Natural Gas Vehicle Association in Europe (NGVA) indicates that the

current fleet of all natural gas fueled vehicles (CNG & LNG) in Europe does not exceed 1%

of the current total fleet of vehicles (with exception of Dutch CNG buses which amount to

7% of the national Dutch bus fleet)33. LNG fuel in road transportation in Europe is currently

considered to be in a pilot phase and adoption so far is patchy across Europe; some coun-

tries like the Netherlands for example show already a growing number of LNG LHDV, while

others indicated no recorded LNG LHDV as shown in Table 6.8.

This figure also shows the latest available numbers on Natural Gas Vehicles in the study

countries. The data in the first column does not distinguish between CNG vehicles and LNG

vehicles; however, one can presume that for France and Germany, those vehicles are CNG

vehicles since the data indicates no LNG stations in those countries in 2013. In addition,

data dated 2014 presented by NGVA shows no recorded LNG vehicles in France and Ger-

many.

Table 6.17 Existing Natural Gas Vehicles in the Rhine Corridor Countries in 2013 and 2014.

Country

Total

NGVs

In 2013

CNG Sta-

tions in

2013

L-CNG sta-

tions in 2013

LNG sta-

tions in

2014

LNG

trucks in

2014*

LNG Stations

ops/planned

2015**

Belgium 499 16 0 2 33

France 13,538 144 0 0 0

Germany 96,349 915 0 0 0 1

Netherlands 6,680 186 1 9 327 6

Switzerland 11,058 138 1 1 1

Source: NGVA: http://www.ngvaeurope.eu/ngv-statistics-june-2013. Note Total NGVs includes light, medium

and heavy duty vehicles as specified by NGVA. * NGVA presentation in Lisbon Nov 2014. Methane as a Vehicle

Fuel in Europe. **Interview with the Port of Antwerp

33

http://www.ngvaeurope.eu/european-ngv-statistics

http://www.ngvaeurope.eu/ngv-statistics-june-2013


The data presented in the last column of Table 6.8 indicates a number of LNG trucks rec-

orded in the Netherlands, Belgium and Switzerland but the data source provided no indica-

tion on the type or size of trucks. The numbers are nationwide numbers, so for the purpose

of this study we adjusted them to reflect the regions in consideration. Existing LNG truck

numbers were adjusted according to the regions average GDP.

Examples of vehicle LNG adoption in the Rhine Corridor include34:

30 LNG HDVs for semi-trailer transport from Simon Loos in the Netherlands since

2012.

10 LNG HDVs for semi-trailer transport from the logistics company Gebr. Huybregts in

the Netherlands (fuelled with liquefied bio-methane).

5 LNG HDVs from Wim Bosman since 2012.

15 LNG tractor-trailers from Vos Logistics in the Netherlands since 2012.

LNG trailer HDVs from logistics company Hellmann in Osnabrück.

As part of the LNG Blue Corridor a fleet of 100 LNG vehicles will be constructed (see

below).

LNG Blue Corridor

LNG Blue Corridor is a European project financed by the Seventh Framework Programme

which aims to implement four pan-European LNG transport corridors for long-distance

transport (see

6.19).

Three of the four corridors include countries in the Rhine corridor:

The West-East Corridor: Belgium, Germany, Austria, Slovenia, Croatia.

The South-North Corridor: Sweden, Germany, France, Spain.

The Atlantic-Baltic Corridor: Sweden, Germany, Netherland, Belgium, France, Spain

and Portugal.

To achieve this the project aims to mobilize a critical mass of industrial experts, partners

and research institutes in LNG transportation and infrastructure technology to support the

roll out of initial LNG fuelling stations and broad market development for LNG fueled heavy

duty vehicles.

As part of the project 14 new LNG or L-CNG stations (location information unavailable at

the time of writing this report) will be built and a fleet of about 100 LNG Heavy Duty Vehicles

will be made available for operation along the corridors.

34

Source: DLR ea. (2014), Websites companies, NGVA


Figure 6.20 Overview of the LNG Blue Corridors

Source: NGVA

In general, the LNG fuel economics have become attractive for commercial fleet owners,

particularly for commercial long-haul trucks due to the ability to provide a safe traveling dis-

tance of up to 1,000 kilometers between stops and refueling. Owners of commercial truck-

ing fleets are beginning to recognize the additional fuel savings that LNG fuel could poten-

tially bring to their business but remain cautions with purchasing new trucks and engine

conversions. This caution approach is a result of uncertainty of fuel price spreads, additional

CAPEX of LNG fueled trucks and the lack of LNG fueling infrastructure.

6.4.2 Light and Heavy Duty LNG Fueled Vehicles LNG Adoption Drivers

The main drivers of LNG adoption by Light and Heavy Duty Vehicles in the study area are

the economic benefits arising from the difference in taxes between LNG and diesel, the in-

frastructure readiness and the fleet growth as our analysis shows in Chapter 4, section 4.3

The current excise tax policy regarding diesel and natural gas plays a critical role in deter-

mining the LNG fuel switching economics for European countries.


1 shows the current diesel and natural gas excise taxes for road traffic at each study loca-

tion. The average ‘tax delta’ between diesel and natural gas across the study countries is

about Euro10.6/MMbtu with the maximum in Belgium with Euro12.39/MMBtu and minimum

in Switzerland with Euro 9.00/MMBtu. This significant difference in taxes helps further widen

the spread between LNG and diesel and drive more favorable economics to switch to LNG.

We have assumed the same tax regime throughout the forecasting period. While it is im-

possible to foresee whether governments will amend taxation following a large uptake of

LNG to gain more revenue from it, we consider that such a shift in tax policy is only likely to

occur once LNG fuel as a market is sufficient mature to outcompete diesel.


Figure 6.21 Excise Tax for Diesel and Natural Gas (On-road traffic) in 2014.

Source: Eurostat, Pace Global

In addition the costs benefits between LNG and CNG depending on the vehicle size and

operations profile will favor one option over the other (LNG tends to be more cost competi-

tive for long haul vehicles, whereas CNG is more applicable to short distance, known route

back to base operations profile). Secondary drivers include LNG supply infrastructure, the

fleet growth, driven by GDP and trade growth, engine technology, and the vehicle fleet

owner’s perceived risk of switching to new fuel and operations paradigm. All these drivers

will have influences the LNG volume and speed of adoption as outlined in Chapter 4.

6.4.3 Light and Heavy Duty Vehicles LNG Fuel Demand

-

2

4

6

8

10

12

14

16

18

20

Belgium France Germany Netherlands Switzerland

€/M

MB

tu

LNG Diesel


shows that the LNG fuel demand (Reference Case) from Light and Heavy Duty vehicles

(LHDV) along the Rhine corridor grows to 412,000 metric tonnes by 2020 and 3,251,000

metric tonnes by 2035. The slow adoption in the initial years reflects the lack of supply in-

frastructure and slow fleet growth based (reflecting the general European economy); these

two aforementioned drivers, aside taxation and price spread, are the main key drivers as

outlined in section 4.3 that will drive LNG adoption in the LHDV sector

Among all the study locations, the port of Rotterdam and Antwerp shows the strongest

growth in the near term (next 5 years).

This can be explained by the fact that the Netherlands and Belgium already have a number

of LNG LHDV registered and fuelling stations and so adoption is already underway particu-

larly in the Netherlands as indicated in Table 6.8.


Figure 6.22 LHDV LNG Demand (Reference Case).

Source: Pace Global

Figure 6.23 Light and Heavy Duty Vehicle LNG Fuel Adoptions (Reference Case).

Source: Pace Global


Mannheim 0.1 78 798

Strasbourg 0.0 17 164

Rotterdam 9.8 219 1,351

Antwerp 0.9 89 763

Basel 0.0 9 175


Mannheim 0.00% 4.00% 34.70%

Strasbourg 0.00% 2.86% 21.52%

Rotterdam 0.29% 6.08% 30.71%

Antwerp 0.04% 3.70% 24.52%

Basel 0.00% 1.38% 20.50%


6.4.9 Light and Heavy Duty Vehicles Summary

The results show that the LNG fuel demand from LHDV in the five study countries/regions

along the Rhine corridor could reach up to 412,000 metric tonnes in 2020 and 3,252,000 by

2035. 90% of this demand would be concentrated in the ports of Mannheim, Rotterdam, and

Antwerp (Fout! Verwijzingsbron niet gevonden. and 6.24).

As previously indicated, the high range between the High and Low Cases, is attributed to

the difference in the energy price spread and infrastructure readiness scores between the

Low and High Case. The strong difference between the High and Low Case further indi-

cates how sensitive LHDV adoption is to energy price changes and the speed of supply

infrastructure development.

The difference between the high and low cases is less significant than in the shipping sec-

tor, this is because the LHDV sector is not as sensitive to the difference in price spreads

between the Low and High Case as are the IWT and SSS sectors as shown in sector 4.3.

Furthermore, the difference in adoption between each ports is driven by the difference is

LHDV fleet structure, infrastructure readiness, GDP and trade growth and energy price dif-

ferences.

Regions which have a higher number of Heavy Duty Articulated trucks registered will show

a high volume of adoption, since this class of truck offers the best economics in terms of

fuel savings per investment unit, due to the typical high mileage associated with these

trucks.

Figure 6.24 LHDV Fuel Demand and Numbers per Port in 2020 (All cases).

Source: Pace Global

-

100

200

300

400

500


Th

ou

sa

nd

s L

NG

MT


-

5,000

10,000

15,000

20,000

25,000

30,000


# o

f L

NG

Ve

hic

le


Rotterdam Antwerp Mannheim Strasbourg Basel Rotterdam Antwerp Mannheim Strasbourg Basel

High 392 203 217 43 52 27,893 15,239 15,257 3,132 4,032

Low 15 28 12 5 0 770 2,157 780 376 0

Reference Case 219 89 78 17 9 15,693 6,767 5,586 1,276 692

LNG Vehicle Fuel Demand 2020 (thousand MT) LNG Vehicle Count 2020


Figure 6.25 LHDV Fuel Demand and Numbers per Port in 2035 (All cases).

Source: Pace Global

6 indicates that heavy duty articulated truck and heavy duty rigid truck drive the strongest

adoption amongst all vehicle segments with a combined market share of 95% and 96% by

2020 and 2035 respectively. The reason they drive the strongest adoption is because those

class of vehicle show the most favorable economics. The high mileage covered by those

vehicles allows them to gain the fuel savings necessary to cover the incremental cost of

conversion. In comparison, vans have a lesser fuel consumption per km, and do not cover

sufficient kilometer to gain the fuel savings to cover such an investment. In fact vans are

more suitable to CNG conversions as the incremental cost is much less than for LNG and

since vans don’t cover large distances and can refuel every night they don’t need to carry

large volumes of fuel, hence CNG is more suitable for that class of vehicles. The bus class

shows very little adoption again this is a reflection of the relatively higher cost of conversion

versus the accrued fuel savings gained over the life time of a bus. The difference in adop-

tion between vehicle classes between 2020 and 2035 is a reflection of how the economics

over time favors one class over the other. In the model all four classes are subject to the

same economic drivers, price spread and infrastructure development. However, the classes

differ in the costs of conversion and fuel consumption. Over time, innovation in technology

(which is considered in the model) will drive the cost of conversion down which means that

vehicles which previously would not switch to LNG because the cost of conversion was

higher than the fuel savings, will then switch. Fout! Verwijzingsbron niet gevonden.

hows that the heavy duty articulated trucks will have a stronger growth relative to the other

two classes because the relative cost of conversion to fuel savings for heavy duty articulat-

ed trucks is the most favorable of all vehicle classes.

-

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0


Millio

ns

LN

G M

T


-

20,000

40,000

60,000

80,000

100,000

120,000


# o

f L

NG

Ve

hic

le



High 1,579 904 994 194 229 112,776 67,769 69,684 14,098 17,675

Low 718 578 518 111 37 50,389 43,619 36,140 8,175 2,744

Reference Case 1,351 763 798 164 175 96,703 57,368 56,029 11,979 13,500

LNG Vehicle Fuel Demand 2035 (thousand MT) LNG Vehicle Count 2035


Figure 6.26 LNG Vehicle Segmentation by 2020 and 2035 (Reference Case).

Source: Pace Global

Fout! Verwijzingsbron niet gevonden.18 shows the overall LNG adoption rates in the

hine region. It is difficult to effectively compares these rates with other studies as the geog-

raphy in this study is very specific.

Table 6.18 LHDV Adoption Rate in the Lower and Upper Rhine in 2020 and 2035.


2020 2035

Low Case 1% 18-21%

High Case 10% 30-37%



However, a study undertaken by BMVI35 in Germany in 2011 indicates adoption rates for

HDVs>7.5t and tractor units, meaning large trucks with trailers. It shows very different re-

sults from our analysis which we can attribute to methodology, assumption and geograph-

ical range. Our study has neither differentiated between dual fuel engines and full LNG en-

gines. We assumed conversions to full LNG engines. Yet, the adoption rates of the fully

LNG power tractor units accelerated scenario for 2030 is somewhat in the same ball park as

our Low forecast. It is impossible to draw any conclusions from this other than it is difficult to

make forecasts, let alone on the future. And that such forecasts are open to a multitude of

different approaches and assumptions.

35

BMVI 2011. LNG as an alternative fuel for the operation of ships and heavy-duty vehicles. Federal Ministry of

Transport and Digital Infrastructure (BMVI). Berlin


Table 6.19 HDV and Tractor Units LNG adoption in 2030

HDVs>7.5t Tractor units

LNG powered Dual fuel LNG powered Dual fuel

Moderate Scenario 3% 50% 5% 50%

Accelerated Scenario 5% 50% 20% 50%

Source: BMVI 2011

6.5 Industry

6.5.1 LNG Fuel Potential in Industry

The analysis of LNG fuel adoption in industry is focused on the conversion of petroleum

fueled process equipment to natural gas, from facilities which are not connected to the pipe-

line gas. In addition to generating fuel savings, this will also reduce the industrial plant’s

greenhouse gas emissions.

The geographic scope of the regions associated with each port is outlined in figure 6.27 and

associated table

Figure 6.27 Rhine Corridor Region

Source: BCI


Table 6.20 Table of the Specific Regions Considered Within the Geographic Scope of the Study


Belgium_Port of Antwerp Switzerland_ Port of Basel


Hoofdstedelijk Gewest

CH02 Espace Mittelland




BE24 Prov. Vlaams-Brabant Germany_ Port of Mannheim



Netherlands_ Port of Rotterdam DE13 Freiburg










DEA1 Düsseldorf DEB2 Trier

DEA2 Köln DEB3 Rheinhessen-Pfalz

DEA3 Münster DEC0 Saarland

France_ Port of Strasbourg

FR42 Alsace

Source: BCI Note: NUTS 2: EU Nomenclature of territorial units for statistics for regions

The key drivers in the industry sector, as shown in our analysis in Chapter 4, section 4.3,

are the demand growth / industry performance and infrastructure readiness. The reason for

this is mainly the weakness of the other drivers in comparison. The level of taxation is fairly

low, equipment innovation will be minimal as the technology of gas turbines is very well de-

veloped and already at the bottom of the technology innovation development curve as

shown in Figure 4.15. The owner’s perceived risk is fairly small as the investment is relative-

ly small. Moreover, the technology and fuel is already well known and used for process in

industries that are connected to the gas grid. Some small industries which are not connect-

ed to the gas grid have already begun consuming LNG as an alternative fuel. However

these are few and far between, yet growing, but the lack of available information meant that

for the purpose of this study we assumed as of 2015 zero LNG consumption in industry.

Figure 6.27 shows that LNG fuel demand from Industry along Rhine corridor grows to

25,000 metric tonnes by 2020 and 271,000 metric tonnes by 2035. LNG adoption is initially

relatively slow this reflects the current slow economic development and infrastructure readi-

ness. As soon as LNG supply infrastructure develops and LNG is easily available, industry

adoption will increase. Among the study locations, the Port of Mannheim shows the highest

LNG demand with 57,000 metric tonnes by 2035. This is due to the amount of industrial

facilities with oil fueled processes located near Mannheim. The rate of LNG adoption shows

the percentage of fuel consumption that is forecasted to be LNG (Figure 6.28). The industry


LNG adoption for the port of Rotterdam shows a faster adoption rate than LNG adoption by

industry in the other ports. The faster rates is attributed to the countries’ respective GDP

and industrial growth forecasts and respective price spread as these are shown to be the

main drivers as outlined in section 4.3. The GDP forecast will drive the demand for fuel re-

gardless of the type of fuel. So a higher demand for fuel drives a high potential for adoption.

A country/ port which offers a more favorable spread between LNG and diesel will drive a

faster adoption than the other ports. However, Fout! Verwijzingsbron niet gevonden.8

ndicates that the port of Mannheim will see the strongest adoption in terms of LNG volumes.

The volumes reflect the fuel demand by the industry types within the regions associated

with the port of Mannheim. It shows that those German regions harbor industries with a

higher consumption of petroleum products than the regions in Switzerland or those in

France associated with Strasbourg.

Figure 6.28 Industry LNG Demand for all Ports (Reference Case).

Source: Pace Global


Mannheim 0.07 7.3 57

Strasbourg 0.00 0.5 6

Rotterdam 0.11 6.4 41

Antwerp 0.04 3.7 45

Basel 0.03 2.6 20


Figure 6.29 Industry Sector LNG Fuel Adoption Rates for all Ports, Reference Case.

Source: Pace Global

6.5.7 Industry Summary

Fout! Verwijzingsbron niet gevonden. shows the Reference Case for LNG adoption by

ndustry in the regions along the Rhine corridor could reach up to 24,000 metric tonnes in

2020 and over 274,000 metric tonnes by 2035. The High and Low Case scenarios indicate

that demand could range between 162,000 and 433,000 metric tonnes by 2035.

Although the Port of Rotterdam hosts more industry facilities in its region than the other lo-

cations, most of these facilities are refineries which consume petroleum fuel as a feedstock,

for this reasons we only considered heavy and light fuel oil in the analysis, as those fuels

are not used for feedstock but to power the plant. The overall industry consumption of petro-

leum fuels (i.e. diesel, heavy fuel oil and light fuel oil) is only approximately 5 petajoules,

which represents less than 1% of the total industry energy consumption in the region

around the Port of Rotterdam, see Chapter 3. In addition, the Netherlands has a very com-

prehensive gas pipeline supply network and most industries are already fueled by natural

gas, the same applies to Antwerp.

Fout! Verwijzingsbron niet gevonden.30 shows the significant growth in industry between

020 and 2035, and that chemical and petrochemical, metal products and machinery and

other industries form the majority of industries driving LNG demand volumes. This is simply

a reflection of the fuel consumption of those particular industries. The difference in the pe-

troleum fuel burning processes specific to each industry was not considered within this

study. Without specific information on the conversion required for each specific industry, the

cost of conversion was assumed to be the same for each industry, since this is most likely


Mannheim 0% 1% 7%

Strasbourg 0% 2% 18%

Rotterdam 0% 6% 35%

Antwerp 0% 2% 16%

Basel 0% 1% 10%


to be a boiler for heating purposes which would be very similar across industries. Therefore

the only difference between industries, in this study, is their respective fuel consumption.

Figure 6.30 Industry Total LNG Fuel Demand for all Locations in 2020 and 2035 (Reference Case).

Source: Pace Global

Fout! Verwijzingsbron niet gevonden.1 shows that the regions associated with the

annheim port are forecasted to have the highest LNG demand. This is due to the type of

industries in the Mannheim regions which have a higher consumption of petroleum fuel than

those in other regions. This generates a higher potential for LNG conversion when aligned

with favorable switching economics.

LNG Demand (thousand MT) 2020 2035

Iron,Steel, non-ferrous, Mining 1 7

Chemical,Petrochemical 5 42

Food and Tobacco 3 23

Paper, Pulp and Print 1 5

Non-Metallic Minerals 3 21

Metal prod. machinery,transpt equip. 4 29

Textile and Leather 0 1

Other industries 4 40


Figure 6.31 Industry LNG Fuel Demand Sector per Port in 2020 and 2035 (all cases).

Source: Pace Global

1 shows the overall adoption rates in 2020 and 2035 in the Rhine corridor. The adoption is

relatively low in comparison to other sectors. This is mainly because the potential to dis-

place petroleum fuel with natural gas in industry is limited. The consumption is relatively

small (see chapter 3) and the regions considered are well connected to pipeline gas. We

have not come across previous studies evaluating LNG adoption in industry, although there

are indications from press releases of small remote industries switching to LNG in some

countries in Europe, notably in Norway and Poland. The lack of public information on statis-

tics may also reflect a low level of awareness by industrial facilities that they can switch their

petroleum consumption to LNG and in turn this may be because the volumes are so small

they have not considered it.

Table 6.21 LHDV Adoption Rate in the Lower and Upper Rhine in 2020 and 2035.


2020 2035

Low Case 1% 8-13%

High Case 4-5% 17-20%



Ad

op

tio

n R

ate

%

-

5

10

15

20

25


Th

ou

sa

nd

s L

NG

MT

Reference Case

-

20

40

60

80

100

120


Th

ou

sa

nd

s L

NG

MT

Reference CaseHigh Case Low Case High Case Low Case


High 15 20 21 5 16 67 114 103 27 92

Low 3 2 2 0 2 32 44 43 8 35

Reference Case 6 6 7 1 4 41 87 57 19 70

LNG Fuel Demand 2020 LNG Fuel Demand 2035

2020 2035


6.6 Conclusion

The overall volumes by region and sector are presented in section 6.1, which outlines the

main differences in adoption between sector and the drivers behind these. The subsequent

sections discussing each sector by ports showcase the different adoption rates and vol-

umes by locations. It showed how some locations demonstrate a stronger rate of adoption

in particular end-user segments, because of stronger key drivers influencing the total cost of

ownership economics, but do not necessarily harbor the highest forecasted LNG volumes,

which are attributed to fuel consumption rates and fleet growth. This circles back to figure

4.1 in Chapter 4 which shows that some factors impact the speed of adoption and other the

volumes and these will differ by sector and location as demonstrated in these subsequent

sections.

Furthermore, the scenario analysis shows the level of sensitivity of LNG adoption to varia-

tions in the key drivers and how relatively small changes in the drivers can compound each

other to project either very low adoption volumes or very high adoption volumes, further

underlining the uncertainty in forecasting such a nascent market with the historical trends to

provide any guidance.

The relatively low rate of LNG adoption in the near future is reflective a number of factors

that mitigate LNG adoption despite its price competitiveness with incumbent petroleum

fuels, the level of LNG supply infrastructure, whilst in development, is not ready yet to pro-

vide the same level of supply than the incumbent fuel which impacts the owner’s risk per-

ception. In addition to this the adoption of LNG will follow the replacement cycle of equip-

ment. So while, the economics may in first instance seem very favourable and one would

assume therefore an immediate switch to LNG, one has to consider the life time of the

equipment, which will push back the adoption by a few years, even if the economics are

favourable in the immediate. For example an IWT ship or truck owner whose equipment is

3-4 years old will not replace it yet, but will wait until the end of the equipment’s life to then

consider switching to LNG.

This does not apply to SSS vessels which face the choice between three technologies. In

this instance, ship owners whose ships are not ready to be replaced by new ones will

choose the least cost option to comply with the ECA requirements, and so the adoption will

arise mainly from new builds. The cost of an LNG new build is still greater than the other

options, but since it is a new build the ship has a longer life span to recover the fuel savings

and render the option economically favourable. In addition, if the ships are chartered, the

owner’s don’t gain the fuel savings, as the fuel savings are gained by the vessel operator,

this reduces the attractiveness of switching one’s ship to LNG, unless one increases the

charter rates, but then renders the ship less competitive to other chartered ships.

LNG is a competitive fuel versus other incumbent petroleum fuels at a commodity level, the

challenge for the industry is to maintain that competitiveness across the supply chain all the

way to consumption. This will develop as the market matures, LNG infrastructure becomes

ubiquitous and technology reduces in cost.


The results of the demand report certainly indicate that there is a market for LNG along the

Rhine corridor which, out of the four sectors analysed, will be mainly driven by LHDV and

IWT vessels. It shows that adoption will be gradual and there remains much uncertainly on

the volumes as demonstrated by the High and Low Case scenarios. This indicates that LNG

supply infrastructure should develop in a cautious and gradual way, block by block, which

follows the demand growth. LNG delivery by truck is a great flexible mean to supply LNG as

it required little or no infrastructure and hence upfront investment. As demand develops

further, more suitable means of delivery which require investment but offer economies of

scale can be considered i.e. barge delivery, rail delivery or even peak shavers.

The Supply Report will consider the development of supply infrastructure related to the

forecasted volumes in the Demand Report in more detail.


Annexe 1 Demand short sea shipping

per port

A.1.1 Short Sea Shipping at the Port of Rotterdam

Figure 1 shows the LNG fuel demand for SSS vessels in the Port of Rotterdam for all three

scenarios. The Reference Case LNG adoption will reach 1.9 thousand metric tonnes by

2020 and 94.2 thousand metric tonnes by 2035. The High and Low Case scenarios indicate

that the volumes in 2035 could range from 19 to 871 thousand metric tonnes. This repre-

sents between 0.4 % and 15% of total bunkering volumes.

The significant jump between the Low and the High Case is attributed to the sensitivity of

SSS adoption to the price spread as outlined in Chapter 4. A slight change in the price

spread will have a very strong impact on the switching economics whereby switching to

LNG will become much more favorable than installing a scrubber or switching to MGO/MDO

and installing and SCR device. This price sensitivity is perceived by the ship owners as ‘risk’

which will hinder their decision to switch to LNG. The concern of the ship owners is to en-

sure they will gain sufficient savings to cover the investment costs, if those savings are not

apparent in the price spread or if there is doubt that the spread remain, ship owners will

remain with the technology that they know. This perceived risk is taken into account in the

analysis as “Owner’s risk” and as analysed in chapter 4 section 4.3, the price spread has a

50% weighted impact on the Owner’s risk perception in the SSS sector. This means that out

of the 4 drivers of the Owner’s risk perception, the price spread accounts for 50% of the

‘Owner’s risk’ factor which is then used to calculate the TCO. The assumption in the model

is that the ships are owned by the operator. In the case where ships are chartered, the fuel

savings are gained by the entity chartering the ship and not by the owner in that case there

is little incentive for the ship owners to switch to a different technology to gain fuel savings,

as the fuel savings will not be gained by the operator. We believe that this is also why we

currently see more ships fitting scrubbers to meet the ECA emissions restrictions than con-

verting to LNG.

A table is included below the figure to present the data in more clarity as the low volumes

do not show up well due to the scale used. We chose to keep the scale consistent in all the

LNG adoption graphics to help highlight the differences in volumes between scenarios.


Figure 1 SSS Vessels LNG Fuel Demand at the Port of Rotterdam. All Cases.

0.0

0.1

0.2

0.3

0.4

0.5

0.6

0.7

0.8

0.9

1.0

2014 2017 2020 2023 2026 2029 2032 2035

Mill

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NG

MT

LNG Bunker Fuel Demand by Ship Class (Ref Case)

Container General Cargo Oil & Chem Tank. Offshore/ Service/ Tugs Ro-Ro

0.0

0.1

0.2

0.3

0.4

0.5

0.6

0.7

0.8

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1.0

2014 2017 2020 2023 2026 2029 2032 2035

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NG

MT

LNG Bunker Fuel Demand by Ship Class (High Case)


0.0

0.1

0.2

0.3

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0.6

0.7

0.8

0.9

1.0

2014 2017 2020 2023 2026 2029 2032 2035

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NG

MT

LNG Bunker Fuel Demand by Ship Class (Low Case)



Table 1 SSS LNG Fuel Demand at the Port of Rotterdam. All Cases (thousand LNG MT)

Source: Pace Global

Category 2015 2020 2035

General Cargo 0.0 0.0 68.7

Container 0.0 0.0 0.0

Ro-Ro 0.0 0.0 0.0

Bulk 0.0 0.0 0.0

Oil & Chem Tank. 0.0 0.0 5.7

Gas Tank. 0.0 0.0 0.0

Passenger 0.0 0.0 0.0

Offshore/ Service/ Tugs 0.0 1.9 19.7

Total LNG as Bunker Fuel Demand 0.0 1.9 94.2

Category 2015 2020 2035


Container 0.0 0.0 327.5

Ro-Ro 0.0 0.0 0.0

Bulk 0.0 0.0 0.0

Oil & Chem Tank. 0.0 2.6 176.2

Gas Tank. 0.0 0.0 0.0




Category 2015 2020 2035



Ro-Ro 0.0 0.0 0.0

Bulk 0.0 0.0 0.0

Oil & Chem Tank. 0.0 0.0 2.6

Gas Tank. 0.0 0.0 0.0





A.2.1 Short Sea Shipping at the Port of Antwerp

Figure 2 shows LNG fuel demand from SSS vessels at the Port of Antwerp will reach

44,000 metric tonnes by 2035 in the reference scenario. The High and Low Case scenarios

indicate that the LNG fuel demand by 2035 could range from 8,900 to 404,000 metric

tonnes.

The significant jump between the Low and the High Case is attributed to the sensitivity of

SSS adoption to the price spread as outlined in Chapter 4. A slight change in the price

spread will have a very strong impact on the switching economics whereby switching to

LNG will become much more favorable than installing a scrubber or switching to MGO/MDO

and installing and SCR device.


Figure 2 SSS Vessels LNG Fuel Demand at the Port of Antwerp

remove gas tank and passenger as they do not show up on the graphics

amend colour of oil& chem tanks and offshore/ service/ tugs, too similar in the colour, hard to differentiate

x axis - 3 year interval , so that 2020 and 2035 show up

years label, horizontal

if values in thousands of thousands, change that to millions. One decimal point

Make charts smaller so aht you can fit 3 on a page

chance oil& chem tank to Chemical/Product tanker

0.00

0.05

0.10

0.15

0.20

0.25

0.30

0.35

0.40

2014 2017 2020 2023 2026 2029 2032 2035

Mill

ion L

NG

MT


General Cargo ContainerRo-Ro Oil & Chem Tank.Offshore/ Service/ Tugs

0.00

0.05

0.10

0.15

0.20

0.25

0.30

0.35

0.40

0.45

2014 2017 2020 2023 2026 2029 2032 2035

Mill

ion L

NG

MT



0.00

0.05

0.10

0.15

0.20

0.25

0.30

0.35

0.40

2014 2017 2020 2023 2026 2029 2032 2035

Mill

ion L

NG

MT




Table 2 Short Sea Vessels LNG Fuel Demand at the Port of Antwerp. All Cases(thousand LNG MT)

Source: Pace Global

Reference Case (thousand MT) 2015 2020 2035



Ro-Ro 0.0 0.0 0.0

Bulk 0.0 0.0 0.0

Oil & Chem Tank. 0.0 0.0 2.7

Gas Tank. 0.0 0.0 0.0




High Case (thousand MT) 2015 2020 2035


Container 0.0 0.0 151.9

Ro-Ro 0.0 0.0 0.0

Bulk 0.0 0.0 0.0

Oil & Chem Tank. 0.0 1.2 81.7

Gas Tank. 0.0 0.0 0.0




Low Case (thousand MT) 2015 2020 2035



Ro-Ro 0.0 0.0 0.0

Bulk 0.0 0.0 0.0

Oil & Chem Tank. 0.0 0.0 1.2

Gas Tank. 0.0 0.0 0.0





Annexe 2 Demand IWT per port

A.7.1 Inland Waterway Shipping at the Port of Rotter-

dam

Fout! Verwijzingsbron niet gevonden. shows LNG demand from IWT vessels at the Port

f Rotterdam will reach 67,000 metric tonnes in 2020 and over 613,000 metric tonnes by

2035. The High and Low Case scenarios indicate that demand could range between

202,000 and 1,160, 000 metric tonnes by 2035.


Figure 3 IWT Vessels LNG Fuel Demand at the Port of Rotterdam.

0.0

0.2

0.4

0.6

0.8

1.0

1.2

1.4

1.6

1.8

2.0

2014 2017 2020 2023 2026 2029 2032 2035

Mill

ion L

NG

MT


Motorvessel CEMT I Motorvessel CEMT IIMotorvessel CEMT III Motorvessel CEMT IVMotorvessel CEMT Va Motorvessel CEMT Via

0.0

0.2

0.4

0.6

0.8

1.0

1.2

1.4

2014 2017 2020 2023 2026 2029 2032 2035

Mill

ion L

NG

MT



0.0

0.2

0.4

0.6

0.8

1.0

1.2

1.4

1.6

1.8

2.0

2014 2017 2020 2023 2026 2029 2032 2035

Mill

ion L

NG

MT




Table 3 IWT LNG Fuel Demand at the Port of Rotterdam. All Cases (thousand LNG MT)

Source: Pace Global

A.2.2 Inland Waterway Shipping at the Port of Antwerp

Figure 4 shows LNG demand from IWT vessels at the Port of Antwerp will reach 59,000

metric tonnes in 2020 and over 536,000 metric tonnes by 2035. The High and Low Case

scenarios indicate that demand could range between 177,000 and 1,014,000 metric tonnes

by 2035.


Motorvessel CEMT I 0 1 23

Motorvessel CEMT II 0 7 53

Motorvessel CEMT III 0 3 117

Motorvessel CEMT IV 4 26 167

Motorvessel CEMT Va 1 28 190

Motorvessel CEMT Via 1 2 37

Push Barges IV 0 0 11

Push Barges Va 0 0 14

Push BargesVb + 0 0 0

Total LNG as Bunker Fuel Demand 7 67 613











Total LNG as Bunker Fuel Demand 15 192 1,160













Figure 4 IWT Vessels LNG Fuel Demand at the Port of Antwerp.

amend colours so that one ccan easily differentiate between the push barges and the motor vessels (.e.g. push barges are in orange/red, push barges are in blue greys), make sure the push barges are groupes togther either at the top or at the bottom of the graphic



if values in thousands of thousands, change that to millions. One decimal point

Make charts smaller so aht you can fit 3 on a page

chance oil& chem tank to Chemical/Product tanker

0.0

0.1

0.2

0.3

0.4

0.5

0.6

2014 2017 2020 2023 2026 2029 2032 2035

Mill

ion L

NG

MT





0.0

0.2

0.4

0.6

0.8

1.0

1.2

2014 2017 2020 2023 2026 2029 2032 2035

Mill

ion L

NG

MT





0.0

0.0

0.0

0.1

0.1

0.1

0.1

0.1

0.2

0.2

0.2

2014 2017 2020 2023 2026 2029 2032 2035

Mill

ion L

NG

MT






Table 4 IWT LNG Fuel Demand at the Port of Antwerp. All Cases(thousand LNG MT)

Source: Pace Global






















Total LNG as Bunker Fuel Demand 13 168 1,014













A.2.3 Inland Waterway Shipping at the Port of Mann-

heim

Figure 5 shows LNG demand from IWT vessels at the Port of Mannheim will reach 9,000

metric tonnes in 2020 and over 79,000 metric tonnes by 2035. The High and Low Case

scenarios indicate that demand could range between 27,000 and 132, 000 metric tonnes by

2035.

Figure 5 IWT Vessels LNG Fuel Demand at the Port of Mannheim.

Total LNG Demand

Total LNG Demand

Total LNG Demand

Total LNG Demand

0

20

40

60

80

100

120

140

160

180

2014 2017 2020 2023 2026 2029 2032 2035

Thousands LN

G M

T


Motorvessel CEMT I Motorvessel CEMT II Motorvessel CEMT IIIMotorvessel CEMT IV Motorvessel CEMT Va Motorvessel CEMT ViaPush Barges IV Push Barges Va Push BargesVb +

0

20

40

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100

120

140

160

180

2014 2017 2020 2023 2026 2029 2032 2035

Thousands LN

G M

T



0

20

40

60

80

100

120

140

160

180

2014 2017 2020 2023 2026 2029 2032 2035

Thousands LN

G M

T




Table 5 IWT LNG Fuel Demand at the Port of Mannheim. All Cases (thousand LNG MT)

Source: Pace Global

A.2.4 Inland Waterway Shipping at the Port of Stras-

bourg


f Strasbourg will reach 8,000 metric tonnes in 2020 and over 71,000 metric tonnes by 2035.

The High and Low Case scenarios indicate that demand could range between 24,000 and

115,000 metric tonnes by 2035.



































Figure 6 IWT Vessels LNG Fuel Demand at the Port of Strasbourg.

0.0

0.1

0.2

2014 2017 2020 2023 2026 2029 2032 2035

Mill

ion L

NG

MT





0.0

0.1

0.2

2014 2017 2020 2023 2026 2029 2032 2035

Mill

ion L

NG

MT





0.0

0.1

0.2

2014 2017 2020 2023 2026 2029 2032 2035

Mill

ion L

NG

MT






Table 6 IWT LNG Fuel Demand at the Port of Strasbourg. All Cases (thousand LNG MT)

Source: Pace Global



































A.2.5 Inland Waterway Shipping at the Port of Basel


f Basel will reach 13,000 metric tonnes in 2020 and over 91,000 metric tonnes by 2035. The

High and Low Case scenarios indicate that demand could range between 33,000 and


Figure 7 IWT Vessels LNG Fuel Demand at the Port of Basel

0

10

20

30

40

50

60

70

80

90

100

2014 2017 2020 2023 2026 2029 2032 2035

Thousands LN

G M

T





0

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40

60

80

100

120

140

160

2014 2017 2020 2023 2026 2029 2032 2035

Th

ou

sa

nd

s L

NG

MT





0

5

10

15

20

25

30

35

2014 2017 2020 2023 2026 2029 2032 2035

Thousands LN

G M

T


Motorvessel CEMT I Motorvessel CEMT II

Motorvessel CEMT III Motorvessel CEMT IV

Motorvessel CEMT Va Motorvessel CEMT Via


Table 7 IWT LNG Fuel Demand at the Port of Basel. All Cases (thousand LNG MT)

Source: Pace Global



































Annexe 3 LNG demand Light and

Heavy Duty Vehicles per

port

A.3.1 Light and Heavy Duty Vehicles at the Port of

Rotterdam

Fout! Verwijzingsbron niet gevonden. shows the Reference Case for LNG demand from

HDV at the Port of Rotterdam will reach 219,000 metric tonnes in 2020 and 1,351,000 met-

ric tonnes by 2035. The High and Low Case scenarios indicate that demand could range

between 718,000 and 1,579,000 metric tonnes by 2035. Fout! Verwijzingsbron niet ge-

vonden. shows that the Reference Case for the number of vehicles will grow to ~15,700 by

2020 and to ~ 96,700 by 2035. The High and Low Case scenarios indicate that the number

of vehicles adopting LNG could range between ~50,390 and ~112,776 by 2035 depending

on the speed of supply infrastructure development, in-country GDP and trade growth.


Figure 8 LHDV LNG Demand at the Port of Rotterdam

Table 8 LHDV LNG Fuel Demand at the Port of Rotterdam. All Cases(thousand LNG MT)

Source: Pace Global

0.0

0.2

0.4

0.6

0.8

1.0

1.2

1.4

1.6

2014 2017 2020 2023 2026 2029 2032 2035

Mill

ion L

NG

MT

LNG Fuel Demand by Vehicle Class (Ref Case)

Heavy Duty Articulated Trucks (>32t) Heavy Duty Rigid Trucks (<32t) Bus

0.0

0.2

0.4

0.6

0.8

1.0

1.2

2014 2017 2020 2023 2026 2029 2032 2035

Mill

ion L

NG

MT

LNG Fuel Demand by Vehicle Class (Low Case)


0.0

0.2

0.4

0.6

0.8

1.0

1.2

1.4

1.6

2014 2017 2020 2023 2026 2029 2032 2035

Mill

ion L

NG

MT




Bus 0 10 50

Van 0 0 0

Heavy Duty Rigid Trucks (<32t) 1 75 371

Heavy Duty Articulated Trucks (>32t) 9 134 930

Total LNG as Vehicle Fuel Demand 10 219 1,351


Bus 1 14 54

Van 0 0 0


Heavy Duty Articulated Trucks (>32t) 19 270 1,112

Total LNG as Vehicle Fuel Demand 30 392 1,579


Bus 0 0 19

Van 0 0 0



Total LNG as Vehicle Fuel Demand 9 15 718


Figure 9 LHDV LNG Vehicle Numbers at the Port of Rotterdam.

0

20

40

60

80

100

2014 2017 2020 2023 2026 2029 2032 2035

Thousands LN

G

Vehic

les

LNG Vehicle Count by Vehicle Class (Ref Case)


0

20

40

60

80

100

120

2014 2017 2020 2023 2026 2029 2032 2035

Thousands LN

G

Vehic

les

LNG Vehicle Count by Vehicle Class (High Case)


0

10

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30

40

50

60

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90

Thousands LN

G

Vehic

les

LNG Vehicle Count by Vehicle Class (Low Case)



Table 9 LHDV LNG vehicle numbers at the Port of Rotterdam. All Cases(mln LNG MT

Source: Pace Global


Antwerp

Fout! Verwijzingsbron niet gevonden. shows the Reference Case LNG demand from

HDV at the Port of Antwerp will reach 88,600 metric tonnes in 2020 and over 763,300 met-

ric tonnes by 2035. The High and Low Case scenarios indicate that demand could range

between 578,000 and 904,000 metric tonnes by 2035. Fout! Verwijzingsbron niet gevon-

den. shows the Reference Case for the number of vehicles will grow to ~ 6,767 by 2020

and to ~57,368 by 2035. The High and Low Case scenarios indicate that the number of ve-

hicles could range between ~ 43,619 and ~ 67,769 by 2035.

Reference Case (Number of LHDV) 2015 2020 2035

Bus 11 857 4,104

Van 0 0 0

Heavy Duty Rigid Trucks (<32t) 70 6,018 29,818

Heavy Duty Articulated Trucks (>32t) 356 8,818 62,781

Total LNG Vehicle Count 437 15,693 96,703

High Case (Number of LHDV) 2015 2020 2035

Bus 110 1,184 4,438

Van 0 0 0


Heavy Duty Articulated Trucks (>32t) 1,048 18,068 75,061

Total LNG Vehicle Count 1,945 27,893 112,776

Low Case (Number of LHDV) 2015 2020 2035

Bus 0 0 1,551

Van 0 0 0

Heavy Duty Rigid Trucks (<32t) 0 0 10,960


Total LNG Vehicle Count 352 770 50,389


Figure 10 LHDV LNG Fuel Demand at the Port of Antwerp.


Table 10 LHDV LNG Fuel Demand at the Port of Antwerp. All Cases (mln LNG MT

Source: Pace Global


Bus 0.0 7.5 52.6

Van 0.0 0.0 0.0

Heavy Duty Rigid Trucks (<32t) 0.1 53.5 388.7

Heavy Duty Articulated Trucks (>32t) 0.8 27.6 322.1

Total LNG as Vehicle Fuel Demand 0.9 88.6 763.3


Bus 0.2 14.3 59.4

Van 0.0 0.0 0.0





Bus 0.0 2.6 45.7

Van 0.0 0.0 0.0





Figure 11 LHDV LNG Vehicle Numbers at the Port of Antwerp.

Legends are not consisent

move small numbers ( i.e vans to the top of the graphic)

amend the colour from van and HDV<32, as they are soo simliar.

IF there is no adoption by Van take it out of the legend and include a note under the graphic.


0

10

20

30

40

50

60

70

80

2014 2017 2020 2023 2026 2029 2032 2035

Thousand LN

G V

ehic

les


Bus Heavy Duty Articulated Trucks (>32t) Heavy Duty Rigid Trucks (<32t)

0

10

20

30

40

50

60

70

80

2014 2017 2020 2023 2026 2029 2032 2035

Thousand LN

G V

ehic

les



0

10

20

30

40

50

60

70

80

2014 2017 2020 2023 2026 2029 2032 2035

Thousand LN

G V

ehic

les




Table 11 LHDV LNG vehicle numbers at the Port of Antwerp. All Cases (thousand LNG MT)

Source: Pace Global


Mannheim

Fout! Verwijzingsbron niet gevonden. shows that the Reference Case LNG demand from

HDV at the Port of Mannheim will reach 78,000 metric tonnes in 2020 and over 798,000

metric tonnes by 2035. The High and Low Case scenarios indicate that demand could

range between 518,000 and 994,000 metric tonnes by 2035. Fout! Verwijzingsbron niet

evonden. shows that the Reference Case number of vehicles will grow to ~5,586 by 2020

and to ~56,029 by 2035. The High and Low Case scenarios indicate that the number of ve-

hicles could range between ~36,140 and ~69,684 by 2035. Heavy Duty Trucks >32 tonnes

show the greatest adoption.


Bus 1 613 4,307

Van 0 0 0





Bus 16 1,172 4,867

Van 0 0 0





Bus 1 217 3,740

Van 0 0 0





Figure 12 LHDV LNG Fuel Demand at the Port of Mannheim.

0.0

0.5

1.0

1.5

2.0

2.5

2014 2017 2020 2023 2026 2029 2032 2035

Mill

ion L

NG

MT


Heavy Duty Articulated Trucks (>32t) Heavy Duty Rigid Trucks (<32t)

0.0

0.2

0.4

0.6

0.8

1.0

1.2

2014 2017 2020 2023 2026 2029 2032 2035

Mill

ion L

NG

MT

LNG Fuel Demand by Vehicle Class (High Case)


0.0

0.5

1.0

1.5

2.0

2.5

2014 2017 2020 2023 2026 2029 2032 2035

Mill

ion L

NG

MT


Bus Heavy Duty Rigid Trucks (<32t) Heavy Duty Articulated Trucks (>32t)


Table 12 LHDV LNG Fuel Demand at the Port of Mannheim. All Cases (mln LNG MT

Source: Pace Global


Bus 0 3 18

Van 0 0 0





Bus 0 5 20

Van 0 0 0





Bus 0 0 9

Van 0 0 0





Figure 13 LHDV LNG Fueled Vehicle Numbers at the Port of Mannheim.

0

10

20

30

40

50

60

70

80

2014 2017 2020 2023 2026 2029 2032 2035

Thousand LN

G V

ehic

les



0

5

10

15

20

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30

35

40

2014 2017 2020 2023 2026 2029 2032 2035

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ehic

les



0

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50

60

2014 2017 2020 2023 2026 2029 2032 2035

Thousand LN

G V

ehic

les


Heavy Duty Articulated Trucks (>32t) Heavy Duty Rigid Trucks (<32t)


Table 13 LHDV LNG vehicle numbers at the Port of Mannheim. All Cases (mln LNG MT

Source: Pace Global


Strasbourg

Fout! Verwijzingsbron niet gevonden. shows that the Reference Case for LNG demand

rom LHDV at the Port of Strasbourg will reach 17,100 metric tonnes in 2020 and over

164,200 metric tonnes by 2035. The High and Low Case scenarios indicate that demand

could range between 111,400 and 193,700 metric tonnes by 2035. Fout! Verwijzingsbron

iet gevonden. shows the Reference Case for the number of vehicles will grow to ~1,276 by

2020 and to ~11,979 by 2035. The High and Low Case scenarios indicate that the number

of vehicles could range between ~8,175 and ~14,098 by 2035.

Reference (Number of LHDV) 2015 2020 2035

Bus 0 207 1,457

Van 0 0 0




High (Number of LHDV) 2015 2020 2035

Bus 5 397 1,650

Van 0 0 0




Low (Number of LHDV) 2015 2020 2035

Bus 0 0 736

Van 0 0 0





Figure 14 LHDV LNG Fuel Demand at the Port of Strasbourg.

0

50

100

150

200

250

2014 2017 2020 2023 2026 2029 2032 2035

Thousands LN

G M

T



0

50

100

150

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2014 2017 2020 2023 2026 2029 2032 2035

Thousands LN

G M

T



0

50

100

150

200

250

2014 2017 2020 2023 2026 2029 2032 2035

Thousands LN

G M

T




Table 14 LHDV LNG Fuel Demand at the Port of Strasbourg. All Cases (thousand LNG MT)

Source: Pace Global


Bus 0.0 2.1 14.3

Van 0.0 0.0 0.0



Total Vehicle Fuel Demand 0.0 17.1 164.2


Bus 0.1 3.9 16.2

Van 0.0 0.0 0.0





Bus 0.0 0.7 12.4

Van 0.0 0.0 0.0





Figure 15 LHDV LNG Vehicle Numbers at the Port of Strasbourg.

0

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2014 2017 2020 2023 2026 2029 2032 2035

Thousand LN

G

Vehic

les



0

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Vehic

les




Table 15 LHDV LNG vehicle numbers at the Port of Strasbourg. All Cases (thousand LNG MT)

Source: Pace Global

A.3.5 Light and Heavy Duty Vehicles at the Port of Ba-

sel

Fout! Verwijzingsbron niet gevonden. shows that the Reference Case for LNG demand

rom LHDV at the Port of Basel will reach 9,300 metric tonnes in 2020 and over 175,200

metric tonnes by 2035. The High and Low Case scenarios indicate that demand could

range between 37,300 and 228,900 metric tonnes by 2035. Fout! Verwijzingsbron niet

evonden. shows the Reference Case for the number of vehicles will grow to ~1,276 by

2020 and to ~11,979 by 2035. The High and Low Case scenarios indicate that the number

of vehicles could range between ~8,175 and ~14,098 by 2035.


Bus 0 168 1,173

Van 0 0 0





Bus 4 319 1,324

Van 0 0 0





Bus 0 60 1,018

Van 0 0 0





Figure 16 LHDV LNG Fuel Demand at the Port of Basel.

0

20

40

60

80

100

120

140

160

180

200

2014 2017 2020 2023 2026 2029 2032 2035

Thousands LN

G M

T



0

50

100

150

200

250

2014 2017 2020 2023 2026 2029 2032 2035

Thousands LN

G M

T



0

5

10

15

20

25

30

35

40

2014 2017 2020 2023 2026 2029 2032 2035

Thousands LN

G M

T




Table 16 LHDV LNG Fuel Demand at the Port of Basel. All Cases (thousand LNG MT)

Source: Pace Global


Bus 0.0 0.0 10.7

Van 0.0 0.0 0.0





Bus 0.1 4.2 17.7

Van 0.0 0.0 0.0





Bus 0.0 0.0 1.3

Van 0.0 0.0 0.0





Figure 17 LHDV LNG Vehicle Numbers at the Port of Basel

0

2

4

6

8

10

12

14

16

2014 2017 2020 2023 2026 2029 2032 2035

Thousand LN

G V

ehic

les



0

2

4

6

8

10

12

14

16

18

20

2014 2017 2020 2023 2026 2029 2032 2035

Thousand LN

G V

ehic

les



0.0

0.5

1.0

1.5

2.0

2.5

3.0

2014 2017 2020 2023 2026 2029 2032 2035

Thousand LN

G V

ehic

les




Table 17 LHDV LNG vehicle numbers at the Port of Basel. All Cases (thousand LNG MT)

Source: Pace Global


Bus 0 168 1,173

Van 0 0 0





Bus 4 319 1,324

Van 0 0 0





Bus 0 60 1,018

Van 0 0 0





Annexe 4 LNG demand Industry per

port region

A.9.1 Industry in the Port of Rotterdam Region

Fout! Verwijzingsbron niet gevonden. shows the reference case for LNG adoption by

ndustry in the Port of Rotterdam region will reach 6,000 metric tonnes in 2020 and over


could range between 3,200 and 67,000 metric tonnes by 2035.


Figure 18 Industry LNG Demand at the Port of Rotterdam All Cases.

0

10

20

30

40

50

60

70

80

2014 2017 2020 2023 2026 2029 2032 2035

Thousands LN

G M

T

LNG Fuel Demand by Industry Sector (Ref Case)

Iron,Steel/non-ferrous,Mining Chemical, Petrochemical

Food and Tobacco Paper, Pulp and Print

Non-Metallic Minerals Metal products

Textile and Leather Other industries

0

10

20

30

40

50

60

70

80

2014 2017 2020 2023 2026 2029 2032 2035

Thousands LN

G M

T

LNG Fuel Demand by Industry Sector (High Case)





0

10

20

30

40

50

60

70

80

2014 2017 2020 2023 2026 2029 2032 2035

Thousands LN

G M

T

LNG Fuel Demand by Industry Sector (Low Case)






Table 18 Industry LNG Demand at the Port of Rotterdam. All Cases (thousand LNG MT)

Source: Pace Global

A.4.2 Industry in the Port of Antwerp Region


ndustry in the Port of Antwerp region will reach 3,700 metric tonnes in 2020 and over




Iron and Steel / non-ferrous and Mining 0.0 0 2

Chemical and Petrochemical 0.0 2 16

Food and Tobacco 0.0 1 5

Paper, Pulp and Print 0.0 0 1

Non-Metallic Minerals 0.0 1 6

Metal products 0.0 1 6

Textile and Leather 0.0 0 0

Other industries 0.0 1 6

Total LNG Fuel Demand 0.1 6 41






















Figure 19 Industry LNG Demand at the Port of Antwerp All Cases

Amend graphic so that all the labels in the legend show up

remove labels for industries that do not show up



0

50

100

150

2014 2017 2020 2023 2026 2029 2032 2035

Thousands LN

G M

T


Textile and Leather Iron and Steel / non-ferrous and MiningPaper, Pulp and Print Metal productsNon-Metallic Minerals Food and TobaccoChemical and Petrochemical Other industries

0

50

100

150

2014 2017 2020 2023 2026 2029 2032 2035

Thousands LN

G M

T



0

50

100

150

2014 2017 2020 2023 2026 2029 2032 2035

Thousands LN

G M

T




Table 19 Industry LNG Demand at the Port of Antwerp. All Cases (thousand LNG MT)

Source: Pace Global

A.4.3 Industry in the Port of Mannheim Region

Fout! Verwijzingsbron niet gevonden. shows the Reference Case for LNG adoption by

ndustry in the Port of Mannheim region will reach 7,300 metric tonnes in 2020 and over




Iron and Steel / non-ferrous and Mining 0.0 0.1 1.5

Chemical and Petrochemical 0.0 0.6 7.4

Food and Tobacco 0.0 0.4 4.6

Paper, Pulp and Print 0.0 0.1 1.1

Non-Metallic Minerals 0.0 0.3 4.0

Metal products 0.0 0.3 3.3

Textile and Leather 0.0 0.0 0.3

Other industries 0.0 1.9 22.4

Total LNG Fuel Demand 0.0 3.7 44.6










Total LNG Fuel Demand 0 11 54












Figure 20 Industry LNG Demand at the Port of Mannheim.

0.00

0.05

0.10

0.15

0.20

0.25

0.30

2014 2017 2020 2023 2026 2029 2032 2035

Mill

ion L

NG

MT






0.00

0.01

0.02

0.03

0.04

0.05

2014 2017 2020 2023 2026 2029 2032 2035

Mill

ion L

NG

MT






0.00

0.05

0.10

0.15

0.20

0.25

0.30

2014 2017 2020 2023 2026 2029 2032 2035

Mill

ion L

NG

MT







Table 20 Industry LNG Demand at the Port of Mannheim. All Cases (thousand LNG MT)

Source: Pace Global

A.4.4 Industry in the Port of Strasbourg Region

Fout! Verwijzingsbron niet gevonden. shows LNG demand by Industry at the Port of

trasbourg will reach 1,000 metric tonnes in 2020 and over 19,000 metric tonnes by 2035.

The High and Low Case scenarios indicate that demand could range between 8,000 and

































Figure 21 Industry LNG Demand at the Port of Strasbourg.

0

10

2014 2017 2020 2023 2026 2029 2032 2035

Thousands LN

G M

T


Textile and Leather Metal products

Other industries Paper, Pulp and Print

Iron and Steel / non-ferrous and Mining Chemical and Petrochemical

Food and Tobacco Non-Metallic Minerals

0

10

2014 2017 2020 2023 2026 2029 2032 2035

Thousands LN

G M

T






0

10

2014 2017 2020 2023 2026 2029 2032 2035

Thousands LN

G M

T







Table 21 Industry LNG Demand at the Port of Strasbourg. All Cases (thousand LNG MT)

Source: Pace Global

A.4.5 Industry in the Port of Basel Region


ndustry in the region of the Port of Basel will reach 2,600 metric tonnes in 2020 and over


































Figure 22 Industry LNG Demand at the Port of Basel.

0

10

20

30

2014 2017 2020 2023 2026 2029 2032 2035

Thousands LN

G M

T



Chemical & Petrochemical Metal products

Non-Metallic Minerals Iron and Steel/non-ferrous and Mining

Textile and Leather Food and Tobacco

0

20

40

2014 2017 2020 2023 2026 2029 2032 2035

Thousands LN

G M

T



Chemical and Petrochemical Metal products

Non-Metallic Minerals Iron and Steel / non-ferrous and Mining


0

20

40

2014 2017 2020 2023 2026 2029 2032 2035

Thousands LN

G M

T



Chemical and Petrochemical Metal products

Non-Metallic Minerals Iron and Steel / non-ferrous and Mining



Table 22 Industry LNG Demand at the Port of Basel. All Cases (thousand LNG MT)

Source: Pace Global
































A.4.5 Total Demand in the Port of Rotterdam

Figure 23 shows the reference case for LNG adoption in the Port of Rotterdam will reach

294,000 metric tonnes in 2020 and 2,099,000 tonnes by 2035. The High and Low Case

scenarios indicate that demand could range between 971 and 3,678,000 metric tonnes by

2035.

Figure 23 Total LNG Demand at the Port of Rotterdam in 2020 and 2035, all Cases, (thousand MT)

Source: Pace Global

Thousand MT Low Ref High Low Ref High

Industry 3 6 15 32 41 67

IWT 5 67 192 202 613 1160

SSS 1 2 86 19 94 872

Vehicle 15 219 392 718 1351 1579

Total 23 294 685 971 2099 3678

20352020

Percentage Low Ref High Low Ref High

Industry 11% 2% 2% 3% 2% 2%

IWT 21% 23% 28% 21% 29% 32%

SSS 3% 1% 13% 2% 4% 24%

Vehicle 65% 74% 57% 74% 64% 43%

Total 100% 100% 100% 100% 100% 100%

2020 2035


A.4.5 Total Demand in the Port of Antwerp

Figure 24 shows the reference case for LNG adoption in the Port of Antwerp will reach

152,000 metric tonnes in 2020 and 1,388,000 tonnes by 2035. The High and Low Case

scenarios indicate that demand could range between 800 and 2,376,000 metric tonnes by

2035.

Figure 24 Total LNG Demand at the Port of Antwerp in 2020 and 2035, all Cases, (thousand MT)


Industry 2 4 11 36 45 54

IWT 4 59 168 177 536 1014

SSS 0 1 40 9 44 404

Vehicle 28 89 203 578 763 904

Total 34 152 421 800 1388 2376

2020 2035


Industry 5% 2% 3% 4% 3% 2%

IWT 12% 39% 40% 22% 39% 43%

SSS 1% 1% 10% 1% 3% 17%

Vehicle 82% 58% 48% 72% 55% 38%

Total 100% 100% 100% 100% 100% 100%

2020 2035


A.4.5 Total Demand in the Port of Mannheim

Figure 25 shows the reference case for LNG adoption in the Port of Antwerp will reach

95,000 metric tonnes in 2020 and 933,000 tonnes by 2035. The High and Low Case sce-

narios indicate that demand could range between 588 and 1,230,000 metric tonnes by

2035.

Figure 25 Total LNG Demand at the Port of Mannheim in 2020 and 2035, all Cases, (thousand MT)


Industry 2 7 21 43 57 103

IWT 1 9 25 27 79 132

SSS 0 0 0 0 0 0

Vehicle 12 78 217 518 798 994

Total 14 95 264 588 933 1230


Industry 15% 8% 8% 7% 6% 8%

IWT 5% 10% 10% 5% 8% 11%

SSS 0% 0% 0% 0% 0% 0%

Vehicle 81% 83% 82% 88% 85% 81%

Total 100% 100% 100% 100% 100% 100%

2020 2035

2020 2035


A.4.5 Total Demand in the Port of Strasbourg

Figure 26 shows the reference case for LNG adoption in the Port of Strasbourg will reach

26,000 metric tonnes in 2020 and 241,000 tonnes by 2035. The High and Low Case sce-

narios indicate that demand could range between 140 and 316,000 metric tonnes by 2035.

Figure 26 Total LNG Demand at the Port of Strasbourg in 2020 and 2035, all Cases, (thousand MT)


Industry 0.2 0.5 1.5 4.7 6.2 7.6

IWT 0.6 8.1 23.1 24.3 71.0 115.2

SSS 0.0 0.0 0.0 0.0 0.0 0.0

Vehicle 5.0 17.1 42.8 111.4 164.2 193.7

Total 5.8 25.7 67.4 140.4 241.4 316.5


Industry 4% 2% 2% 3% 3% 2%

IWT 10% 31% 34% 17% 29% 36%

SSS 0% 0% 0% 0% 0% 0%

Vehicle 86% 67% 64% 79% 68% 61%

Total 100% 100% 100% 100% 100% 100%

2020 2035

2020 2035


A.4.5 Total Demand in the Port of Basel

Fout! Verwijzingsbron niet gevonden.7 shows the reference case for LNG adoption in the

ort of Basel will reach 25,000 metric tonnes in 2020 and 286,000 tonnes by 2035. The High

and Low Case scenarios indicate that demand could range between 85 and 403,000 metric

tonnes by 2035.

Figure 27 Total LNG Demand at the Port of Basel in 2020 and 2035, all Cases, (thousand MT)


Industry 1 3 8 15 20 37

IWT 0 13 28 33 91 138

SSS 0 0 0 0 0 0

Vehicle 0 9 52 37 175 229

Total 1 25 87 85 286 403


Industry 69% 11% 9% 18% 7% 9%

IWT 31% 52% 32% 39% 32% 34%

SSS 0% 0% 0% 0% 0% 0%

Vehicle 0% 38% 60% 44% 61% 57%

Total 100% 100% 100% 100% 100% 100%

2020 2035

2020 2035


20141127

LNG Masterplan for Rhine-Main-Danube · The drivers for LNG fuel adoption and the constraints...

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