Swiss WinGD Report: LNG Retrofits by 2030 Can Pay Back in Six Years

en.Wedoany.com Reported - A new fuel economy report released by Swiss marine power company WinGD shows that retrofit solutions for existing vessels switching to alternative fuels can help ship operators move toward net-zero emissions in a cost-effective manner, but the report also notes that stronger policy support is still needed to enhance commercial viability and secure international shipping decarbonization targets.

Engine technologies currently applied to decarbonize existing vessels are already relatively mature, with the remaining challenges mainly lying in aligning fuel economy and regulatory requirements with established emission reduction targets. The report models a 16,000 TEU container vessel retrofitted in 2030 with WinGD high-pressure dual-fuel engines to switch to alternative fuels such as liquefied natural gas (X-DF-HP), methanol (X-DF-M), and ammonia (X-DF-A), and designs a global pricing mechanism based on the International Maritime Organization (IMO) draft Net-Zero Framework, calculating retrofit investment, fuel costs, and carbon costs.

The simulation results show that, under the stated assumptions, all three retrofit pathways outperform continued use of very low sulfur fuel oil (VLSFO) in terms of both cost and emission reduction over the vessel's full lifecycle. Among them, the LNG pathway offers the strongest and earliest financial returns, while the ammonia and bio-methanol pathways achieve greater emission reductions but require longer payback periods.

Carmelo Cartalemi, Head of Strategic Marketing at WinGD, stated: "The important finding is that retrofit technology is increasingly not the limiting factor. Commercial outcomes depend more on fuel prices, fuel greenhouse gas intensity, and regulatory signals. Ship operators need to understand not only the cost of the retrofit, but also the cost per tonne of fuel and how their emissions will be treated by regulations over the remaining life of the vessel."

In addition to calculating net present value, the report also lists the potential payback periods for each retrofit pathway, as well as the level of subsidy required to achieve investment recovery within five years. The best-performing pathway—transitioning from LNG to low-greenhouse-gas LNG—can recover costs within six years. To achieve payback within five years, the required subsidy level ranges from $126 to $330 per tonne of CO2-equivalent emissions. This indicates that the incentive mechanism for zero or near-zero emission fuels under the IMO Net-Zero Framework needs to be set at levels similar to the $100 to $380 per tonne remediation units for excess emissions already considered in the framework.

The study also finds that retrofit capital expenditure itself is not the dominant factor in the business case. Across all simulated scenarios, fuel costs and regulatory treatment have a significantly greater impact on full-lifecycle economics than differences in retrofit investment amounts.

Cartalemi concluded: "For operators, the valuable insight is that cost-effective retrofit solutions already exist, although the picture is not yet fully clear. For regulators, the simulation results show that without strong policy, the most cost-effective solutions may not include the fuels that contribute most to the shipping decarbonization trajectory."

The Alternative Fuel Retrofits study is the latest in WinGD's series of fuel economy reports. The first report in the series, drawing on actual bunkering prices and lifecycle emission data from fuel supplier Envision Energy, demonstrated a cost-effective pathway for green ammonia adoption. The series aims to provide ship operators with data, analytical tools, and methodologies for evaluating decarbonization investments, as part of WinGD's commitment to supporting the shipping energy transition across the full range of fuel routes operators may choose.