Abstract
With the booming natural gas trade, liquefied natural gas (LNG) carriers—the primary transportation method for intercontinental trade on natural gas—have been experiencing enormous growth. This study offers a novel analysis that connects 2011's in-use LNG fleet characteristics, global satellite data on ship movement, and literature on LNG trade to assess the long-term prospects for increasing the energy efficiency of LNG carriers. This analysis also investigates how efficiency characteristics (such as age, size, technology, and operational practices) influence the efficiency of the LNG fleet and develops a ship stock model to independently track technical and operational efficiency practices in LNG carriers. The findings indicate that industry-leading LNG carriers are about 40% more efficient than industry laggards. This analysis indicates that by fully embracing the available technical and in-use practices of the low-carbon industry leaders of today, the fleet could reduce CO2 emissions by 30 million metric tons by 2040—about 8 million metric tons of natural gas, equivalent to $4 billion savings in the LNG supply chain. This study has important implications for the shipping industry and policy makers. The industry has to address split incentives to take advantage of energy-saving opportunities. Regulations that set targets for the energy efficiency of the in-use fleet may ultimately help the industry harvest the efficiency gains while mitigating climate impact from the industry.