In response to increasingly tighter environmental regulations, Japan is taking a concrete step to realize LNG bunkering operations in Tokyo Bay. Prior to a supply ship’s deployment in 2021, the Development Bank of Japan recently extended a loan of several hundred million dollars to a company that would be involved in the operation of the new fueling system; a total of five billion dollars are now available for the project. Ise Bay and Tokyo Bay will each have a supply ship to provide vessels with LNG fuel, which does not emit sulfur oxide (SOx) that is subject to environmental regulations.
The approximate LNG bunker fuel market shares by country are Singapore at 30%; China, 5%; South Korea, 5%; and Japan, only 1%. China and South Korea each currently has a plan to build an LNG supply ship. Japan hopes to increase its presence as a major international port of call by establishing organized bunker zones early on.
At the moment, it is considered more logical to use supply ships that are better suited to fueling large vessels in the outer harbor, rather than directly fueling vessels from tanks placed on land. The development of the facility in Ise Bay is currently underway, led by four companies including Toyota Tsusho Corporation and Nippon Yusen Kaisha. Construction of the supply ship is expected to be completed as early as this fall.
For the Tokyo Bay project, three companies, including Sumitomo Corporation, have established a joint venture for the operation of the bunker zone. Because private banks were hesitant to extend loans as LNG vessels are not yet common, the Development Bank of Japan helped the joint venture by using special investment funds that employ government funding, hoping the initial investment will encourage future loans from private financial institutions.
Starting in 2020, environmental regulations in the marine transportation industry started to restrict the SOx level of a vessel’s fuel to under 0.5% in general sea areas. Emission of nitrogen oxide (NOx) is expected to become more tightly controlled as well. LNG, which emits no SOx and can reduce the discharge of NOx by 40 to 70% compared with petroleum fuels, is an increasingly more attractive alternative.