Under increasing environmental regulations from the IMO and EU, the shipping industry is pressured to bear significant responsibility in reducing GHG emissions globally. This is further underscored by South Korea's commitment to achieving net zero by 2050, as outlined in the Ministry of Oceans and Fisheries (MOF) 's Strategy for International Shipping Decarbonization, announced in February 2023. Under the guise of reducing GHG emissions, LNG is considered an environmentally friendly interim fuel, and many countries, including South Korea, are ordering LNG-powered vessels and expanding the LNG bunkering market.

However, LNG is a fossil fuel, mainly consisting of methane, and, therefore, cannot achieve substantial GHG emissions reduction compared to conventional petroleum-based fuels on a lifecycle assessment basis. The benefits of LNG are diminished with the adoption of the Well-to-Wake standard in many international regulations. In addition, the infrastructure secured for LNG bunkering will likely be obsolete in 20 years, exposing it to higher stranded asset risk.

In this brief, SFOC examines the South Korean government's decarbonization policy and support for the shipping industry, particularly its reliance on LNG. The brief also recommends immediate and decisive actions that need to be considered to realize the 60% GHG emission reduction declared in MOF's Strategy for International Shipping Decarbonization.