Ammonia may be commercially viable as early as 2026
In a new report, the Global Maritime Forum claims that the cost gap between ammonia and conventional fuels can be closed before 2030, perhaps as early as 2026. But that requires a hefty dose of cost-cutting measures.
Thanks to high scalability and a high potential for use on long shipping routes, ammonia is increasingly seen as an important part of shipping's transition. The technology for using the chemical as a marine fuel is advancing rapidly, and reports from projects that have made great progress have been pouring in recently. But tests of engines, fuel supply systems and bunkering are one thing - the biggest problem is still the costs. According to the Global Maritme Forum's report NoGAPS: Nordic Green Ammonia Powered Ships, an ammonia-powered gas tanker is expected to be 50 to 130 percent more expensive than an LPG/LNG tanker.
A significant part of the NoGAPS project's second phase has therefore been devoted to finding solutions to reduce costs and the most effective is, of course, as the report states, "pulling several cost-reducing levers at the same time". It is about everything from design of dual-fuel vessels (i.e. the ability of a vessel to run on conventional fuels as well as ammonia) and operational efficiency to competitive loan financing arrangements and fuel subsidies.
“With the completion of this latest project phase, we not only have a detailed ship design that could be used for a shipyard tender but also a feasible commercialisation pathways. We hope this boosts confidence amongst charter parties and investors to take steps towards the realisation of M/S NoGAPS and other ammonia-powered vessels,” says Jesse Fahnestock, project director of the Global Maritime Forum.
But the industry is dependent on subsidies and policy instruments from the outside world. The report points to the possibilities of the US Inflation Reduction Act, which could reduce operating costs by 20 percent, and the EU's Fit for 55 measures, which could provide a further 10 percent reduction. If one only bunker with American ammonia, it will also be cheaper. There is much that has to be fulfilled to close the cost gap between ammonia and conventional fuels before 2030.
