What's Happening?
The adoption of ammonia as a marine fuel is hindered by high costs, according to an analysis by DNV. Ammonia-fuelled ships are currently 15% to 20% more expensive than conventional designs, with retrofits costing even more. Despite the high costs, the potential for cost reduction exists as production scales and designs become standardized. The EU Emissions Trading System and other regulations could help narrow the cost gap, but ammonia remains significantly more expensive than marine gas oil.
Why It's Important?
The transition to ammonia as a marine fuel is crucial for reducing greenhouse gas emissions in the shipping industry. However, the high costs pose a significant barrier to widespread adoption. If costs can be reduced, ammonia could become a viable alternative to traditional fuels, contributing to global efforts to combat climate change. The development of infrastructure and regulatory frameworks will be essential to support this transition, potentially leading to significant environmental and economic benefits.
What's Next?
The transition to ammonia as a marine fuel involves three phases: preparation, upscaling, and stabilization. Currently, the industry is in the preparation phase, with companies building a pioneering fleet and developing initial infrastructure. Upscaling will require standardized frameworks and global carbon pricing to encourage investment in large-scale production. Public-private partnerships and advances in fuel technologies will be critical to overcoming current barriers and achieving widespread adoption.
