Hydrogen demand to spur on green ammonia shipping

Hydrogen-based fuels present a major opportunity for the shipping sector, as they replace highly carbon-intensive grey hydrogen with green and blue hydrogen, according to a report commissioned by the International Chamber of Shipping (ICS).

The 'Shipping's Role in the Global Energy Transition' report says higher demand for hydrogen will increase tonne mileage, making it more economically efficient to ship hydrogen as ammonia.

There is extensive infrastructure in place to deal with ammonia shipments, as well as experience using it. But in order to meet climate targets and match the required demand, 20 newbuild ammonia carriers would need to be added each year from now until 2030, the report said. This represents a scale-up of the recent rate of five vessels per year.

Green ammonia is becoming more economically viable, helped by recent price rises on natural gas and by declines in electrolyser, wind and solar costs, the report said. In the EU, imported green ammonia can be cheaper than domestic grey ammonia. However, with cost penalties at destinations in the form of converting ammonia back to hydrogen, the best export markets for green hydrogen producers are likely to be those with direct uses of ammonia, the report stated.

This issue does not necessarily apply if the imported ammonia is used directly as ammonia in the consuming country, for example to use for power generation.

The report highlighted some profound implications for the shipping industry as it prepares for a "rapid transition" to meet 1.5°C global climate targets. Coal shipments are expected to fall by 90-100pc, while oil transportation could fall by 50-90pc by 2050, the report states. While biomass and biofuel shipments are likely to increase, although there is a great uncertainty with bioenergy and sustainability.

It said what support and projects that have been announced by governments fall short of what is required, and said there is a significant gap between the planned low-carbon hydrogen production and what is required to meet the 1.5°C target. The IEA estimates low-carbon hydrogen production will reach 24mn t/yr by 2030, but in order meet the 1.5°C scenario, production needs to be at least double.

By Jamie Aldridge