CATF reveals economic and environmental benefits of ammonia-fuelled ships

A new report from the Clean Air Task Force finds ammonia-fuelled ships could outperform conventional vessels in cost and emissions, aligning with decarbonisation goals.

In brief:
  • Ammonia-fuelled ships offer a 77% reduction in lifetime emissions at comparable costs to heavy fuel oil-powered ships.
  • Retrofitting existing ships for ammonia fuel provides a competitive edge under new carbon emission regulations.
  • International and regional regulatory changes, like the EU's FuelEU Maritime targets and the IMO's revised GHG strategy, support the transition to low-carbon marine fuels.
In detail:

A groundbreaking report from the Clean Air Task Force (CATF) has unveiled that ships retrofitted or built to use ammonia as fuel could operate at lower costs than traditional fossil fuel-powered vessels, while significantly reducing emissions. This finding is pivotal as the maritime sector, responsible for approximately 3% of global energy-related CO2 emissions in 2022, seeks alignment with the Paris Climate Agreement.

John Steelman, Deputy Director of CATF's Transportation Decarbonization program, emphasised the potential of ammonia as a leading alternative fuel. The report, "Managing the Transition to Zero-Carbon Marine Fuels," utilised CATF's economic tools to analyse the production and usage costs of low-carbon fuels in commercial shipping, focusing initially on ammonia.

The study compared four investment scenarios: a new vessel powered by low sulphur heavy fuel oil (HFO), a new ammonia-fueled vessel, and two retrofitted dual-fuel vessels with varying ammonia fuel capacities. Remarkably, a new ammonia-powered ship could achieve a 77% reduction in lifetime emissions at a cost equivalent to a conventional HFO ship, even when accounting for emissions pricing.

In markets like the EU, where carbon pricing is implemented through the Emissions Trading System (EU ETS), ammonia-fueled ships demonstrated compliance or superiority over the new FuelEU Maritime targets at competitive costs. The EU's recent adoption of an 80% emissions reduction target by 2050 for the marine sector further underscores the viability of ammonia-fueled vessels.

The report's findings are timely, considering the International Maritime Organization's (IMO) revised GHG strategy targeting net-zero emissions around 2050 and the EU's expansion of the ETS to maritime shipping. Additionally, the U.S. Inflation Reduction Act (IRA) offers tax credits to reduce the production cost of low-carbon hydrogen and ammonia, while a federal hydrogen hub programme aims to scale hydrogen-based fuel infrastructure, including at ports.

Steelman concluded by highlighting the clear technological path for the marine sector to shift from heavy fuel oil and marine diesel to zero-carbon fuels like hydrogen and ammonia. The report underscores the availability of cost-competitive options for the shipping industry and regulators, urging decisive action towards decarbonisation.

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