“Green” ammonia, closely followed by “green” hydrogen, is likely the most advantageous bunker fuel for ships, in terms of the lifecycle GHG emissions, broader environmental factors, the scalability, the economics, and the technical and safety implications of each fuel, according to a new report from World Bank.
Ammonia or hydrogen also have the advantage of having multiple production pathways, providing a significant strategic advantage that alleviates concerns about capacity limits and technology issues, the “Volume 1: The Potential of Zero-Carbon Bunker Fuels in Developing Countries” report unveils.
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Ammonia appears preferable over hydrogen because hydrogen is expensive to store and handle, particularly onboard a vessel. However, ammonia is toxic to humans and aquatic wildlife. Fortunately, ammonia is already an important globally traded commodity. Therefore, meeting challenges associated with its safe storage and handling onboard a vessel will be achievable through the application of appropriate protocols, compliance with technical standards, and use of safety equipment.
The same report concludes that both biofuels and synthetic carbon-based fuels are not expected to become the major power source for achieving shipping’s future zero-carbon energy needs.
Without a breakthrough in aquatic biomass production, biofuels are likely constrained by their feedstock availability, the potential high demand across multiple sectors of the global economy, and the resulting uncertain supply-and-demand price dynamics. Synthetic carbon-based fuels are penalized by their very high costs relative to other alternatives due to multiple energy-intensive steps involved in their production,
…says World Bank.
In addition, the report has deployed a new methodological approach that seeks to understand, at a global scale, which countries are likely to be well-positioned to produce future zero-carbon bunker fuels for the maritime industry. It finds that many countries, including developing countries, are very well-situated to become future suppliers. Well-positioned countries tend to be those endowed with many of the natural resources required to produce the zero-carbon fuels, combined with favorable access to a large volume of shipping activity.
Four developing countries have been selected for further high-level case studies: Brazil, India, Mauritius, and Malaysia. These case studies discuss the implications of each country becoming a potential future producer of zero-carbon bunker fuels in its regional market.
Considering a range of hypothetical ammonia supply scenarios, the capital expenditure requirements have been estimated for each country selected:
- This approach finds that Brazil would need a capital expenditure ranging between $24 billion and $107 billion to meet the full range of blue ammonia supply scenarios.
- India and Mauritius would require between $147 billion and $385 billion and $1.6 billion to $2.7 billion, respectively, to meet the full range of green ammonia supply scenarios.
- Malaysia’s capital expenditure to meet first the blue and later the green ammonia supply scenarios would range between $17 billion and $138 billion.
Recommendations
Further future work will be required for assessing which countries may be well-positioned as future fuel suppliers, focusing, for instance, on the following aspects:
- Cost competitiveness: Considering the individual cost competitiveness of different developing countries in addition to any competition effects between neighboring countries (including both developing and developed countries) has been beyond the scope of this report, but should be a key topic for any further research.
- Multi-criteria assessment: The multi-criteria assessments of the most promising zero-carbon bunker fuels (including the current RAG matrix approach) for shipping should be further developed as first pilots and demonstrator projects conclude and provide practical insights. Additionally, further valuable insights in how to build a future supply chain for zero-carbon bunker fuels could be gained by extending the scope of the assessment to consider opportunities for bilateral energy cooperation between neighboring countries.
- National datasets: There is an opportunity to increase the coverage and granularity of national datasets on energy resources. This would enable the assessment framework to better classify the nature and scale of the business opportunity in individual countries.
- Case studies: Additional country case studies can make important contributions to validate general global findings on a national scale, and to facilitate comparison among countries.
Ultimately, any further analysis which enables constructive policy design, including carbon pricing, in particular, can inform effective policymaking and strategically exploit synergies between global GHG emissions reduction, national development opportunities, and multilateral cooperation at the IMO.
Explore more by reading the full report
