Is global shipping on the cusp of a green hydrogen renaissance? Earlier this month, Danish shipping giant A.P. Moller-Maersk announced that it, along with Hong Kong’s Fleet Management Limited, Keppel Offshore & Marine, the Maersk Mc-Kinney Moller Center for Zero Carbon Shipping, Sumitomo Corporation and Norwegian chemicals company Yara has signed a Memorandum of Understanding (MoU) to conduct a joint feasibility study aimed at creating a competitive supply chain for green ammonia at the Port of Singapore, the largest bunkering port in the world.
Ammonia, which emits no CO2 when combusted, has long been regarded as one of the more promising alternative marine fuels to reduce greenhouse gas (GHG) emissions within the shipping industry, which is in line with the International Maritime Organization (IMO) strategy to reduce CO2 emission by 2050. In particular, Maersk says, green ammonia possesses great potential as it is produced from only renewable electricity, water and air with no CO2 emissions.
According to figures quoted from Norwegian industrial giant Aker (more about them later), shipping currently accounts for 2 percent of global GHG emissions, of which long-distance shipping represents 80 percent. Converting all long-distance shipping to ammonia would require approximately 500-600 tons of ammonia annually, 3-4 times current world production levels.
The Maersk-led, multi-party study will examine the entire end-to-end supply chain of ammonia bunkering, which includes the development of a cost-effective green ammonia supply chain, design of ammonia bunkering vessels, and related supply chain infrastructure. The project will also assess potential synergies for ammonia with Liquefied Petroleum Gas (LPG) as a starting point. Considering the comparable requirements for mild refrigerated storage, vessels or barges initially designed for LPG can also handle brown, blue and green ammonia.
“Alongside Methanol, at A. P. Moller – Maersk we see green ammonia as an important future fuel for the decarbonization of our fleet,” A.P. Moller-Maersk’s VP and Head of Decarbonization Morten Bo Christiansen said upon announcing the partnership. “ A dual fuel ammonia engine is currently under development, but for green ammonia to fuel our vessels in the future we also have supply, infrastructure and safety related challenges to solve, not least when it comes to bunkering operations. We are pleased to work with renowned companies in this field to pave the way for ammonia as a future fuel to decarbonize global shipping.”
A recent market study by Argus Media Principal Andrea Valentini predicted that decarbonization pressure among global carriers could help fuel a “billion-ton market” for green ammonia, noting that ammonia is already the second-most-widely produced commodity chemical in the world, with 180 million tons produced in 2019, most of which is used in the fertilizer industry.
Despite its widespread availability of ammonia, economic feasibility of large-scale production of the green variant (which is made from hydrogen produced through water electrolysis, powered by renewable energy) has been hampered by prohibitively high operating costs (namely, the cost of renewable electricity). But, Valentini says, this could be addressed through government regulations and incentives, either through a two-tier pricing system for ammonia or potential regulations from the IMO to enforce the absorption of higher energy costs.
“Although at present the economics of green ammonia are not particularly favorable, it is possible that with significantly lower capital costs, efficiency gains, aggressive decarbonization policies and lower renewable energy costs, a significant market for green ammonia will develop in the long term,” Valentini concluded in the report. “There is real potential for adoption of green ammonia in traditional fertilizer and industrial markets, especially from end users who are willing to pay a premium for carbon-free ammonia. In addition, with the right incentives, we can foresee scenarios in which the market adoption of ammonia in energy applications could outstrip demand for traditional ammonia applications such as fertilizers.
Wärtsilä
But recent pushes into ammonia, specifically from Nordic shipping companies, could point the way toward quicker industrial adoption. Last spring, Finnish marine and energy technology producer Wärtsilä began a series of combustion trials using ammonia, part of an ongoing partnership with an EU-funded project, ShipFC, to install fuel cells on a supply vessel owned by Norwegian shipping company Eidesvik Offshore by 2023, a project that (if successful) will mark the world’s first zero-emission supply vessel.
Aker
And February, Norwegian sustainable energy investment firm Aker Horizons AS, a subsidiary of industrial giant Aker ASA, signed a Letter of Intent with Statkraft, the Norwegian state-owned hydropower producer that is also the largest producer of renewable energy, and Yara to establish Europe’s first industrial-scale green ammonia project in Norway, enable the hydrogen economy, and accelerate the energy transition.
“Aker has been a driving force for knowledge-based industrial development for 180 years. A partnership with Yara and Statkraft, two fellow Norwegian industrial pioneers, marks the beginning of a new industrial adventure in Norway. The first project in Porsgrunn can be a lighthouse project – providing competitive advantage in a growing global hydrogen economy, building on existing capabilities in the Norwegian supplier industry to create new jobs for the future, and forming the basis for a future Norwegian export industry,” said Øyvind Eriksen, President & CEO of Aker ASA and Chairman of Aker Horizons, upon the deal’s announcement in February.
The partnership’s first task will be the electrification of Yara’s existing ammonia facility in Porsgrunn, which Aker says could potentially become one of the largest climate initiatives in Norwegian industrial history. Porsgrunn, which is already one of the largest sources of onshore CO2 emissions in Norway, is well set up for large-scale production and export, allowing Norway to quickly play a role in the hydrogen economy. While building a new plant and associated infrastructure is typically highly capital-intensive, using the existing Porsgrunn plant (which is valued at $450 million) represents significant cost savings to a greenfield project.
The Norwegian shipping industry has a stated ambition to reduce emissions from domestic shipping by 50 percent by 2030, which Aker says will require significant green hydrogen production.
