Key facts
- Shipping companies are losing faith in green fuels like ammonia and hydrogen due to high costs.
- Belief in ammonia as a viable fuel in the next decade fell from 31% to 12% in a survey.
- Conviction in hydrogen as a viable alternative fuel dropped to 10% from 18% in the same survey.
- 50% of executives now believe traditional fuels will remain dominant, up from 41% last year.
- The shipping industry accounts for approximately 3% of global carbon dioxide emissions.
- Shipowners are prioritizing energy efficiency and dual-fuel vessels over immediate adoption of new fuels.
The shipping industry, responsible for approximately 3% of global carbon dioxide emissions, is facing increasing pressure from climate activists and politicians to decarbonize. While efforts to find greener alternatives to petroleum-based fuels have been underway, a significant hurdle has emerged: the prohibitive cost of potential replacements like ammonia and hydrogen.
A recent survey cited by the Financial Times indicates a waning confidence among shipping executives regarding the commercial viability of these alternative fuels within the next decade. The percentage of executives who believe ammonia will become a commercially viable fuel within ten years has fallen sharply from 31% last year to 12% this year. Similarly, conviction in hydrogen as a viable alternative has decreased to 10% from 18%.
Conversely, the belief that traditional fuels will continue to dominate the industry has grown, with 50% of executives expressing this view, up from 41% in the previous year. This sentiment persists despite the energy market disruptions caused by the war in the Middle East.
This trend aligns with broader observations about the slow progress of green hydrogen, which remains expensive and limited in supply. Germany, a proponent of green hydrogen, recently canceled a large-scale project due to economic and political conditions, though it did approve significant government financing for another. The International Energy Agency has also noted widespread project delays, cancellations, and downward revisions of production targets for nascent green hydrogen initiatives, with a study last year revealing only a small fraction of announced projects were completed on schedule.
Industry executives acknowledge the desire to be green but express a strong reluctance to bear the associated costs. As a result, shipowners are prioritizing energy efficiency measures and investing in dual-fuel vessels capable of running on both traditional and alternative fuels. This approach allows them to remain adaptable should alternative fuels become more affordable and accessible in the future, while continuing to rely on fuel oil and liquefied natural gas in the interim.