- The transition to zero-emission shipping is hindered by the high cost and long-term commitments required for securing green fuels like methanol and ammonia, with IMO targets set for 2050 and 2030.
- Solutions proposed include joint procurement and ventures, market-making by governments, hydrogen hubs, and time stacking to help manage fuel supply and reduce contract burdens.
- These measures aim to boost production of sustainable fuels and meet international targets while making the transition more manageable for shipping companies.
The transition to zero-emission shipping is gaining momentum as key elements start falling into place. The Global Maritime Forum has released a two-part insight brief series focusing on demand aggregation for zero-emission fuels and its role in facilitating their adoption, reports Global Maritime Forum.
Challenges in Securing Zero-Emission Fuels
The first brief highlights the difficulties early adopters face in obtaining green methanol and ammonia. To meet the International Maritime Organization (IMO) target of net zero emissions by 2050, with 5-10% of energy from alternative fuels by 2030, shipping companies need long-term, large-scale fuel contracts (10-15 years).
However, few companies have managed to secure these supplies due to the high costs and long-term commitments required.
Demand Aggregation Solutions
- Demand-Led Measures:
- Joint Procurement: By combining purchasing power, shipowners, operators, and charters can collectively negotiate better deals, support infrastructure development, and signal strong demand to the market.
- Joint Ventures: Participants in green corridor initiatives can share costs and risks, leveraging combined financial capacity and simplifying complex contracts.
- Third Party-Led Measures:
- Market Making: Governments or international institutions can commit to purchasing fuels from producers and then sell them to shipping companies on shorter, smaller, or cheaper terms.
- Hydrogen Hubs: Increased involvement in hydrogen hubs can connect producers, consumers, and infrastructure in specific locations, facilitating fuel supply.
- Supply-Led Measures:
- Time Stacking: Encouraging fuel producers and financiers to accept shorter contract packages, so no single shipping operator has to commit to the full 10-15 years.
These measures aim to boost the production of sustainable fuels like green ammonia and methanol to meet international targets while keeping the burden on shipping manageable. The insight briefs serve as a starting point for discussions on demand aggregation and its role in advancing zero-emission shipping.
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Source: Global Maritime Forum
