The Week In Alt Fuels: Subsidising Bunker Fuel Production

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  • Canada approved CAD 93 billion ($67.98 billion) in tax credits over 10 years to boost clean hydrogen production in the country.
  • scarce biogenic carbon dioxide availability could drive green ammonia production for the global shipping sector rather than e-methanol.

Over the past couple of years, industry organisations including the Global Maritime Forum (GMF), UMAS and Lloyd’s Register have endorsed government subsidies aimed at reducing the costs of producing alternative fuels. Subsidies can “reduce cost disparities associated with low- and zero-emission marine fuels and technologies,” reports Engine according to a GMF report last year.

Green hydrogen’s appeal across shipping

Given green hydrogen’s appeal across shipping and other industries, several governments around the world have subsidised or are planning to subsidise green hydrogen production. This includes nations like the US, Australia and most recently, Canada. While these subsidies are not tailored specifically for shipping, they could make it more lucrative to produce hydrogen-based low- and zero-emission bunker fuels in these regions.

Canada approved CAD 93 billion ($67.98 billion) in tax credits over 10 years to boost clean hydrogen production in the country. Clean hydrogen refers to blue or green hydrogen produced through processes that result in little to no greenhouse gas (GHG) emissions. Green hydrogen, produced via water electrolysis using renewable electricity, is the cleanest form of hydrogen and qualifies for the highest refunds. Tax credits for green hydrogen production could particularly benefit producers of e-methanol and green ammonia bunker fuels, which rely on green hydrogen as their primary feedstock.

A World Economic Forum (WEF) report argues that scarce biogenic carbon dioxide (CO2) availability could drive South African producers to opt for green ammonia production for the global shipping sector rather than e-methanol. Interestingly, WEF proposed subsidising green hydrogen and ammonia production in Africa to make projects “bankable” for foreign investors. But it is the South African government that needs to “subsidize the capex – because there is not sufficient balance sheet strength in the Southern African market to make these projects bankable,” one industry representative told WEF.

Green hydrogen as marine fuel

Speaking of green hydrogen and its derivatives, other news this week have featured technologies that make it possible to use these fuels on ships.

French hydrogen tech firm Genevos will supply a hydrogen fuel cell system for a waste collection vessel that will operate in the Port of Klaipeda. Genevos will provide a hydrogen power system comprising two 40-kilowatt (kW) fuel cell stacks, and which will be equipped with additional battery systems to extend its range. The vessel is expected to be delivered next year.

But it’s worth noting that even if hydrogen-powered fuel cells can help decarbonise smaller vessels and boats, they have yet to make the technological breakthrough needed to power large ocean-going vessels.

Classification society Lloyd’s Register has granted an approval in principle for an ammonia fuel supply system designed by South Korea’s HD Korea Shipbuilding & Offshore Engineering (KSOE). The fuel supply system will be used in upcoming ammonia-capable vessels being built by KSOE.

The Danish fuel cell manufacturer Blue World Technologies has completed factory trials of its methanol-based fuel cell system for maritime applications. It is backed by Maersk, and one of Maersk’s methanol-capable vessels will test a pilot 1kW fuel cell stack in 2026 to generate auxiliary power. Blue World plans to launch a methanol auxiliary power unit system by 2027 to replace diesel power generators onboard ships.

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Source: Engine