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DNV: Is there a business case for ammonia and hydrogen as an alternative bunkering fuel?

12 Oct 2022

The following article was published by Cristina Saenz de Santa Maria, Regional Manager South East Asia, Pacific & India, Maritime at DNV, on Monday (10 October) through the social media platform LinkedIn; it has been reproduced on Manifold Times with permission from DNV:

Before there is a viable business case for alternative maritime fuels like ammonia and hydrogen, there’s a lot of work to do, according to a SIBCON panel of industry experts, I was happy to moderate last week.

My panellists Murali Srinivasan, Peter Liew, Raghav Gulati and Takahiro Rokuroda shared about the various ammonia and hydrogen projects their companies Yara International, Eaglestar, Anglo American and NYK Line are currently conducting, and drew attention to five main points in the discussion:

  • There is need for regulations and standards to be set for these fuels, so the International Maritime Organisation (IMO) must step up to the mark;
  • Technology around the new fuels is available and being put to the test in good pilot programmes around the world;
  • There is no real business case for ammonia and hydrogen without a carbon price or carbon tax being applied to fossil fuels;
  • To have a level playing field for alternative fuels, all stakeholders must collaborate and develop effective partnerships;
  • Safety is paramount, as while ammonia has been safely transported on vessels for a long time, it has not yet been applied as a bunkering fuel.

Many companies might know how to ship ammonia, but all stakeholders must make sure safety measures are in place for ammonia to be widely used as a bunkering fuel.

It was also pointed out that the industry must expedite the introduction of alternative fuels, like ammonia and hydrogen, but we cannot take as many years as was the case with LNG.

We all agreed that the industry must come together – collaborate and partners – to meet our collective commitments to decarbonise. Caution was expressed about concentrating on just one fuel. There must be a multi-fuel solution and vessels must be equipped accordingly.

Having the infrastructure in place to support a mix of fuels and making sure it is in the places where it’s needed, was a strong point raised by our panel.

Panellists sited many examples around the world where industry collaboration was taking place, but we need to see IMO stepping up to put in place the necessary regulations and standards for new bunkering fuels like ammonia and hydrogen.

We know that a number of maritime companies are clearly looking at all options when it comes to alternative fuels, but ammonia was coming up as one of the more realistic solutions.

For ship owners and operators, one of the biggest challenges is the toxicity of ammonia. Therefore, much needs to be done to ensure safety measures, technology and regulations are in place, and we in DNV will play our part in this process.

My esteemed panellists stressed the need to make sure crews are trained to handle ammonia, at ports and at sea. It was of utmost importance to start training crews and bunkering staff in time, not wait until the first ammonia and hydrogen fuelled vessels hit the water.

When I asked the panellists – “Like all other alternative fuels, ammonia and hydrogen will be much more expensive and according to DNV projections, at least two times more than current fuels. Is there a business case yet – and if not, what is needed?” – there was general agreement that “the business case is not yet there” for the adoption of ammonia and hydrogen as bunkering fuels.

An effective workable carbon price/tax on fossil fuels would help provide “a level playing field” for a transition to alternative clean fuels. One panellist also called for more incentives to drive the transition to cleaner fuels like ammonia and hydrogen.

Already there is considerable investment in renewable fuels, as well as in adapting ship and engine design to accommodate fuels like hydrogen and ammonia. However, more infrastructure and regulation are necessary, along with a greater degree of collaboration and co-operation involving all maritime stakeholders.

As the world’s biggest bunkering hub, Singapore is already playing an important leadership role, joining forces with ports and other stakeholders around the world to advance maritime decarbonisation.

The Global Centre for Maritime Decarbonisation (GCMD) is an excellent example of public-private partnership, seeing collaboration at work between government authorities and industry. I’m very excited that we in DNV are leading the GCMD-commissioned ammonia bunkering safety study and I look forward to its results in Q1 2023.

In conclusion, my panellists agreed that Singapore was providing many good initiatives of industry collaboration and partnerships for decarbonisation and adoption of alternative fuels, so the local cluster has every reason to be optimistic while helping the shipping industry accelerating on its Net Zero pathway.

 

Photo credit: DNV
Source: LinkedIn
Published: 12 October, 2022

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