The shipping industry must transition to ammonia as the main
source of fuel to attain decarbonization targets and meet the goals of zero
carbon emissions by 2050, according to a new study by BloombergNEF.
In its latest annual energy outlook report, BloombergNEF
says the world must work on strategies and commit significant investments to
ensure ammonia derived from hydrogen becomes the dominant fuel in shipping for
new vessels post-2030.
Transiting to ammonia is expected to contribute two-thirds
of emissions reductions by 2030 and account for around 45 percent of abatement
in the shipping sector by 2050.
“Biofuels and ammonia derived from zero-carbon hydrogen each
make up 18 percent to 35 percent of emissions reductions,” notes the report.
It adds that while hydrogen, carbon-capture-and-storage
(CCS) and new nuclear technologies are not expected to play a meaningful abatement
role in the 2020s, getting them to scale is a critical task for this decade.
Scaling up CCS, for instance, is forecast to result in on-board CCS, allowing
fuel oil to continue to supply around 17 percent of final energy in shipping by
The report shows that large investments in energy
infrastructure are needed for the energy transition, with capital flowing away
from fossil fuels and toward clean power and other climate solutions. Over the
next three decades, the world will need to invest up to $173 trillion in
greener energy infrastructure and supply to achieve net-zero carbon emissions
To achieve this, annual investment will need to more than
double from around $1.7 trillion per year today, to somewhere between $3.1
trillion and $5.8 trillion per year on average over the next three decades.
Around 53 percent of all investment must be directed towards
the production, storage and transport of hydrogen.
To achieve net-zero in 2050 with an orderly transition,
global energy-related emissions also need to drop 30 percent below 2019 levels
by 2030 and 75 percent by 2040 to reach net-zero in 2050.
This is a 1.75 degree equivalent budget that implies a 3.2
percent reduction each year to 2030, and a swift reversal of recent trends.
Emissions rose 0.9 percent a year from 2015 to 2020.
“The energy transition is inherently uncertain. Hydrogen,
nuclear and carbon capture could all play an important role in helping the
world reach net-zero, and each of these technologies must be further developed
and brought to market in the coming decade if they are to realize their
potential,” said Matthias Kimmel, BNEF’s head of energy economics.
Hydrogen in particular must scale rapidly from its current
very small base, with a target of increasing to around 22 percent of total
final energy consumption - compared with less than 0.002 percent today.
“Hydrogen has many applications as an energy carrier and for
emissions abatement to help meet the net-zero target whether displacing
fossil-fuel combustion in industry, buildings and transport or complementing
renewables to help meet seasonal demand in the power sector,” notes the report.
The shipping industry is coming under increasing pressure to
decarbonize and shift away from reliance on fossil fuels, with ammonia looking
like an attractive alternative. It is projected that if 30 percent of shipping
switched to ammonia as a fuel, the current production must double. Today 80
percent of ammonia produced is used exclusively for the fertilizer industry.
The shipping industry emits around 940 million tons of
carbon dioxide annually and is responsible for about 2.5 percent of global
greenhouse gas (GHG) emissions.