The maritime industry is on the cusp of a seismic shift, and a new study has thrown down the gauntlet, challenging shipowners and fuel producers to adapt or risk being left adrift. The study, a collaborative effort between UMAS and the UCL Energy Institute Shipping and Oceans Research Group, commissioned by the Global Maritime Forum, has sent ripples through the sector with its bold assertions about the future of maritime fuels.
At the heart of the study is a Total Cost of Operation (TCO) modelling approach, which has laid bare the competitive advantages and uncertainties surrounding various fuel and ship technology options. The analysis is a wake-up call for shipowners, particularly those still hedging their bets on conventional fuels. “The strategy to only own conventionally fueled tonnage is now uncompetitive in both the short-term and certainly the mid-term,” the report states bluntly. It’s a stark warning that the days of business as usual are numbered.
The study’s findings are clear: ammonia dual-fueled ships have a competitive edge from the mid-2030s onwards, and potentially even earlier if the IMO’s zero and near-zero reward mechanism plays out as expected. “Even conservative projections… results in a ‘no brainer’ choice for shipowners in dual fuel ammonia,” said Dr. Tristan Smith, Professor of Energy and Transport at the UCL Energy Institute. This isn’t just about cost; it’s about optionality and future-proofing. Ammonia dual-fueled ships offer the broadest range of least-cost compliance options in the short-term, giving shipowners the flexibility to navigate the uncertain waters ahead.
But it’s not all smooth sailing for ammonia. The study highlights significant complexities and uncertainties, particularly around the IMO’s fuel standard and remedial unit pricing. The dynamics of the surplus unit trading market are also a wild card, adding to the industry’s collective headache. Despite these hurdles, the study’s message is clear: shipowners need to start making decisions, and ammonia is the safest bet.
The news isn’t all doom and gloom for other fuels, though. LNG will initially hold a competitive advantage during the early transition period, but its prospects dim as we move into the 2030s. The study points out that LNG’s high emissions intensity is a fundamental constraint, making it a less attractive option in the long run. Moreover, LNG dual-fuel ships will need to rely on lower-emission drop-in fuels or face penalty costs, further clouding its future.
For fuel producers, the study paints a mixed picture. Conventional and LNG producers face significant demand uncertainty, while biogenic fuel producers could see a brighter future if they can achieve competitive pricing. However, the study sends a clear signal to investors: focus on ammonia capacity development and be prepared for rapid scaling.
The study’s findings are a call to arms for the maritime industry. It’s time to stop dithering and start making decisions. The IMO’s Net Zero Framework has provided a roadmap, and the study has illuminated the path forward. Shipowners and fuel producers must adapt, innovate, and invest if they want to stay afloat in the coming decades. The future of maritime is ammonia-powered, and those who don’t get on board risk being left behind. The study has sparked a debate that the industry can’t afford to ignore. The time for action is now.