In response to increasing environmental regulations, various technical measures such as ship speed reduction, hull form improvment and wind propulsion are being implemented, as well as operational measures such as route optimisation and speed optimisation to reduce fuel consumption, but these are not enough to achieve complete decarbonisation. In the end, the transition to carbon-free fuels is essential, and as environmental regulations such as the IMO and EU become more stringent, the transition to carbon-free fuels will accelerate.

Ammonia is a chemical compound made up of nitrogen and hydrogen, and contains no carbon, making it a prominent carbon-free fuel. The key properties of ammonia as a marine fuel are summarised below.

The most important milestone for the commercialisation of ammonia fueled ship is the commercialisation of ammonia engines. Currently, major engine companies such as MAN, Wartsila, WinGD, Hyundai Heavy Industries Group, and STX Engines are developing ammonia engines and have announced plans to launch them after 2024. At the same time, global shipbuilders such as Korea Shipbuilding & Marine Engineering, Daewoo Shipbuilding & Marine Engineering, and Samsung Heavy Industries are also announcing plans to commercialise ammonia propulsion.

Ammonia can be divided into three types: grey ammonia, produced by feeding hydrogen produced through natural gas reforming into the Haber-Bosch process; blue ammonia, produced by treating the carbon dioxide generated in the production of grey ammonia with carbon capture, utilisation and storage (CCUS); and green ammonia, which uses green hydrogen produced through water electrolysis using renewable energy. Depending on how the ammonia is produced, the lifecycle CO2 emissions of the fuel can be very different.

As ammonia is widely used in various industries as a hydrogen carrier, a number of blue/green hydrogen production projects are being planned. For example, the Helios Green Fuels project will produce 1.2 million tonnes of green ammonia per year from 4 GW of renewable energy facilities, including solar, wind and energy storage, in the NEOM region of Saudi Arabia, and the Asian Renewable Energy Hub project will generate up to 100 TWh of electricity per year from 26 GW of solar and wind power facilities in the Pilbara region of Western Australia, and produce green hydrogen and ammonia using renewable power, which will be exported overseas in 2027-2028.

Approximately 180 million tonnes of grey ammonia are produced and transported every year, with 38 ammonia export terminals and 88 import terminals operating globally. There are already well established import/export ports and infrastructure, and the number of ammonia bunkering ports is expected to grow with the increase in green ammonia production and export projects. Maersk and Keppel Offshore & Marine have signed an MOU for a joint feasibility study to establish a green ammonia bunkering hub in Singapore ('21.3) and are conducting a feasibility study on developing a cost-effective green ammonia supply chain and developing green ammonia supply chain infrastructure.

The price of green ammonia tends to be strongly influenced by the price of renewable-based electricity. The production price of green ammonia in 2030 is expected to be around $370/tonne (IEA, 2022. Glybol Hydrogen Review) and around $475/tonne (IRENA, 2022. Innovation Outlook - Renewable Ammonia), although there are some differences in the forecasts by different organisations depending on the capacity factor, electricity prices, etc. However, as renewable-based electricity production becomes more widespread in the future, the production price of green ammonia is expected to become competitive.