This week, DNV GL published its annual Energy Transition Outlook, providing a long-term forecast for global energy production and consumption, and including a dedicated report describing its Maritime Forecast to 2050. This is the first forecast from a major classification society explicitly to evaluate ammonia as a maritime fuel.
By 2050, DNV GL predicts that 39% of the global shipping energy mix will consist of "carbon-neutral fuels," a category that include ammonia, hydrogen, biofuels, and other fuels produced from electricity. By 2050, these fuels will therefore have gained greater market share than oil, LNG, and battery-electric. If ammonia succeeds as the carbon-neutral fuel of choice in the shipping sector, this new demand will be roughly equivalent to 200 million tons of ammonia per year, more than today's total global production.
The International Chamber of Shipping has published a short but powerful report to "endorse" the International Maritime Organization's Initial Strategy on Reduction of GHG Emissions from Ships, adopted in April 2018. The ICS report calls the IMO's Initial GHG Strategy "a historic agreement which the global industry, as represented by ICS, fully supports," and discusses four fuel technologies that could deliver the IMO's targets: batteries, hydrogen, ammonia, and nuclear.
The ICS report also demonstrates four realities, which apply, perhaps uniquely, to the maritime sector. First, corporations are driving change, in advance of government legislation. Second, these corporations are looking for more than incremental reductions in emissions and instead targeting total sectoral decarbonization with the ambition "to achieve zero CO2 emissions as soon as the development of new fuels and propulsion systems will allow." Third, they realize that LNG and other low-carbon fuels cannot meet these targets: "the ultimate goal of zero emissions can only be delivered with genuine zero CO2 fuels that are both environmentally sustainable and economically viable." Fourth, they recognize that, because ships are long-lived assets, the need to invest in zero CO2 fuel technologies is urgent and immediate.
Last week, the International Maritime Organization (IMO) formally adopted its Initial GHG Strategy. This means that the shipping industry has committed to "reduce the total annual GHG emissions by at least 50% by 2050," and completely "phase them out, as soon as possible in this century."
This also means that a global industry is searching for a very large quantity of carbon-free liquid fuel, with a production and distribution infrastructure that can be scaled up within decades. The most viable option is ammonia. How much would be required? Roughly one million tons of ammonia per day.
Twelve months ago, I wrote here that "the shipping industry is beginning to evaluate ammonia as a potential 'bunker fuel,' a carbon-free alternative to the heavy fuel oil (HFO) used in maritime transport." Around that time, I described the obstacle to adoption of ammonia fuel as an information gap, rather than a technology gap, because no new technology was required: the industry simply did not know about ammonia. This information gap had allowed the industry to believe that "CO2 reduction objectives will only be achievable with alternative marine fuels which do not yet exist." I'm glad to announce that this information gap is closing, and fast.
According to a report published last week by the International Transport Forum, the OECD's "think tank for transport policy," the use of "currently known technologies could make it possible to almost completely decarbonise maritime shipping by 2035." This conclusion requires the adoption of ammonia as a zero-carbon fuel.