And creates opportunities for first movers in new fuel production in a range of geographies, concludes a forthcoming report titled, A Strategy for the Transition to Zero-Emission Shipping, prepared by UMAS for the Getting to Zero Coalition with funding from the Mission Possible Partnership.

Previous analysis by UMAS has shown that decarbonizing shipping is estimated to unlock in the range of $1-1.9 trillion of investment, with 87% of this needed for land-based infrastructure and production facilities, primarily associated with new production of hydrogen. An S-curve based analysis by UMAS suggested that zero emission fuels need to make up 5% of the international shipping fuel mix by 2030 to enable decarbonisation in line with Paris goals.

Given the evidence of constraints on supply and therefore scalability of sustainable biofuel, as well as the societal/political obstacles faced by nuclear propulsion or onboard carbon capture, the clear implication is that shipping’s transition is dependent on green hydrogen used as a primary feedstock of Scalable Zero-Emission Fuels (SZEF) e.g. ammonia, synthetic hydrocarbons/alcohols or as a fuel itself in its liquid form.

Shipping’s demand for SZEF can support investment in green hydrogen for a number of reasons. From a business case perspective, serving the shipping fuels market carriers lower risks for hydrogen producers than focusing on some other sectors that have some scope for direct or battery powered electrification (e.g. heat, road transport). Deep-sea shipping has no electrification option, thereby de-risking investments in green hydrogen capacity.

SZEF production for the maritime sector can spread risk associated with when market demand for green hydrogen and derivative products will emerge, helping investors build more robust business cases. One example is the potential synergy between a decarbonization of ammonia production (for existing, primarily agricultural demands), with growth in green hydrogen/ammonia demand by shipping. The initial shipping demand for green hydrogen/ammonia production can develop in parallel to the first steps in decarbonizing fertilizer production over the course of this decade – but then rapidly grows the market not just for the decarbonized commodity, but also for hydrogen/ammonia itself, further improving the business case for large-scale, long-term investment.

Shipping’s transition creates significant opportunities for employment and investment in supply chains not just of the energy commodity itself, but all the equipment and manufacturing needed to create those supply chains. The report estimates the build-out rate required just to meet shipping’s rapidly growing SZEF demand will reach around 30 additional full-scale plants (1.5GW each) per year at its peak.

First mover advantages in certain geographies

Evidence gathered from previous transitions suggests that first movers in shipping’s adoption of SZEF can be expected where the business case for moving to the new fuel can be built on alignment between ship-side opportunities and those on the land-side.

Considering only vessels making regular, predictable voyages and a small number of port calls that also operate in close proximity to low-cost hydrogen production potential, the study estimates that about 10% of shipping’s total fuel consumption has attractive fundamentals for moving to SZEF during the 2020s. This analysis also shows that there are opportunities in a number of locations globally.

The report shows this transition is an opportunity that will create new markets, new technology, new jobs alongside wholescale benefits for society. The energy sector and land-side actors can use this information to strategize, take action, invest, collaborate, communicate, share best practices and lessons learned, and to call for supporting regulatory mechanisms that secure market demand and enable the necessary supply of Scalable Zero-Emission Fuels.

The report is the first in a series funded by Mission Possible Platform ahead of COP26. Read more

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