A new report produced by Swiss engine designer WinGD in conjunction with Envision suggests that although renewable fuels with zero or near-zero (ZNZ) emissions may seem a distant and expensive prospect, that could change quickly.
With global regulation and the development of green fuels and associated infrastructure progressing more slowly than expected, shipowners need fuels that can compete on economics rather than policy ambition alone. The study by WinGD and green hydrogen producer Envision Energy shows how green ammonia could emerge as the first carbon molecule-free marine fuel with a credible commercial business case.
Fabio Cococcetta, WinGD Product Manager Engines, said: “Even under a relatively moderate carbon pricing regime, the study shows how green ammonia bunkered at today’s price (bunkered at ports in eastern China) is already capable of narrowing the operational cost gap with conventional fuels. And across a vessel lifetime, as green fuel costs reduce and regulatory levers tighten, it could outperform other fuels economically.”
Ammonia benefits from practical advantages that competing green fuels lack. It produces no CO2 at the point of combustion and eliminates sulphur and particulate emissions altogether. Unlike many alternative fuels still struggling with supply chain immaturity, ammonia is already a globally traded commodity with established storage and distribution infrastructure at ports worldwide.
Cococcetta added: “Challenges remain, particularly around crew training, bunkering and safety standards – but the operational frameworks needed to support wider adoption are already being developed. Importantly, the first commercial ammonia-powered vessels enter service this year, providing the industry with real-world operational experience and data.”
As with all new fuels, the economics become more compelling as production scales. Green ammonia currently remains significantly more expensive than conventional marine fuels, but large renewable-powered production projects are already beginning to close the gap. Envision Energy’s green hydrogen and ammonia facility in the Gobi Desert, powered by large-scale wind and solar generation, is expected to produce 320,000t annually before scaling to 1.5m tonnes by 2028. Based on Envision’s projections, green ammonia prices could fall from around US$ 710/t towards parity with grey ammonia, currently at approximately US$ 400/t.
Unlike VLSFO, however, green ammonia falls the right side of regulatory regimes.
Cococcetta said: “This matters because even with the scaling of green fuels, regulation remains an important driver of the transition away from conventional fuels. Within the European Union, this pressure already exists through FuelEU Maritime, which steadily increases the financial exposure of high-emitting vessels. Beyond Europe, additional regional carbon-pricing mechanisms are also being considered. While the IMO’s proposed Net Zero Framework remains unresolved, those regional regimes are more likely to be introduced – with material impact for operators on net fuel cost and administrative complexity.”
Even under today’s assumptions, the economics are beginning to favour green ammonia. The analysis by WinGD and Envision suggests that a typical ammonia-fuelled bulk carrier and container vessel operating with ammonia priced at US$ 710/t could still cost around US$ 6m and US$ 7m less respectively than equivalent VLSFO-fuelled vessels over the first eight-year phase of the IMO framework.
Cococcetta continued: “The longer-term economics become even more compelling. Looking beyond the initial compliance period and towards the IMO’s 2050 net-zero target, the cost advantage of green ammonia strengthens over a full vessel lifecycle. Compared with VLSFO-fuelled vessels, WinGD’s analysis indicates that ammonia-powered container ships could reduce operating expenditure by more than US$ 50m over their operational life, while ammonia-fuelled bulk carriers could reduce Opex by approximately US$ 28m. These calculations exclude any future reward mechanism for zero- or near-zero-emission fuels, which would further strengthen the commercial case.”
Further efficiency gains are likely. Widespread use of green fuels in auxiliary engines, alongside technologies such as power take-off (PTO) systems supplying onboard electrical demand, could significantly reduce lifecycle carbon costs. These innovations would further embed the economics of green ammonia as a marine fuel.
For now, shipowners planning the future fuel mix of their global fleets must weigh significant uncertainties. With the first ammonia-powered ships entering service this year, at least some of those uncertainties will start to be answered. As production scales, carbon pricing expands and shipowners look beyond short-term fuel costs towards lifetime compliance exposure, green ammonia is already moving from a theoretical future fuel to a commercially credible one.
The full WinGD Envision Energy Renewable Fuel Economics Report can be downloaded here.
Image: Fabio Cococcetta, WinGD Product Manager Engines (source: WinGD)
