Report identifies gap in shipping capacity for transporting new fuels

The report Shipping’s Role in the Global Energy Transition has found a huge gap between announced government led projects and what is required. The report is being officially discussed at this year’s UN climate conference, COP 27.

The report’s authors identify growth in low-carbon hydrogen and sustainable bioenergy as essential to meet the Paris Climate Agreement’s goals, but they found that a lack of enabling policies from governments, such as guaranteeing markets and prices for producers and consumers, was holding back investment in the shipping infrastructure needed.

The world needs 50-150 million tonnes of low-carbon hydrogen by 2030, but already-announced projects will only produce 24 million tonnes by 2030, according to the International Energy Authority. Only 4% of these projects have a final investment decision.

The report identifies a major role for the shipping sector in transporting bioenergy and hydrogen converted into ammonia. It found that shipment of these commodities in the future could match those of gas and coal today. However, this would require around 20 large new ammonia carriers a year, to link green hydrogen producers with consumers.

Given the 2-3 year timeline for constructing new vessels, shipping industry representatives said they needed certainty on hydrogen production as soon as possible to be able to justify the necessary investments in new infrastructure.

The report was commissioned and welcomed by the International Chamber of Shipping and called on governments attending COP27 to send stronger market signals to the shipping industry to reduce fears that any new ships built to transport low-carbon fuels would never be used.

The report identified several directions for government policy, including introducing mandates for increasing percentages of green hydrogen, creating ‘production credits’ for producing hydrogen, or providing guaranteed markets and prices for producers and consumers. Such measures are already being trialled in the US, Germany, and India.

Guy Platten, Secretary General of the International Chamber of Shipping, said: “The shipping industry knows it has a huge part to play in global decarbonisation in the coming decades, transporting the new green fuels the world’s economy needs. But for us to invest, governments need far stronger policies to de-risk green hydrogen production.

“National hydrogen strategies must include an explicit focus on supporting the transport infrastructure needed for both imports and exports. Industry is ready to respond but we urgently need stronger market signals and infrastructure investment to make this a reality.”