Alternative Fuels: Bets Narrow Over Long-term but Uncertainty Remains

by Julian Macqueen, Senior Editor, Ship & Bunker
Wednesday February 28, 2024

Ammonia is the most likely long-term bet to be shipping's bunker fuel of the future, the Argus Oil and Future Fuels Forum heard during International Energy Week.

In a well-attended afternoon session, Argus experts buffed up their crystal balls to see what might be in store for the marine, aviation and road sectors.

Ammonia is in abundance but under-traded as most global production goes to make urea. Marine fuels panel member Jack Merriott predicted a 13-fold increase in seaborne trade of the commodity as ship operators switch to the fuel adding that the 13-fold increase "was a conservative estimate".

But Merriott cautioned that "ammonia is a highly toxic, dangerous chemical" and that any forecast for the marine sector inevitably carries caveats.

"There are uncertainties, risks and trade-offs every whichway you turn."

If not ammonia, what then?

Annual production capacity for biodiesel stands at 66 million metric tonnes which is around a sixth of global bunker demand per year and marine biodiesel blends have been progressing "at speed", the forum heard. But while recent figures from Rotterdam and Singapore point to a growing appetite for the fuel, the increase represents less than one per cent of global bunker demand.

Like ammonia, hydrogen is a much talked about alternative. There is no issue with its green credentials (green hydrogen is produced with energy from renewable sources) or its application (e-fuels derived from hydrogen are adaptable to existing supply infrastructure). The issue is whether enough hydrogen can be produced to meet demand as industry transitions away from fossil fuels.

Argus's hydrogen expert, Tim Hard, was on hand to set the record straight. The role for green hydrogen might be clear on paper but there is little evidence of visible capacity. 

The "vaulting ambitions" for green hydrogen production are "stood on thin legs", he said.

The business case behind liquified natural gas remains "compelling" even if clouds gather over LNG's fossil fuel link making LNG as marine fuel less attractive over the longer term, the forum was told.

As the session drew to a close, the focus returned to hydrogen and e-fuel production. Green hydrogen requires renewable electricity to produce e-fuels. Was there the capacity to get the energy transition in transport moving?  Road, aviation and marine all want their share but, the forum heard, of the three, "marine sits at the back of the queue".

A snap poll taken at the event had ammonia and methanol as the most favoured, long-term fuel choices among the attendees. Argus Oil and Future Fuels Forum was held at the London Hilton Hotel on February 27.