Dominik Schneiter is the CEO of WinGD. Image Credit: WinGD

Green ammonia could become cheaper than LNG to operate by mid-century, according to a new study by marine engine developer WinGD and China-based Envision Energy.

The report finds that by 2050, ships using green ammonia are expected to see 5-6% lower lifecycle operating costs than LNG, driven largely by lower exposure to carbon pricing, as per the report shared by WinGD on Thursday.

The modelling is based on real engine performance, fuel consumption and current bunker pricing, using a container ship and a bulk carrier trading between China and Australia.

For now, however, ammonia remains expensive on a straight fuel-cost basis. Green ammonia is priced at about $710/mt, based on current supply along China’s coast, compared with roughly $460/mt for VLSFO.

However, bunker prices have risen significantly since the Iran war broke out.

There are also technical and operational challenges with ammonia.

Ammonia-fuelled ships are only just entering service, bunkering infrastructure is limited, and most vessels still rely on conventional fuels for auxiliary engines.

In addition, ammonia has a much lower energy density than conventional fuels, meaning ships need significantly larger fuel volumes to achieve the same range, which can impact vessel design and cargo capacity.

The study’s outlook also depends on regulation that is not yet in place.

The IMO’s proposed Net Zero Framework, which includes carbon penalties and a system of tradable credits, has yet to be adopted after member states delayed a decision last year.

Even so, the analysis suggests that under such a framework, ammonia-fuelled bulk carriers could already be cheaper to run than VLSFO and LNG in the early 2030s, with container vessels close to parity.

Overall, the study suggests ammonia has a clear long-term cost advantage, but its uptake will depend on how quickly costs fall and regulation catches up.

"With global policy on pause, now is the time for the industry to show how it can overcome the obstacles to decarbonisation using the fuels and technologies that already exist today," Dominik Schneiter, CEO of WinGD, said.

Full report can be downloaded from here.