INSIGHT: A Comparative Analysis of Alternative Fuels for Sustainable Maritime Shipping

Eliseo Curcio is director of clean technologies at Blend Tiger.

Introduction

The maritime industry is the backbone of global trade, with an estimated 90% of the world's goods transported by sea.

The industry is essential for the global economy, enabling the movement of raw materials, finished products, and energy resources across continents. However, this vast industry also faces significant environmental challenges, as it is responsible for approximately 2-3% of global greenhouse gas (GHG) emissions.

The majority of these emissions arise from the burning of fossil fuels, primarily Heavy Fuel Oil (HFO) and Very Low Sulfur Fuel Oil (VLSFO), which are used to power the world's fleet of commercial ships.

HFO and VLSFO are dense, carbon-rich fuels that, when combusted, produce large amounts of carbon dioxide (CO2), sulfur oxides (SOx), nitrogen oxides (NOx), and particulate matter. These emissions contribute to global climate change, air pollution, and health problems, particularly in coastal and port areas.

Recognizing these environmental impacts, the International Maritime Organization (IMO) has implemented a series of regulations aimed at reducing emissions from shipping.

One of the most ambitious goals set by the IMO is to cut GHG emissions from international shipping by at least 50% by 2050 compared to 2008 levels, with a longer-term vision of phasing them out entirely before the end of the century.

Achieving these targets will require a radical transformation of the maritime industry, particularly in how ships are powered.

Traditional fuels like HFO and VLSFO will need to be replaced with low-carbon or zero-carbon alternatives. This transition poses significant challenges, including the development of new technologies, the scaling of alternative fuel production, and the retrofitting or replacement of the existing fleet.

Furthermore, the economic implications of this transition are profound, as shipowners and operators must balance environmental goals with the need to remain competitive in a cost-sensitive industry.

This paper explores the current landscape of marine fuels, the energy requirements of different ship types, and the potential alternatives to HFO and VLSFO.

It also examines the economic implications of adopting these alternative fuels, comparing their costs and fuel consumption for different ships size. It is important to highlight that when a new fuel is selected there are many steps to analyze. The paper mainly focuses on one step: the cost of buying fuels.

Chapter 1: The Current Landscape of Marine Fuel Usage

As of 2024, the maritime industry is predominantly powered by fossil fuels, with Heavy Fuel Oil (HFO) and Very Low Sulfur Fuel Oil (VLSFO) comprising approximately 80-85% of the total fuel consumption.

The remaining 15-20% is made up of a mix of Marine Diesel Oil (MDO), Marine Gas Oil (MGO), and Liquefied Natural Gas (LNG), with LNG usage growing steadily due to its lower sulfur content and relatively lower CO2 emissions.

• Heavy Fuel Oil (HFO): Still widely used, especially in large ocean-going vessels, HFO is a dense, carbon-rich fuel that produces significant CO2, sulfur oxides (SOx), and nitrogen oxides (NOx) emissions. Despite its environmental drawbacks, its low cost makes it a common choice in regions where emissions regulations are less stringent.
• Very Low Sulfur Fuel Oil (VLSFO): Introduced as part of the IMO's 2020 sulfur cap, VLSFO has rapidly become a major player, accounting for a significant portion of the industry's fuel mix. VLSFO reduces SOx emissions but still contributes heavily to CO2 emissions.
• Liquefied Natural Gas (LNG): LNG currently represents about 5-8% of the maritime fuel market. Its adoption is driven by its lower CO2 emissions compared to HFO and VLSFO, as well as its near-zero SOx and particulate emissions. However, concerns over methane slip and infrastructure availability remain challenges.
• Marine Diesel Oil (MDO) and Marine Gas Oil (MGO): These distillate fuels are typically used in smaller vessels and auxiliary engines. While they produce fewer emissions than HFO, their higher cost and lower energy density make them less attractive for large-scale use.

The Need for a Comprehensive Fuel Transition Strategy

While this paper focuses on the comparison of alternative fuels based on burning rates and costs, it is crucial to acknowledge that these factors represent only a part of the broader analysis required when introducing new fuels to the maritime market.

The successful transition to alternative fuels involves a multifaceted approach, addressing not only the direct operational costs but also the following key considerations:

• Infrastructure and Bunkering: The availability of fueling infrastructure is a significant determinant in the adoption of any new fuel. For instance, while LNG has established bunkering facilities in major ports, the same cannot be said for hydrogen or ammonia, which would require significant investment in new infrastructure.
• Supply Chain and Global Availability: Ensuring a consistent and reliable supply of alternative fuels is critical. This includes the production, storage, and distribution networks necessary to support global shipping operations. For example, hydrogen and ammonia are still in the early stages of supply chain development, limiting their immediate scalability.
• Regulatory Compliance and Incentives: Regional and international regulations play a significant role in fuel adoption. For instance, the presence of Emission Control Areas (ECAs) where stricter emissions standards are enforced can accelerate the adoption of cleaner fuels. Additionally, governments and international bodies may provide incentives for the adoption of low-emission technologies, influencing fuel choice.
• Safety and Risk Management: The safety profile of alternative fuels must be carefully evaluated, especially for flammable or toxic fuels like hydrogen and ammonia. The maritime industry has stringent safety standards, and any new fuel must meet these requirements to ensure the safety of both crew and cargo.
• Environmental Impact Beyond CO2: While reducing CO2 emissions is a primary goal, the environmental impact of alternative fuels must also consider other factors such as NOx, SOx, particulate matter, and potential environmental hazards from spills or leaks. For example, while LNG reduces CO2 and SOx emissions, the risk of methane slip—where unburned methane is released into the atmosphere—poses a significant environmental challenge.
• Economic Viability and Long-Term Sustainability: The long-term sustainability of a fuel involves not just its environmental impact but also its economic viability. This includes the costs associated with fuel production, transportation, storage, and the retrofitting or replacement of ships. A fuel must be economically competitive to be widely adopted, especially in an industry as cost-sensitive as shipping.

Given the complex landscape of marine fuel adoption, this paper will focus specifically on comparing alternative fuels in terms of their burning rates—how much of each fuel is required to meet the power demands of various ship types—and the associated costs.

While these factors are critical for operational decision-making, they must be viewed within the broader context of the comprehensive considerations outlined above. The transition to a low-carbon maritime industry will require a balanced approach that accounts for not only cost and efficiency but also safety, infrastructure, regulatory compliance, and long-term environmental sustainability.

Chapter 2: Types of Ships and Their Dimensions

The global fleet of commercial ships is diverse, with vessels ranging in size from small coastal ferries to massive Ultra Large Container Vessels (ULCVs) and Very Large Crude Carriers (VLCCs).

Each type of ship is designed for a specific purpose, and their dimensions and capacities vary accordingly. In this chapter, we categorize ships into three primary groups—large, medium, and small—and provide a detailed comparison of their size, dimensions, and typical uses.

Large ships are the giants of the seas, typically used for transporting vast quantities of goods or crude oil across long distances. These vessels are essential for global trade and energy supply chains.

• Ultra Large Container Vessels (ULCVs): ULCVs are the largest type of container ships, designed to maximize cargo capacity. They are typically over 400 meters in length, with a deadweight tonnage (DWT) ranging from 200,000 to 240,000 metric tons, and a gross tonnage (GT) of around 200,000. These ships can carry more than 20,000 TEUs (Twenty-foot Equivalent Units), making them highly efficient for transporting goods on major trade routes between Asia, Europe, and North America.
• Very Large Crude Carriers (VLCCs): VLCCs are among the largest tankers used to transport crude oil. These vessels are typically around 330 meters in length, with a DWT ranging from 200,000 to 320,000 metric tons, and a GT of 160,000 to 200,000. They play a critical role in the global oil supply chain, transporting crude oil from production regions in the Middle East, West Africa, and the Americas to refineries around the world.

Medium-sized ships are versatile workhorses of the maritime industry, capable of operating on a wide range of routes and carrying various types of cargo.

• Panamax Container Ships: These ships are designed to fit within the locks of the Panama Canal, with a maximum length of around 294 meters, a DWT of 60,000 to 80,000 metric tons, and a GT of 65,000 to 80,000. Panamax ships are commonly used for containerized cargo on routes between the Americas and Asia, as well as Europe.
• Suezmax Tankers: Suezmax tankers are the largest vessels that can transit the Suez Canal without requiring modifications to the canal's infrastructure. These ships typically measure around 275 meters in length, with a DWT of 120,000 to 200,000 metric tons, and a GT of 120,000 to 160,000. They are used primarily for transporting crude oil, though they can also carry refined products.

Small ships are typically used for regional trade, coastal transport, and specialized services. They are more maneuverable and can access ports and waterways that larger vessels cannot.

• Handysize Bulk Carriers: Handysize carriers are versatile bulk carriers, typically used for transporting dry bulk commodities such as grains, coal, and minerals. They range from 150 to 200 meters in length, with a DWT of 10,000 to 40,000 metric tons, and a GT of 20,000 to 40,000. Their smaller size allows them to access a wide range of ports and inland waterways.
• Ferries: Ferries are used primarily for passenger and vehicle transport over short distances. They vary widely in size, but typical dimensions are 100 to 200 meters in length, with a DWT of 5,000 to 10,000 metric tons, and a GT of 10,000 to 20,000. Ferries are essential for regional connectivity, particularly in archipelagic and coastal regions.

Image Credit: Blend Tiger

The table provides a detailed comparison of the dimensions and capacities of different ship categories, highlighting the diversity within the global fleet.

Large ships like ULCVs and VLCCs dominate the global trade routes, while medium and small ships play crucial roles in regional and specialized markets.

Chapter 3: Energy Requirements for Different Ship Sizes

The energy required to move a ship depends on several factors, including its size, weight, hull design, and operational speed.

In general, larger ships require more energy due to their greater mass and the longer distances they travel. However, energy efficiency is also influenced by the ship's design and the type of fuel used.

In this chapter, we categorize ships into three groups—large, medium, and small—and calculate the average energy required for each category. We also discuss the factors that influence energy consumption, including speed, weather conditions, and operational practices.

Large ships, such as ULCVs and VLCCs, are among the most energy-intensive vessels. These ships typically require between 50 and 70 MW of power to maintain their operational speed of around 20-25 knots.

• Energy Requirement: The energy required to move a large ship is primarily determined by its size and weight. For example, a fully loaded VLCC may require 70 MW of power to maintain a cruising speed of 15 knots, while a ULCV may require 60 MW to maintain a speed of 22 knots.
• Factors Influencing Energy Consumption: The energy consumption of large ships is influenced by several factors, including hull design, propulsion system efficiency, and operational speed. Slow steaming, a practice where ships reduce their speed to save fuel, can significantly reduce energy consumption but also increases transit times.

Medium-sized ships, such as Panamax container ships and Suezmax tankers, require between 20 and 40 MW of power to operate. These ships are typically more versatile than large ships and are used on a wider range of routes.

• Energy Requirement: A Panamax container ship might require around 25 MW to maintain a speed of 20 knots, while a Suezmax tanker may need around 30 MW to maintain a speed of 15 knots.
• Factors Influencing Energy Consumption: Medium-sized ships benefit from advances in hull design and propulsion technology, which can improve energy efficiency. However, these ships still consume significant amounts of fuel, particularly when operating at higher speeds or in rough seas.

Small ships, such as Handysize bulk carriers and ferries, require less energy than their larger counterparts. These ships typically need between 5 and 20 MW of power, depending on their size and operational requirements.

• Energy Requirement: A Handysize bulk carrier may require around 10 MW to maintain a speed of 14 knots, while a large ferry may need around 15 MW to operate at 20 knots.
• Factors Influencing Energy Consumption: The energy consumption of small ships is influenced by their operational profile, including the frequency of port calls, route length, and the type of cargo they carry. Ferries, for example, often operate on short routes with frequent stops, which can lead to higher energy consumption relative to their size.

Image Credit: Blend Tiger

The table summarizes the average energy requirements for different ship sizes, providing a baseline for comparing fuel consumption and emissions across the global fleet.

Chapter 4: Alternative Fuels to VLSFO and HFO

As the maritime industry seeks to reduce its carbon footprint, several alternative fuels are being explored.

These include methanol, ammonia, liquefied natural gas (LNG), and hydrogen. Each of these fuels offers different advantages and challenges, including variations in energy density, burning rates, and environmental impact.

Methanol is a liquid fuel that can be produced from natural gas, coal, biomass, or even captured CO2. It has a lower energy density than HFO and VLSFO, but it burns more cleanly, producing fewer NOx and particulate emissions.

• Energy Content: Methanol has an energy content of 20 MJ/kg, which is about half that of HFO.
• Burning Rate: A ship using methanol as a fuel would require approximately 471.3 tons/day to meet the energy needs of a 60 MW ship using a PEM fuel cell with 55% efficiency.
• Environmental Impact: Methanol produces lower CO2 emissions than HFO, but it is still a carbon-based fuel. However, when produced from renewable sources, methanol can be nearly carbon-neutral.

Ammonia is another promising alternative fuel, particularly for large ocean-going vessels. It can be produced from natural gas, coal, or renewable energy through electrolysis and the Haber-Bosch process.

• Energy Content: Ammonia has an energy content of 18.6 MJ/kg, slightly lower than methanol.
• Burning Rate: To meet the energy needs of a 60 MW ship, approximately 506.8 tons/day of ammonia would be required if used in a fuel cell with 55% efficiency.
• Environmental Impact: Ammonia is carbon-free and does not produce CO2 when burned. However, it can produce NOx emissions, which need to be managed with appropriate aftertreatment technologies.

Liquefied Natural Gas (LNG) is natural gas that has been cooled to a liquid state for easy storage and transport. It is currently the most widely adopted alternative fuel in the maritime industry.

• Energy Content: LNG has a higher energy content of 50 MJ/kg, making it more efficient than methanol and ammonia.
• Burning Rate: A ship using LNG would require approximately 188.5 tons/day to meet the energy needs of a 60 MW ship using a fuel cell with 55% efficiency.
• Environmental Impact: LNG produces lower CO2 emissions than HFO and VLSFO, and it virtually eliminates SOx emissions. However, methane slip (unburned methane) is a concern, as methane is a potent greenhouse gas.

Hydrogen is considered the ultimate zero-emission fuel, particularly when produced from renewable energy sources through electrolysis.

• Energy Content: Hydrogen has a very high energy content of 120 MJ/kg, making it the most energy-dense fuel available.
• Burning Rate: A ship using hydrogen would require approximately 78.6 tons/day to meet the energy needs of a 60 MW ship using a PEM fuel cell with 55% efficiency.
• Environmental Impact: Hydrogen produces zero CO2 emissions when used in a fuel cell, making it the cleanest fuel option. However, challenges include storage, transportation, and the current high cost of green hydrogen production.

Biofuels, including biodiesel and biofuel blends like B30, are gaining traction as viable alternatives to traditional marine fuels. Derived from renewable biological sources such as vegetable oils, animal fats, and waste cooking oil, biofuels can reduce the carbon footprint of marine operations.

• Energy Content: The energy content of biodiesel is approximately 37-39 MJ/kg, slightly lower than that of conventional diesel (around 42-45 MJ/kg). A B30 blend, consisting of 30% biodiesel and 70% fossil diesel, would have an energy content between 39 and 41 MJ/kg.
• Burning Rate: Given its lower energy density, biofuels like B30 would require a higher burning rate compared to VLSFO or HFO to generate the same power. For instance, a ship using a B30 blend may need to consume about 2-5% more fuel by mass than if it were running on pure VLSFO.
• Environmental Impact: Biofuels offer significant environmental benefits, primarily due to their lower lifecycle carbon emissions. The use of biofuels can result in a reduction of CO2 emissions by 50-90% depending on the feedstock and production process. Additionally, biofuels generally produce lower levels of particulate matter and NOx emissions compared to fossil fuels.
• Compatibility: One of the key advantages of biofuels, particularly blends like B30, is their compatibility with existing marine engines. This allows for easier adoption without requiring significant modifications to existing vessels, making them an attractive option for near-term emissions reduction.

Image Credit: Blend Tiger

The table provides a detailed comparison of alternative fuels, highlighting their energy density, burning rate, and environmental impact.

While hydrogen offers the highest energy content and the lowest burning rate, its current challenges include storage, infrastructure, and cost. LNG is the most widely adopted alternative due to its higher energy density and established supply chains, though it still has some environmental drawbacks.

In terms of emissions, we know that traditional VLSFO and residual bunker fuels, have the highest values. How do VLSFO compare with other alternative fuels? The table below gives an idea about the GHG emissions in gCO2e/MJ.

Image Credit: Blend Tiger

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Chapter 5: Cost of Using Alternative Fuels

The transition to alternative fuels is not only a technical challenge but also an economic one.

The cost of these fuels varies significantly depending on production methods, regional availability, and market demand. This chapter analyzes the cost of using different fuels, including both the fuel cost per ton and the total operational cost for a 60 MW ship.

Methanol is relatively affordable compared to some other alternative fuels, with prices ranging from $350 to $550 per ton. The daily cost for a ship using methanol, assuming a consumption rate of 471.3 tons/day, would range from approximately $165,000 to $259,000 per day.

Ammonia is more expensive, with prices ranging from $400 to $800 per ton. The daily cost for a ship using ammonia, assuming a consumption rate of 506.8 tons/day, would range from approximately $203,000 to $406,000 per day. This higher cost reflects the energy-intensive production process of ammonia, especially when produced from renewable sources.

Liquefied Natural Gas (LNG) is currently the most cost-effective alternative fuel, with prices ranging from $500 to $1,000 per ton. The daily cost for a ship using LNG, assuming a consumption rate of 188.5 tons/day, would range from approximately $94,000 to $188,000 per day. LNG's lower cost and higher energy content make it an attractive option for many shipowners.

Hydrogen is the most expensive fuel currently available, with prices ranging from $3,500 to $6,000 per ton for green hydrogen. The daily cost for a ship using hydrogen, assuming a consumption rate of 78.6 tons/day, would range from approximately $275,000 to $471,600 per day. The high cost of hydrogen reflects the current state of production technology, particularly for green hydrogen, which is produced using renewable energy sources.

Electricity propulsion is another alternative, particularly for short-sea shipping or hybrid applications.
Assuming an electricity cost of $0.10 per kWh, the daily cost for a ship requiring 1,515,840 kWh/day would be approximately $151,584 per day. While electric propulsion is highly efficient, the main challenge lies in energy storage and infrastructure, particularly for long-haul ocean-going vessels.

B30 Blend Cost: Assuming biodiesel is priced at $1,000 per ton and conventional diesel at $600 per ton, the cost of a B30 blend would be approximately $720-$800 per ton. Daily Operating Cost: For a ship using B30, the daily operating cost would be slightly higher than that for VLSFO or HFO. For instance, if a large ship typically consumes 300 tons of fuel per day, the cost difference could be in the range of 10-15% higher compared to using VLSFO, depending on market prices.

Image Credit: Blend Tiger

The table provides a comprehensive cost comparison of alternative fuels.

LNG stands out as the most cost-effective option, particularly for large ships that require significant amounts of energy. Methanol and ammonia are more expensive, but they offer environmental benefits that may justify the higher cost in certain regulatory environments.

Hydrogen, while currently the most expensive, represents the cleanest fuel option and may become more competitive as production costs decrease.

Chapter 6: Comparison of Alternative Fuels

This chapter synthesizes the data and analysis presented in previous chapters to provide a comprehensive comparison of alternative fuels based on energy efficiency, environmental impact, safety, and cost-effectiveness.

The goal is to identify the most viable options for the maritime industry as it transitions to a low-carbon future, while also addressing potential challenges related to safety, infrastructure, and market manipulation.

Energy Efficiency

Energy efficiency is a critical factor in determining the viability of alternative fuels. Higher energy efficiency means that less fuel is required to produce the same amount of power, reducing both operational costs and environmental impact.

• Hydrogen: Hydrogen has the highest energy content per kilogram (120 MJ/kg), making it the most energy-efficient fuel in terms of weight. This high energy density translates into a significantly lower burning rate compared to other fuels, making it an attractive option for long-distance shipping. However, hydrogen's storage challenges, particularly the need for cryogenic tanks or high-pressure storage, offset some of its efficiency advantages.
• LNG: Liquefied Natural Gas (LNG) also offers high energy efficiency with an energy content of 50 MJ/kg. LNG is currently the most widely adopted alternative fuel due to its relatively high energy density and the existing infrastructure. The burning rate for LNG is lower than that of methanol and ammonia, making it a more efficient option for many ship types.
• Methanol and Ammonia: Both methanol and ammonia have lower energy densities (20 MJ/kg and 18.6 MJ/kg, respectively), which leads to higher burning rates. This means that ships using these fuels require larger fuel tanks or more frequent refueling. However, advances in fuel cell technology could improve the efficiency of these fuels, particularly in niche applications.
• Biofuels: While B30 blends require more fuel by mass to generate the same amount of energy as VLSFO, the difference is relatively small (2-5%). This makes biofuels a practical option, especially for smaller vessels and regional routes.

Environmental Impact

The environmental impact of alternative fuels is assessed based on their potential to reduce greenhouse gas (GHG) emissions, as well as their effects on air quality and marine ecosystems.

• Hydrogen: Hydrogen is the gold standard for zero-emission fuels. When used in fuel cells, hydrogen produces only water vapor as a byproduct, making it the cleanest option available. The challenge lies in producing green hydrogen (using renewable energy) at scale, as most hydrogen today is produced from natural gas (gray hydrogen), which still results in significant CO2 emissions.
• Ammonia: Ammonia is carbon-free, and its combustion does not produce CO2. However, it can produce nitrogen oxides (NOx), which are harmful pollutants. Ammonia's potential for zero-carbon shipping is significant, but it requires careful management of NOx emissions and improvements in ammonia production methods to ensure it is produced sustainably.
• LNG: LNG offers significant reductions in CO2, SOx, and NOx emissions compared to HFO and VLSFO. However, methane slip (the release of unburned methane) during LNG production, transport, and combustion is a major concern, as methane is a potent greenhouse gas. Reducing methane slip is critical for LNG to be a viable long-term solution.
• Methanol: Methanol produces lower CO2 emissions than traditional marine fuels but still contributes to carbon emissions. When produced from biomass or through carbon capture, methanol can be nearly carbon-neutral. However, its overall environmental benefits are limited compared to hydrogen or ammonia.
• Biofuels: Biofuels stand out for their potential to significantly reduce lifecycle CO2 emissions, contributing to a more sustainable maritime industry. Additionally, the ability to blend biofuels with existing fossil fuels allows for a gradual transition to cleaner energy sources, reducing the industry's overall carbon intensity.

Safety and Operational Considerations

Safety is a paramount concern in the adoption of new marine fuels, especially for passenger vessels like cruise ships.

• Hydrogen and Ammonia: Both hydrogen and ammonia are highly flammable and require careful handling. Hydrogen's low molecular weight makes it prone to leakage, while ammonia is toxic and can pose health risks if not properly managed. These safety concerns necessitate rigorous safety protocols, specialized storage facilities, and training for crew members.
• LNG: LNG is also flammable and must be stored at cryogenic temperatures. However, LNG infrastructure and safety protocols are well-established, particularly in regions where LNG is widely used. The safety risks associated with LNG are generally well understood and managed, making it a more mature option compared to hydrogen and ammonia.
• Methanol: Methanol is less hazardous than hydrogen or ammonia but is still toxic if ingested or inhaled in large quantities. It is also flammable, though its handling and storage are more straightforward compared to LNG or ammonia. The safety risks associated with methanol are manageable, particularly with existing safety standards in place.
• Biofuels: Biofuels are generally safer to handle and store than more volatile alternatives like hydrogen or ammonia. This ease of use further supports their adoption in the industry.

Cost-Effectiveness

Cost is a critical factor for shipowners when considering a switch to alternative fuels. The cost of fuel,
infrastructure, and potential retrofitting of ships must be balanced against environmental benefits and
regulatory compliance.

• LNG: LNG currently offers the best balance between cost and environmental performance. With fuel costs ranging from $500 to $1,000 per ton, LNG is relatively affordable and benefits from established infrastructure in key maritime regions. The lower operational costs due to LNG's higher energy density and lower burning rate make it a cost-effective option for many ship types.
• Methanol: Methanol is moderately priced, with costs ranging from $350 to $550 per ton. Its availability and compatibility with existing engines make it an attractive option for short-term compliance with emissions regulations. However, its lower energy density means higher fuel consumption and potentially higher operational costs.
• Ammonia: Ammonia is more expensive, with costs ranging from $400 to $800 per ton. Its use is still in the early stages of adoption, and the infrastructure for ammonia as a marine fuel is limited. The higher cost and potential safety concerns may slow its adoption, but its zero-carbon potential makes it a compelling option for the future.
• Hydrogen: Hydrogen is the most expensive alternative fuel, with costs ranging from $3,500 to $6,000 per ton for green hydrogen. The high cost reflects the current state of hydrogen production and storage technology. However, as green hydrogen production scales up and costs decrease, hydrogen could become a more viable option, particularly for long-haul shipping.
• Biofuels: The B30 blend, which includes 30% biodiesel and 70% conventional marine diesel, typically costs between $720 and $800 per ton. This is more affordable than pure biodiesel and provides a compromise between cost and environmental impact.

Image Credit: Blend Tiger

The table provides a detailed comparison across multiple dimensions, highlighting the strengths and weaknesses of each fuel option. Hydrogen emerges as the most environmentally friendly option, but its high cost and storage challenges make it less attractive for widespread adoption in the near term.

LNG offers a more immediate solution with a good balance of cost, energy efficiency, and environmental benefits, albeit with some concerns over methane slip. Ammonia and methanol present viable alternatives, particularly in specific segments of the industry, but face challenges related to energy density, cost, and infrastructure.

Image Credit: Blend Tiger

The chart compares the daily costs of operating ships of large, medium, and small sizes using different fuel types, including traditional VLSFO, biodiesel, HVO, methanol, hydrogen, ammonia, LNG, and electricity. Here are the key observations:

Comparable Costs Across Fuels

• VLSFO vs. Alternative Fuels: The costs associated with traditional VLSFO, which has been the mainstay of the maritime industry, are comparable to those of alternative fuels like biodiesel, HVO, methanol, hydrogen, ammonia, and even LNG. This indicates that the maritime industry could transition to these alternative fuels without a dramatic increase in operational costs, at least on a daily fuel consumption basis.
• Methanol, Hydrogen, and Ammonia: While methanol, hydrogen, and ammonia are often considered more expensive due to production and infrastructure requirements, the daily costs for these fuels are not significantly higher than VLSFO, especially when used in PEM fuel cells. This parity is crucial as it suggests that with the right technological and regulatory support, these zero-carbon or low-carbon fuels could be viable replacements for VLSFO. We need also to take into account that methanol, ammonia, and hydrogen might have different price tags depending how they are produced (renewables, non-renewables, or combination with CDR technologies).
• Electricity as a Viable Option: The cost of using electricity, particularly for small and medium-sized ships, is competitive with traditional and alternative liquid fuels. This highlights the potential for electrification, especially in short-sea shipping and ferry operations where the infrastructure for charging is more easily developed.

Implications for Fuel Adoption

• Cost Parity: The fact that daily fuel costs are comparable across various fuels reduces one of the major barriers to adopting cleaner alternatives. Shipowners may no longer need to choose between environmental benefits and cost savings, as both can be achieved simultaneously. This cost parity could accelerate the adoption of cleaner fuels, especially as regulatory pressures increase and the IMO's 2050 emissions reduction targets draw nearer.
• Supply Chain and Infrastructure: While cost is a critical factor, other considerations such as fuel availability, supply chain robustness, and bunkering infrastructure will play significant roles in the adoption of alternative fuels. For instance, hydrogen and ammonia require significant investment in new infrastructure for production, storage, and distribution. LNG, while already widely available, still faces challenges in terms of methane emissions. These factors must be weighed alongside cost when considering fuel options.
• Scalability and Regional Considerations: The adoption of alternative fuels may vary by region, depending on the availability of resources and the local regulatory environment. For example, regions with abundant renewable energy sources might find hydrogen or ammonia more attractive, while others may lean towards methanol or LNG based on existing infrastructure and fuel availability.

Chapter 7: Segmented Adoption of Clean Fuels

The maritime industry is indeed diverse, with different types of ships serving various segments of the market. This segmentation naturally leads to different rates of adoption for clean fuels, influenced by factors such as the ship's size, operational profile, and the specific regulations it must comply with.

For instance:

Small and Medium-Sized Ships: These vessels, which include coastal ferries, short-sea shipping vessels, and regional cargo ships, are often more likely to adopt clean fuels earlier.

Several factors contribute to this:

• Operational Range: Smaller ships typically operate over shorter distances, making it easier to implement clean fuel technologies that may have limitations in energy density, such as batteries or hydrogen fuel cells.
• Regulatory Environment: Smaller ships often operate in areas with stricter local emissions regulations, particularly in European and North American waters. These regions may mandate the use of low or zero-emission fuels in designated Emission Control Areas (ECAs).
• Technological Feasibility: Technologies like electric propulsion or hydrogen fuel cells are currently more feasible for smaller vessels due to the lower energy requirements and shorter voyages.

Large Ships: These include Ultra Large Container Vessels (ULCVs), Very Large Crude Carriers (VLCCs), and other large ocean-going vessels.

• Energy Demand: Large ships have substantial energy demands, making the adoption of certain clean fuels, such as hydrogen or ammonia, more challenging due to current limitations in fuel storage and infrastructure.
• Economic Considerations: The cost of transitioning to clean fuels for large vessels can be prohibitively high, especially without sufficient global infrastructure or incentives. This could lead to slower adoption rates for large ships.
• Cruise Ships: Cruise ships present unique challenges due to the combination of high energy demand and the need to ensure passenger safety.
• Safety Concerns: The use of certain alternative fuels, such as hydrogen or ammonia, in cruise ships may raise safety concerns due to the potential hazards associated with storing and handling these fuels on board.
• Passenger Perception: Cruise lines are particularly sensitive to public perception. While adopting clean fuels can enhance a cruise line's image, any incidents involving new fuel technologies could significantly damage their reputation.

Potential for Market Manipulation

The concern about market manipulation arises from the possibility that shipowners might exploit regulatory loopholes by opting for larger ships to avoid stricter environmental regulations that are more easily applied to smaller vessels. Here's how this might unfold:

• Regulatory Avoidance: If smaller ships are subject to more stringent regulations, such as mandatory use of clean fuels within certain regions, there is a risk that operators may choose to invest in larger vessels that are either exempt from these regulations or where the enforcement is less stringent. This could be particularly attractive if the cost of compliance for smaller ships outweighs the benefits.
• Economic Incentives: Larger ships benefit from economies of scale, where the cost per ton of cargo is lower compared to smaller vessels. If clean fuel technologies remain more expensive and less energy-dense, operators might prefer larger ships that can dilute the higher fuel costs across more cargo. This could slow the adoption of clean fuels in the industry as a whole, as larger ships continue to rely on conventional fuels.
• Impact on Global Emissions: The manipulation of market segments could lead to a paradoxical situation where, despite regulations, overall emissions from the maritime industry do not decrease as expected. Larger ships, which contribute more to global emissions, could offset the gains made by smaller vessels adopting clean fuels, thus undermining global climate goals.

Addressing the Issue

To prevent market manipulation and ensure a fair and effective transition to clean fuels across all segments of the maritime industry, several strategies could be considered:

1.  Harmonized Regulations: International and regional regulatory bodies like the IMO could work towards harmonizing regulations across different ship sizes and segments. By applying similar standards to all ships, regardless of size, the incentive to manipulate the market by choosing larger vessels would be reduced.
2. Tiered Incentives and Penalties: Implementing a tiered system of incentives for adopting clean fuels, coupled with penalties for continued use of high-emission fuels, could encourage adoption across all ship sizes. Larger ships might receive greater incentives proportional to their environmental impact, encouraging them to transition to cleaner technologies.
3. Technological Advancements: Continued investment in research and development is critical to making clean fuels more viable for large ships. Improvements in fuel storage, energy density, and fuel cell technology could help make alternatives like hydrogen or ammonia more accessible and safer for large vessels, reducing the economic and operational barriers to adoption.
4. Global Monitoring and Enforcement: Strengthening the global monitoring and enforcement of emissions regulations could deter operators from attempting to bypass environmental standards by manipulating ship size. Robust data collection and reporting mechanisms would help ensure that all segments of the industry contribute fairly to emissions reductions.

Conclusion

The maritime industry is at a critical juncture as it seeks to meet the IMO's ambitious goals for reducing greenhouse gas (GHG) emissions by 50% by 2050, with an ultimate aim of achieving zero emissions within this century.

The transition from traditional fossil fuels like Heavy Fuel Oil (HFO) and Very Low Sulfur Fuel Oil (VLSFO) is imperative to achieving these targets, but the pathway to a low-carbon future is complex and multifaceted.

The analysis presented in this paper underscores the diverse range of alternative fuels available, each with distinct advantages and challenges.

Hydrogen stands out as the most promising long-term solution due to its zero carbon emissions. However, its high cost, along with storage and handling complexities, poses significant barriers to its widespread adoption in the near term.

Liquefied Natural Gas (LNG) emerges as a practical alternative for the short to medium term. Its established infrastructure, high energy efficiency, and moderate cost make LNG attractive for large oceangoing vessels, though the issue of methane slip must be addressed to ensure it remains a sustainable option.

Methanol and ammonia also present viable pathways, particularly as regulatory pressures increase. Methanol offers flexibility due to its compatibility with existing engines and moderate costs, making it suitable for meeting near-term regulatory requirements.

Ammonia, as a carbon-free fuel, holds significant potential for the future of shipping, provided that safety concerns and NOx emissions are effectively managed.

Biofuels, particularly B30 blends and biodiesel, offer a cost-effective and immediately deployable solution for reducing the maritime industry's carbon footprint. Their compatibility with existing engines and significant CO2 reductions makes them an attractive option, particularly for regions with stringent emissions regulations. However, the higher cost of biofuels compared to traditional fuels must be weighed against their environmental benefits and potential subsidies or incentives.

The potential for market manipulation, where operators might choose larger ships to avoid stricter
regulations applied to smaller vessels (hypothetically, following some rumors in the industry) , is a concern that needs to be addressed.

Harmonized regulations across all ship sizes are necessary to ensure an equitable and effective transition to cleaner fuels, preventing any loopholes that could undermine global emissions reduction efforts.

In conclusion, the maritime industry's transition to clean fuels is both necessary and complex. It requires a balanced approach that carefully considers environmental, economic, and safety factors. The path forward will likely involve a mix of fuels tailored to specific ship types and operational contexts. As technology advances and infrastructure develops, the industry must remain agile, adopting solutions that provide the best combination of sustainability, cost-effectiveness, and safety.

By doing so, the maritime sector can play a crucial role in the global effort to combat climate change while maintaining the vital flow of international trade.

This analysis was published by Eliseo Curcio. Director of Clean Technologies at Blend Tiger. For more information send an email to lee.e.curcio@gmail.com or lee@theblendtiger.com.