Nordic consortium study bullish on potential of ammonia-powered ships

The Nordic Green Ammonia-Powered Ship (NoGAPS) consortium has announced the results of its latest study on green ammonia-powered gas carrier transporting ammonia in Northern Europe and using zero-emission ammonia as a fuel.

In the past couple of years, ammonia has been creating the buzz, being identified as one of the key alternatives to conventional fuels on the shipping industry’s decarbonization path.

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Recent research conducted by the Getting to Zero Coalition estimates that zero-emission fuels need to make up 5% of the international fuel mix by 2030 if the industry is to meet decarbonization targets by mid-century.

The NoGAPS project report, developed by the Global Maritime Forum and Fürstenberg Maritime Advisory, summarizes the potential of green ammonia-powered shipping in decarbonizing maritime transport.

As disclosed, green ammonia does hold the potential to speed up the decarbonization process if investors and operators are presented with a credible business model.

Courtesy of GMF

“The NoGAPS concept study examines the full value chain viability of powering ships with green ammonia. It finds that using green ammonia as a fuel is both practical and feasible. Focus should now be on measures that can strengthen the business case for zero-emission ammonia,” Jesse Fahnestock, Project Director at the Global Maritime Forum, commented.

Due to its potential scalability and application on long-distance routes, green ammonia’s usage could prove to be a good choice for LPG carriers.

One key finding of the study is that it is possible to use green ammonia as a natural choice of fuel for an LPG carrier. There are still areas to be explored, but NoGAPS has taken some big steps along the path to ammonia-powered shipping,” Hans-Henrik Ahrenst, Performance Manager, Naval Architect, BW Epic Kosan, pointed out.

The vessel, the fuel and fuelling options, as well as the business, financing and policy considerations were taken into account, while conducting the study.

“The NoGAPS study has helped to identify the most pressing problems and possible solutions for ammonia-powered, zero-emission shipping, from the perspective of the entire maritime value chain,” said Sofia Fürstenberg Stott, Partner at Fürstenberg Maritime Advisory.

NoGAPS conclusions in a nutshell:

  • The potential of green ammonia as the new, carbon-neutral, energy-efficient fuel is significant.
  • Neither the technical considerations nor the associated regulatory approval for a green ammonia-powered vessel present major obstacles to putting the M/S NoGAPS on the water.
  • Ammonia synthesized from green hydrogen represents a credible long-term, zero-emission fuel.
  • The biggest challenge is to present the money-driven shipping sector that both the vessel design and the fuel sourcing strategy could offer opportunities to reduce risks and costs in meaningful ways.
  • Government support and public finance can both accelerate the short-term timetable for investment. Savings of up to 50% may be possible through co-investments.

The report has been made possible through collaboration with consortium project partners; BW Epic Kosan, Danish Ship Finance, DNB, DNV, MAN Energy Solutions, Wärtsilä, Yara International, and Ørsted with co-funding from Nordic Innovation.

Green ammonia-powered vessels will feature new design

New vessel designs will need to accommodate larger fuel tanks, as
well as safety considerations to minimize the possibility of leaks. What is more, the engines should be constructed to minimize the release of unburnt ammonia.

The expected design pathway for these engines will be dual fuel, which can help mitigate the risks to investors in the ships, as the availability of green ammonia fuel remains to be seen.

The consortium expects that these engines should be available as early as 2024.

Potential costs

Even though the current costs of green ammonia are much higher than conventional shipping fuels, these costs can be expected to come down as production is scaled up and operational efficiency improves.

According to the report, the extra costs associated with the NoGAPS concept are significant. A rough calculation of the costs has been made based on assumptions provided by the partners.

It is estimated that the total annualized cost of ownership of a green
ammonia-powered ammonia carrier goes up to $16.8 million.

The report reveals that the overwhelming driver of the extra cost is the cost of fuel.

In the case examined, fuel costs accounted for 93% of the additional annualized cost compared to a traditional carrier running on MDO.

Share of total annual cost (left) and additional annual cost vs. a standard gas carrier and MDO fuel (right) Courtesy of GMF

The additional capital expenditures related to the vessel are significant
for the vessel owner (roughly estimated at 25%) though in the overall cost picture they are much smaller.