INTERVIEW: Ammonia Bunkering Could Take Off at Scale by 2030, Navigator Gas Says

Navigator Gas is looking to retrofit some of its handysize gas carriers to become ammonia bunkering vessels, in anticipation of supply chains for the new marine fuel that could take hold at the end of the decade, the company’s CEO Mads Peter Zacho has told Bunkerspot.

‘Four to five years from now’: this is the timeframe in which the chief of the London-headquartered owner of liquefied gas carriers expects ammonia as a bunker fuel to start becoming available on a large scale.

While Zacho had hoped that such supply chains would have been developed sooner, he is confident that the game is about to change with the global pricing mechanism for shipping’s greenhouse gas (GHG) emissions that was agreed at MEPC 83 in April.

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‘There have been many pioneers, but if you don’t have the regulatory framework that is levelling the playing field between fossil and green fuels, then it’s not going to happen in volumes,’ he said in an interview in Oslo during Nor-Shipping.

‘I think a lot of industry players have been sitting on the fence, waiting for others to de-risk [the transition] by moving first,’ he added. ‘But now, all of us will pretty much be pushed ahead because we know that fossil fuel is going to be much more expensive in just a few years.’

This will also give fuel producers ‘much better opportunities’ to secure offtake agreement with shipping companies, he highlighted. ‘We’ve been waiting for this for a long time.’

Shifting fuel costs

If formally adopted by the IMO’s Marine Environment Protection Committee (MEPC) at an extraordinary session in October, the new Net-Zero Framework will set gradually tightening targets for the GHG intensity of the energy used on board ships, with penalties based on a tiered system.

The price for emissions exceeding the minimum ‘base’ target would be $380 per tonne of CO₂ equivalent, while it would be set at $100 per tonne for vessels whose emission levels comply with the baseline but are higher than a more stringent ‘direct compliance’ target.

‘That means fossil fuels could potentially double in cost, aligning them with the cheapest zero or near zero fuel options as soon as 2030 or 2031,’ Zacho noted.

‘It means, for all of us who are investing now in ships that will last for 25 years, that we have to think really hard about how we do that, and it would be ill-advised to buy a vessel that cannot be retrofitted or propelled by new fuels.’

He expects ‘many more’ ammonia-fuelled vessels to be added to the orderbooks in the next two years as a result. Those would likely enter operations around 2030, coinciding with green or blue ammonia production projects delivering their first volumes.

He is also confident in the industry’s ability to ramp up production rapidly.

‘The projects you see for clean ammonia are million tonnes plus per annum, which is quite large, whereas for many of the bio and e-methanol projects, we’re talking tens or hundreds of thousands of tonnes per annum,’ he highlighted. ‘Those are going to take longer to scale up, and that’s why I think blue ammonia will be fast and it will be cheap.’

Supply chain complexities

But developing the supply chains to get alternative fuels on board ships is complex and requires multiple moving parts to align, Zacho remarked. Producing the fuel is one part of the puzzle, but transporting it to where it is needed and having the bunkering infrastructure in place is also critical. ‘That all takes time,’ he acknowledged.

Navigator Gas is currently in discussions with ports in Europe and Singapore to provide ammonia bunkering infrastructure. The company jointly owns Azane Fuel Solutions, which has received approval from the Norwegian authorities to build an ammonia bunkering facility in Florø, north of Bergen.

In addition, the shipowner is considering converting a handful of its handysize semi-refrigerated vessels, which Zacho said are ‘quite well built for, and have the right size for becoming ammonia bunkering vessels.’

‘You could see that some of the older tonnage in the global handysize fleet can be repurposed to become bunkering infrastructure,’ he added, offering a cheaper alternative to newbuilds that he said can cost around $100 million.

This could represent about 5 to 10 of the 58 liquefied gas carriers in Navigator Gas’ fleet going into retrofitting in the next three to four years, he indicated. ‘It’s a starting point.’