The maritime sector is facing a complex transition to fuels and propulsion systems that will comply with current and future IMO strictures.
For the individual company, the transition will almost certainly upset the competitive dynamics within its industry. The company will need an effective strategy conceived specifically for maintaining and enhancing its competitive position. We developed The Ammonia Report as a tool that can facilitate strategic planning of this nature.
The report considers ammonia as a bunker fuel, but does not cast it as an inevitable sector mainstay. Since ammonia does have the potential to dominate the propulsion-fuel transition, we advise maritime players to determine whether and how it should shape their approach.
The Ammonia Report addresses five questions:
1. What are the specific business strategy challenges created for maritime players by the looming energy transition?
2. How do bunker fuel options, including ammonia, compare on critical dimensions of evaluation?
3. Are there major obstacles that could prevent ammonia from becoming a mainstay bunker fuel?
4. What would a strategy look like that is based on the unique position ammonia occupies in the field of sustainable fuel options?
5. What actions should the company take based on relevant strategic considerations? Our advice boils down to this: understand ammonia’s salient aspects as a bunker fuel; formulate a strategy that takes account of ammonia’s potential impact; move to strategy-driven action as soon as possible; and carry out the action plan in collaboration with like-minded allies.
Why This Report
If you’re in the maritime sector, chances are you have been hearing about ammonia. Many parties, including class societies, think tanks, and media companies, have pointed to ammonia’s promise as a bunker fuel that can comply with current and future IMO emissions regulations. Some are already at work on ammonia-based solutions.
But this rush to embrace ammonia brings with it a mosquito cloud of questions:
- Ammonia is not even an energy commodity today. Why is it being considered as a bunker fuel?
- How does ammonia line up against other sustainable carbon-based fuels? Is there something that might give it an edge?
- What will be the economics of ammonia as a bunker fuel? How will they compare with those of other sustainable fuels?
- Who supports the ammonia fuel idea?
- Does ammonia have any significant drawbacks? Will it pose safety issues?
- Will there be major challenges in the roll-out process?
- When will the elements of an ammonia solution be available? Will it even be possible to implement ammonia as a bunker fuel before 2030?
- Is there something special about ammonia that will change the overall fuel transition process?
This report was written not just to gain answers to the key questions, but to use understanding of the ammonia concept to minimize the risks their businesses will face in the energy transition and to use the energy transition to enhance their competitive position.
The report employs a business strategy methodology. As such, it compiles and analyzes information relevant to the big-picture challenge faced by the maritime companies, contextualizes ammonia within this information set, presents a strategy built on insights gained from the contextualization, and lays out a series of practical actions that can put the strategy into effect.
Who This Report is For:
This report is for companies who will need to make changes in their businesses in response to the IMO’s sulphur limit and GHG regulations - in other words, a large proportion of companies in the maritime sector, including those in the shipbuilding, carrier, financing, fuel production, and bunker fuel supply industries. Many of these companies are on the front lines of change implementation. Many others need to react to the changes made by the front line companies. All will benefit from the clarifying perspectives contained in this report.
1 - Executive Summary
- Why This Report
- Who This Report is For
- The Challenge
- The Strategy
- The Action Plan
- In Closing
2 - IMO Mandates
- Tsunami of Risk
- Strategic Launch Pad
3 - Framing the Alternative Fuel Challenge
- Fossil Fuels
- Low-Carbon Fuels
- Cost Leadership within the Low-Carbon Fuels Group
4 - The Technical Path for Ammonia Bunker Fuel Implementation
- Fuel Production
- Bunkering Infrastructure
- Propulsion Systems: Internal Combustion Engines
- Propulsion Systems: Fuel Cells
- Other Considerations
5 - Prescription for a Winning Strategy
- Reduced Risk of Asset Stranding
- Immediate and Practical Action
- Relative Cost Position
- Dominant Strategy
6 - Action Plan
- Phase 1: Individual Action
- Phase 2: Leadership Coalition
- Phase 3: Public-Private Cooperation
- Phase 4: Industry Consolidation
7 - Acronyms
8 - Photo Credits
- The IMO’s Sulphur and GHG Initiatives
- IPCC Emission Scopes
- The Poseidon Principles
- Energy Carriers Cost Analysis
- Lloyds Profit Analysis
- Low-Carbon Ammonia Production
- Ammonia Bunkering Infrastructure Development
- Current ICE Development Programs
- Current Fuel Cell Vessel Development Programs
- On-board Fuel Systems Development Programs
- LNG to Ammonia Conversion
- Figure 1 Distribution of distinct propulsion systems and fuels under multiple scenarios
- Figure 2 New vessel and overall fleet emissions pathway
- Figure 3 Maritime fuel options
- Figure 4 Australia-to-Japan supply of low-emission fuels
- Figure 5 Comparison of low-emission fuel alternatives
- Figure 6 Relative profitability of zero-emission technologies
- Figure 7 Levelized cost of ammonia production
- Figure 8 Ammonia transport infrastructure
- Figure 9 ZEEDS offshore bunkering concept
- Figure 10 Prices of low-sulphur bunker fuels
- Figure 11 Phased action plan
- Figure 12 2020 Announcements of coalitions focused on ammonia as a maritime fuel