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Ammonia-fuelled gas carriers could compete effectively by 2026

MAN Energy Solutions The ammonia test engine at Research Centre Copenhagen
Analysis from the Copenhagen-based Global Maritime Forum (GMF) concludes that ammonia-powered gas carriers could compete effectively with conventionally fuelled ships before 2030 and possibly as soon as 2026.

Cost reduction levers including the US Inflation Reduction Act (IRA) and the EU’s Fit for 55 Package could cut the cost of owning and operating a typical gas carrier by 20% and 10% respectively, the GMF study found. Other measures such as dual-fuel ship design, competitive debt financing arrangements, operational efficiencies, fuel subsidies, and governmental regulation would help to narrow the gap in running costs further, the GMF research team concluded.  

The analysts, working on the Nordic Green Ammonia Powered Ships (NoGAPS) project co-funded by Nordic Innovation, assessed ways in which the cost gap between operating ‘MS NoGAPS)’ on ammonia and conventional fuel could be bridged. They assumed that MS NoGAPS was deployed on a route between the US Gulf and northwestern Europe, an arrangement that has received Approval in Principle from DNV.

Were the vessel to maximise operational efficiencies, take ammonia bunkers on board exclusively in the US, and make the most of the Fit for 55 measures and IRA subsidies, the ship’s operation could reach parity by 2030, the study found, but with other cost reduction levers, possible as soon as 2026, the study found.

Jesse Fahnestock, Global Maritime Forum Project Director, said: “Since 2020, the NoGAPS project has brought together key industry leaders to progress an ammonia-powered gas tanker concept towards real-world implementation. With the completion of this latest project phase, we not only have a detailed ship design that could be used for a shipyard tender but also a feasible commercialisation pathway. We hope this boosts confidence amongst charter parties and investors to take steps towards the realisation of M/S NoGAPS and other ammonia-powered vessels.”

Participants in the NoGAPS project include leading partners Global Maritime Forum, Yara Clean Ammonia, BW Epic Kosan, MAN Energy Solutions, Wärtsilä, DNV, and the Mærsk McKinney Møller Center for Zero Carbon Shipping. Supporters include the Danish Maritime Authority as flag representative and Breeze Ship Design as ship designer.