In a report, Wartsila provides a roadmap for the future of sustainable fuels, identifying how the industry can more rapidly and affordably scale these fuels and achieve full decarbonisation by mid-century – within the lifetime of just a single vessel

Ammonia has emerged as a promising alternative fuel as the shipping industry looks for more sustainable fuel options.

With new global regulations having set a clear destination for shipping – net zero emissions by mid-century – ammonia will play a significant role in enabling the shipping industry to reduce its emissions.

A report by Wartsila highlights the role that sustainable fuels will play in achieving this target which is set by the International Maritime Organization (IMO).

According to the report, existing decarbonisation solutions, such as fuel efficiency measures, can cut shipping emissions by up to 27 per cent; however, sustainable fuels, such as ammonia, will be a critical step in eliminating the remaining 73 per cent.

In this context, Hakan Agnevall, President and CEO of Wartsila highlights the importance of cross-industry collaboration.

He says: "In just 25 years – the lifetime of a single vessel – shipping needs to get to net zero emissions. Achieving this will require coordinated action by all maritime industry stakeholders to bring about the system change needed to accept a new generation of sustainable fuels."

Sustainable shipping fuels could reach cost parity with fossil fuels as early as 2035 with the help of decisive emissions policy such as carbon taxes and emissions limits, according to a new report launched today by technology group Wartsila.

The report, titled ‘Sustainable fuels for shipping by 2050 – the 3 key elements of success’, reveals that the EU Emissions Trading Scheme (ETS) and FuelEU Maritime Initiative (FEUM) will see the cost of using fossil fuels more than double by 2030.

By 2035, they will close the price gap between fossil fuels and sustainable fuels for the very first time.

Transporting 80 per cent of world trade, shipping is the engine room of the global economy.

However, despite being the most efficient and environmental way to transport goods, it emits 2 per cent of global emissions, equivalent to the annual emissions of Japan. Without action, this could increase by more than 45 per cent by 2050.

In 2023, the International Maritime Organization (IMO) set a target of achieving net zero emissions by 2050. Existing decarbonisation solutions, such as fuel efficiency measures, could cut up to 27 per cent of emissions.

Wartsila's report argues that sustainable fuels will be a critical step in eliminating the remaining 73 per cent but radical action is needed to scale them.

The industry suffers from a "chicken and egg" challenge – ship owners won’t commit to a fuel today that is expensive, only produced in small quantities, and may be usurped by another fuel that scales faster and more affordably. Meanwhile, it is difficult for suppliers to scale production without clear demand signals.

Wartsila has produced new modelling that shows a timeline of which fuels are likely to become widely available on a global scale, when and at what cost.

To accelerate this timeline, the report argues that decisive policy implementation, industry collaboration, and individual operator action must coalesce to scale the production of these fuels.

Roger Holm, President of Wartsila Marine and Executive Vice-President at Wartsila Corporation says: "Achieving net-zero in shipping by 2050 will require all the tools in the toolbox, including sustainable fuels. As an industry, we must focus on coordinating action across policymakers, industry and individual operators to bring about the broad system change required to quickly and affordably produce a mix of sustainable fuels. Policy in Europe is showing just how impactful action at the international level can be, closing the cost gap between fossil- and low-carbon fuels for the first time."

Wartsila’s modelling (Figure 1) shows sustainable fuels will be 3-5 times more expensive than today’s fossil fuels in 2030.

As ETS and FEUM show, policy is key to closing the price gap. The report argues that policymakers should:

• Maximise certainty: Set an internationally agreed science-based pathway for phasing out fossil fuels from the marine sector, in line with IMO targets.

• Boost cost competitiveness: Adopt a global industry standard for marine fuel carbon pricing.

• Collaborate: Increase global collaboration between governments on the innovation and infrastructure necessary to deliver sustainable fuels at scale worldwide.

INDUSTRY COLLABORATION

The sector must collaborate with stakeholders from inside and outside shipping. The report calls on industry to:

• Pool buying power: Initiate sector-wide procurement agreements to pool demand from multiple shipping operators.

• Collaborate with other sectors: Convene with leaders in aviation, heavy transport, and industry to establish a globally recognised framework for the production and allocation of sustainable fuels.

• Share skills: Establish an industry-wide knowledge hub for the purpose of sharing expertise, skills and insights.

Every euro an operator saves in fuel costs at today's prices, could be worth 3-5 times that by 2030.

That means companies such as Carnival Corporation, which made a 5-10 per cent efficiency gain through its Service Power Upgrade Program, could cut its fleetwide fuel costs by as much as $750 million per year in 2030.

All operators can benefit from improving the efficiency of their vessels – the technology is readily available today.

Holm adds: "If there is one take away from our report, it is that smaller operators need not feel powerless. They have a major role in accelerating towards net-zero emissions shipping. Taking steps to improve fuel efficiency and invest in fuel flexibility can deliver immediate returns, reducing both emissions and operating costs. But action must be swift – we have the lifecycle of just a single vessel to get this right."

Investing in fuel flexibility is the most financially viable way to avoid the risk of stranded assets.

Wartsila has been developing multiple fuel options. Most recently, Wartsila launched the first commercially available 4-stroke engine for ammonia fuel, which can immediately reduce emissions by over 70 per cent, compared to diesel.

By Abdulaziz Khattak