Report highlights urgent need for investment in hydrogen fuel for shipping

The crucial role the shipping industry will play in transporting the green fuels required to reach global climate objectives has been emphasized in a new report from the Tyndall Centre at the University of Manchester.

However, it discovered a huge gap between publicly announced government-led programs and what is needed, urging the development of a much more robust national policy on low-carbon fuels.

Growth in low-carbon hydrogen and sustainable bioenergy, according to the authors of Shipping’s Role in the Global Energy Transition, is crucial for achieving the objectives of the Paris Climate Agreement. However, they discovered that the lack of enabling government policies, such as ensuring producers’ and consumers’ access to markets and fair prices, was deterring investment in the transportation infrastructure required to enable the world’s energy transformation.

By 2030, the world will require 50–150 million tonnes of low-carbon hydrogen, but only 24 million tonnes will be produced by projects that have already been announced, according to the International Energy Authority. Only 4% of these initiatives have received a final investment decision, which is worrying. Stronger government rules are needed, according to Tyndall Centre researchers, to offer consumers, shippers, and producers of low-carbon hydrogen the assurance they need to make investments.

Professor Alice Larkin, a co-author of the report, said: “New green fuels are necessary to achieve the Paris climate targets, and the shipping industry plays a crucial role in delivering them. However, there is a huge difference between existing plans and what is required to reach the Paris goals, thus the production of green fuels must be scaled up.

According to the paper, the shipping industry will play a significant part in the global energy transition by transporting bioenergy and hydrogen that have been transformed into ammonia. It concluded that in the following decades, shipments of ammonia and bioenergy might compete with those of gas and coal at the moment. However, connecting green hydrogen producers with consumers would require the construction of about 20 massive new ammonia carriers each year.

Representatives from the shipping industry stated that they needed certainty on hydrogen generation as soon as possible in order to be able to justify the necessary investments in new infrastructure given the 2-3-year schedule for building new boats. The International Chamber of Shipping, which commissioned the analysis and applauded it, urged governments present at COP27 to “send stronger market signals” to the shipping industry to allay concerns that any new ships constructed to transport low-carbon fuels will never be used.

In order to make government policies more effective at encouraging investment, the Tyndall Centre’s analysis identified a number of potential factors that should be taken into account. These include enacting laws requiring higher percentages of green hydrogen, establishing “production credits” for hydrogen generation, or ensuring markets and pricing for both producers and consumers. These policies have already undergone testing in the USA, Germany, and India.

Guy Platten, the International Chamber of Shipping’s secretary general, said: “The shipping sector is aware that, by conveying the new green fuels required by the global economy, it will play a significant role in the decarbonization of the planet in the next decades. Governments, however, require much stronger measures to derisk the generation of green hydrogen before we can invest.

“Explicit support for the transportation infrastructure required for both imports and exports must be a part of national hydrogen initiatives, according to this statement. The industry is prepared to adapt, but for this to become a reality, we desperately need stronger market signals and infrastructural investment.

See report