Following several years of industry action, the key elements necessary to kickstart the transition to zero-emission shipping are now coming into place.
A new two-part insight brief series from the Global Maritime Forum explores the topic of demand aggregation for zero-emission shipping fuels and the role it can play in supporting their early uptake in the sector.
The first brief provides an overview of the challenges early movers are experiencing in securing green methanol and ammonia, and how demand aggregation could help overcome them. The second surveys the available approaches to aggregating demand for zero-emission fuels in detail and explores how they can be applied by early movers.
Key Insights:
The International Maritime Organization (IMO) targets net zero emissions by 2050, with 5-10% of energy from alternative fuels by 2030. However, only a few shipping companies have secured an adequate supply of these fuels.
This challenge arises because operators must commit to long-term, large-scale, high-cost fuel contracts (10-15 years). Without such agreements, producers cannot raise the capital to begin fuel production, stalling the transition.
To overcome this, the Global Maritime Forum has identified novel solutions that fuel producers, would-be fuel users, and market enablers can use to scale availability such as:
Demand-led measures:
Joint procurement – By pooling purchasing power, shipowners, operators and/or charters can exercise collective bargaining power, support the development of key infrastructure, and send strong demand signals to the market
Joint ventures - For participants in existing green corridor initiatives to share costs and risks, leverage combined financial capacity, and simplify shipping's complex contracting
Third party-led measures:
Market making - Having a government or international institution step in to make the commitment with producers and then selling the fuel on to shipping companies on a shorter, smaller, and/or cheaper basis.
Hydrogen hubs – Increased participation in hydrogen hubs to connect producers, consumers, and connective infrastructure in a specific location.
Supply-led measures:
Time stacking – Encouraging fuel producers, and their financiers, to accept a package of shorter contracts so no single shipping operator must commit to a full 10 to15-year contract
Through these measures, sustainable fuels such as green ammonia and methanol can be produced in high enough quantities to hit international sustainable fuel targets, while keeping the burden on shipping manageable.
To help early movers understand the options at their disposal, these insight briefs survey these approaches and provide an overview of key considerations surrounding them. With demand aggregation being an evolving landscape, it is not intended to be an exhaustive presentation, but rather to serve as a starting point for further discussion on the topic.
