Analysis: Zero carbon ammonia for shipping faces cost, safety challenges

Nippon Yusen Kabushiki Kaisha

27/10/2024 23:49

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      Ammonia bunkering study finds 400 safety risks 
    

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      Shippers reluctant to order ammonia-fuelled vessels
    

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      Costs are 2-4 times more than traditional marine fuels
    

  
    By Jeslyn Lerh
       SINGAPORE, Oct 28 (Reuters) - At one of the world's
biggest bulk export ports in Western Australia, shippers safely
completed the first transfer of ammonia from one vessel to
another last month, a key test for its adoption as a marine fuel
in the push for cleaner energy.
    The first cargo ships that would be powered by ammonia are
set to enter service in 2026, one of several alternatives the
industry is tapping to shrink a carbon footprint accounting for
nearly 3% of global emissions.
    But ammonia faces major cost and safety hurdles as a
shipping fuel compared to others, such as liquefied natural gas
(LNG), methanol, and biofuels.
    Ammonia's appeal is that it is carbon free, and would be a
zero emission fuel if made from hydrogen produced with renewable
electricity.
    But safety is a big challenge for the product typically used
for fertilisers and explosives.
    "Currently the lack of regulation, experience in use and
toxicity of ammonia on board ships constitute major safety
deterrents," said Laure Baratgin, head of commercial operations
at mining giant Rio Tinto  RIO.L .
    Top global iron ore producer Rio is the biggest exporter at
Dampier, where the ammonia transfer trial was run. It operates
dual-fuelled bulk ships that run on traditional marine fuel or
LNG, but has yet to charter or order ammonia-fuelled vessels.
    "Pending our confidence and that of our partners, industry,
and communities, that the risks are sufficiently controlled, we
will look to charter ammonia dual-fuel vessels, the specific
timing of which remains uncertain," she told Reuters.
    Other shippers are also hesitant. Globally, only 25 ammonia
dual-fuel ships have been ordered as of 2024, trailing a fleet
of at least 722 LNG-fuelled ships and 62 methanol-fuelled ships
as of the same year which includes orders and ships that are
already in operation.  
    Only two smaller ammonia-fuelled vessels are in service now,
including a tugboat in Japan.
 
      
    DANGEROUS PROPERTIES 
    Refuelling ships, or bunkering, poses particular challenges
with ammonia, which can cause acute poisoning and damage to the
skin, eyes, and respiratory tract. 
    "The greatest risk is leakage during bunkering operations,"
in addition to leakage from fuel tanks, said Yoshikazu
Urushitani, general manager in the marine fuel division at
Mitsui OSK Lines  9104.T , which is designing an ammonia-powered
bulk carrier.    
    A study by the Global Centre for Maritime Decarbonisation
(GCMD) identified 400 risks associated with ammonia bunkering,
which it says can be mitigated with measures such as
emergency-release couplings to shut systems when a leak is
detected.
    The organisation is developing a detailed emergency response
plan for ammonia spills, which are harder to contain than oil
spills. 
    "For oil, you see it - it stays there and it spreads out in
water. But ammonia dissipates in air," said Lynn Loo, chief
executive officer of GCMD.
    Japan's Nippon Yusen Kaisha (NYK)  9101.T , which has agreed
to build the world's first ammonia-fuelled medium-sized gas
carrier, has developed equipment specifically for ammonia
bunkering. 
    The industry will need to set guidelines for seafarers to
safely manage the fuel, said Takahiro Rokuroda, general manager
at NYK's Next Generation Fuel Business Group.
    Singapore, the world's largest ship refuelling hub, has
shortlisted companies to study the viability of ammonia for
power generation and bunkering and is developing ammonia
bunkering standards. 
     
    PROHIBITIVE COSTS
    Costs will have to drop sharply to make ammonia competitive
in bunkering. 
    Powering ships with ammonia can cost two to four times more
than with conventional fuels, industry figures show, due to
limited supply for the marine sector and an energy density about
two-and-a-half times lower than traditional fuel.
    "If you want to travel the same distance, you either have to
carry about two and a half times that amount of fuel, or you
have to bunker more frequently so that you have enough fuel to
be able to make that trip," said Loo.
    
    
    Ammonia engines also need extra maintenance as the fuel is
corrosive, engine manufacturer Wartsila  WRT1V.HE  says.
    Still, the American Bureau of Shipping forecasts ammonia
will account for about one-third of bunker fuelling by 2050.
    "We certainly won't bring any product to market until we are
100% certain that all risks have been duly managed," said Kenny
MacLean, COO at bunker fuel supplier Peninsula.
    

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Growth of alternative fuel uptake by number of ships    https://tmsnrt.rs/4fdLIWG
Asia bunker fuel prices based on type of fuel    https://tmsnrt.rs/3YkAkkO
FACTBOX-Companies build ammonia-fuelled ships to cut emissions  
  USN:nL4N3LG0FB 
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 (Reporting by Jeslyn Lerh in Singapore; Additional reporting by
Katya Golubkova in Tokyo; Editing by Tony Munroe and Sonali
Paul)
 ((jeslyn.lerh@thomsonreuters.com))