Ammonia marine fuel cheapest option from late 2030s, dual-fuel vessels lowest-risk
By on May 30, 2025
Modelling from UMAS & UCL: Ammonia-LNG dual-fuel cheapest to mid 2030s
Following on from the IMO’s historic new regulations for shipping decarbonization, new modeling has been released that analyses the options available to shipping stakeholders for capital investment and operations. From their modeling, UMAS and the University College of London conclude that scalable e-fuels (including ammonia and methanol) have the highest potential to meet shipping’s new decarbonization targets, but that the next decade is critical to ensure supply chains are ready to supply these fuels.
…multiple compliance pathways exist today, the increasing GFI stringency and higher penalties will progressively favour scalable zero-emission fuels, pushing the industry away from fossil fuel-based options such as liquefied natural gas (LNG) and toward e-fuels based on green hydrogen.
[But] while the analysis finds that e-fuels have the highest potential for shipping to achieve its long-term decarbonisation targets, early uptake and value chain development are needed if they are to reach commercial viability in time.
From the Global Maritime Forum’s official press release, 27 May 2025
Click to expand. Modeling for total cost of vessel operations, assuming no ZNZ reward mechanism and holding RU/SU prices fixed (left); including a ZNZ reward mechanism and increasing RU/SU prices over time (right). Fig 1 from IMO’s new Net Zero Framework: Assessing the potential options and costs of compliance (UMAS, May 2025).
Extending the models for “total cost of ownership (TCO)” out to 2050, the authors found that LNG-ammonia dual fueled ships are the cheapest option before and up to the mid 2030s, with ammonia “taking the lead” from around 2037. In particular, ordering ammonia dual-fuel vessels enables vessel owners to “hedge most of the uncertainties” in the short term, with ports likely to continue to provide bunkering services for conventional fuel molecules, as well as new options.
Although there is broad consensus that the new IMO regulations need “ratcheting up” to achieve the necessary decarbonization outcomes, the report authors suggest that the greenhouse gas fuel intensity (GFI) targets in the regulations (and subsequent penalties for non-compliance) are “already creating a framework for long-term investment”.
Further adjustments needed for the long-term
The report authors indicate that – based on in-depth interviews with more than 30 key stakeholders – many in the industry:
…are considering a “wait and see” approach, prioritising short-term cost optimisation strategies, and delaying investment in zero-emission options due to regulatory uncertainty, limited fuel availability, and perceived commercial risk.
From the Global Maritime Forum’s official press release, 27 May 2025
Incentives and policy adjustment will be critical in the near-term to ensure that ammonia fuel becomes a viable, at-scale option once the time is right for adoption.