INTERVIEW: Energy security gives momentum to alternative fuels in shipping fuel transition

Recent disruptions to oil supply amid the Middle East war have underscored the strategic risk of over-reliance on a narrow fuel mix. Although LNG remains the dominant choice for alternative-fuel vessel orders, the latest developments have supported renewed interest in a more diversified fuel stack, including ammonia, methanol, and biofuels, Seonghoon Woo, CEO and Co-Founder of Amogy said.

"The energy transition is not only about decarbonization, but also about energy security and fuel resilience," Woo told Platts, part of S&P Global in an emailed interview.

According to Woo, near-term geopolitical volatility is unlikely to materially accelerate adoption timelines. Progress remains contingent on regulatory clarity, upstream investment in production capacity and bunkering infrastructure, and the development of safe, scalable handling technologies for alternative fuels.

Ammonia well-positioned for long-term scalability

While methanol and ammonia are both expected to play meaningful roles in the maritime decarbonization pathway, Woo argues that ammonia offers superior long-term scalability.

A key differentiator is its carbon-free molecular structure. Unlike e-methanol, which requires both green hydrogen and a sustainable CO₂ source—often obtained via direct air capture or equivalent technologies—ammonia production does not depend on a carbon feedstock. This materially reduces system complexity and input constraints at scale.

Ammonia is synthesized from hydrogen and nitrogen, with nitrogen widely available from atmospheric air, providing a structurally abundant input base.

"From a scalability perspective, that gives ammonia a significant advantage as a pathway for delivering carbon-free fuel to hard-to-abate sectors like shipping," Woo said.

In addition, ammonia benefits from an established global production and logistics backbone developed through its long-standing use in the fertilizer industry. Woo views this infrastructure, combined with its role as a hydrogen carrier and a zero-carbon molecule, as central to its long-term competitiveness in deep-sea shipping.

Improving cost competitiveness of green ammonia

Economics remain a critical barrier to adoption across alternative marine fuels.

Woo said that green ammonia FOB export prices from China are already observed below $600/mt, with marginally higher levels in India. On an energy-equivalent basis, this places ammonia below biodiesel, which currently trades at $1,300-$1,500/mt.

Platts assessed grey ammonia delivered Far East at $780/mt on June 18.

Woo said that ammonia offers structural cost advantages over competing pathways. E-methanol requires carbon capture infrastructure, while liquid hydrogen incurs high energy penalties from liquefaction, cryogenic storage, and boil-off management during transport.

With continued declines in renewable power costs and the scaling of electrolyzer capacity, Woo expects green ammonia production costs to decline by an additional 30%–40% through the mid-2030s.

Regulatory timing not expected to alter long-term trajectory

While delays in the International Maritime Organization's Net Zero Framework may defer near-term final investment decisions in select cases, Woo said the strategic direction remains unchanged.

"Clear regulation is important, but shipping companies, fuel providers, and technology developers continue to prepare for a lower-carbon future," Woo said.

Hydrogen cost curve to trend lower

Woo expects continued structural declines in the costs of both green hydrogen and green ammonia throughout the decade, driven by scale effects and capital deployment in low-cost renewable regions, particularly China and India.

Some of the most competitive projects are projected to achieve green hydrogen production costs below $500/mt or $0.5/kg by decade-end. As hydrogen represents the primary input for ammonia synthesis, these cost declines are expected to directly improve ammonia's competitiveness.

Platts assessed India renewable hydrogen term contract at $3.3041/kg on June 18.

Regional variation will persist, shaped by renewable resource availability, infrastructure buildout, and policy frameworks. However, Woo expects both fuels to gradually enter the competitive set for hard-to-abate sectors, including maritime transport and power generation.

Supply pipeline expanding

Despite recent delays and cancellations across parts of the clean ammonia project pipeline due to financing and cost pressures, Woo remains optimistic about medium- to long-term supply growth.

Woo estimates approximately 300 million mt per annum of announced clean ammonia capacity globally, with over 20 million mt per annum of advanced-stage projects expected to come online before 2030.

While acknowledging inevitable project attrition, Woo believes the remaining pipeline is sufficient to meet demand growth as adoption scales.

Carbon credits can support, but not sufficient

Carbon credits are viewed as a supportive mechanism for improving the relative competitiveness of low-carbon fuels versus conventional alternatives.

However, Woo emphasizes that carbon pricing alone is insufficient to drive full-scale adoption. Broader policy frameworks—including production incentives, fuel standards, bunkering regulations, safety protocols, and emissions accounting methodologies—will remain essential to enable commercial-scale deployment.