1 March 2023 (Lloyd's List) - US legislation to offer subsidies to clean energy companies favours blue ammonia production through its carbon capture credits, the Oil and Future Fuels Forum has heard. 

The US Inflation Reduction Act was signed last August and includes $430bn of provisions to cut carbon emission, boost domestic production and manufacturing.

It offers up to $85 per tonne of CO2 captured and stored permanently and $60 per tonne of CO2 captured and used for enhanced oil and natural gas recovery or to make a commercial product.

“The $85 a tonne of CO2 [offering] is a massive incentive, causing a lot of disruption in the global sustainability industry,” Argus Media senior vice-president Tim Hard told the forum in London. “And I think the Middle East is all over blue ammonia. So we see a lot of investments in ammonia capacity using CCS.”

Liquefied natural gas and green ammonia are expected to be the primary alternative marine fuels by 2050, as the firm estimates green ammonia will make up for around 20% of marine fuels by that time, with feedstock constraints limiting uptake of low-carbon methanol and biofuels, according to Argus Consulting, which also estimates ammonia demand to reach around 200m tonnes by 2050, with marine fuels accounting for nearly half of that number.

Methanol can initially be one of the main bunker fuels as it is easier to handle than ammonia and it does not need any retrofitting at barges or vessel engines, said Stefka Wechsler, editor of Argus’ marine fuels report, adding that methanol does not emit sulphur oxide, making it a viable fuel currently to replace marine gasoil.

Methanol bunkering may pick up in the coming years with more vessels expected to be delivered, especially in the containership segment, as companies such as Maersk have already ordered several methanol-ready ships.

Chartering giant Cargill has become the first company to order methanol dual-fuelled vessels from the dry bulk segment.

Grey methanol, B30 biodiesel and LNG were the most competitive when compared with conventional marine fuels, making them well placed to increase uptake in the shipping industry, especially when calculating CO2 emission costs and EU taxes, Ms Wechsler added.