The Norwegian shipping company, Grieg Star, has published a report analyzing the costs associated with replacing the current conventional propulsion system of one of its Supramax bulk carrier vessels, equipped with cranes and capable of transporting around 50,000 deadweight tons, with an ammonia-fueled system. The report is part of a pilot project initiated by Grieg Star, in collaboration with almost 20 other companies from the maritime sector, aimed at transforming its fleet and adopting alternative fuels. The project is sponsored by the Norwegian Green Shipping Program, which aims to promote sustainable shipping practices.
According to the study’s findings, the conversion cost for the vessel would amount to $22 million, compared to a market value of around $35 million at the end of 2021. Grieg Star has stated that the financial burden of such an investment, which represents more than 50% of the vessel’s market value, would be significant. The report notes that there is still considerable uncertainty regarding the availability of green ammonia in the short term, and there are no clear international mechanisms in place to influence the pricing of alternative fuels in comparison with conventional ones. Grieg Star’s report highlights that there are no firm indications that the market is willing to pay a sufficient premium for low-carbon fuel-operated vessels.
The report concludes that the main barriers to progress are the combination of high investment costs and the uncertain availability of competitively-priced green ammonia. While ammonia is expected to play a significant role in the emissions-free energy mix for the maritime transport sector in the future, there are currently no engines capable of utilizing it, nor specific regulations governing its safe use by vessels. Furthermore, there is the challenge of high energy demand for its production and its high toxicity.
Complete report: Link