Renewable energy ‘will boost e-fuel global trade’ – report

Renewable energy ‘will boost e-fuel global trade’ - report | Windpower Monthly

According to the ‘Oceans of Opportunities’ report, beyond the “significant untapped potential” of technical and operational changes ships can make to reduce the sector’s carbon emissions, the adoption of new fuels will be essential to decarbonise by 2050.

“There is increasing consensus that green hydrogen-based fuels – particularly green methanol and green ammonia – will play a key role in delivering the rapid emission reductions the sector needs,” the report says.

Its analysis suggests that the cost of wind and solar electricity in the area around each port will be the most significant factor determining its green methanol and ammonia fuel sourcing strategies.

This is because the cost of transporting ammonia and methanol to ports “is relatively immaterial, with even the longest possible routes adding no more than 15% to the delivered cost of the fuel”.

Production costs for e-ammonia and methanol make up the largest share of the delivered cost of the fuel. These costs vary significantly between regions depending on local solar and wind resources, as well as access to hydrogen production subsidies.

The report says “there will be extensive trade in these fuels” including diversified, long-distance ammonia trade between projects in low-cost production regions such as the US, South America, Australia and sub-Saharan Africa, and key bunkering hubs.

“Competition for the lowest-cost volumes could be fierce and reward those able to move early in securing supply,” it adds.

The report suggests that green ammonia from the US, which can benefit from the tax credits associated with the Inflation Reduction Act (IRA) “may be particularly sought after” as it will be the most cost-competitive globally.