How is Global Shipping Trying to Decarbonise?

Context: Global shipping targets decarbonisation by 2040–50 by replacing traditional fuels like VLSFO, diesel, and LNG with green alternatives such as green ammonia, e-methanol, and biofuels, creating major opportunities for India in the green energy sector.

Green Fuel Production

• Green hydrogen is made via electrolysis of water using renewable energy.
• For marine use, more stable derivatives are preferred:
  • Green Ammonia: Made from green hydrogen and nitrogen.
  • Green Methanol: Produced from green hydrogen and captured industrial CO₂.
• India promotes green ammonia to reduce dependence on LNG imports for fertiliser.

Green Methanol as a Transition Fuel

• Green methanol is emerging as shipping’s preferred decarbonisation fuel due to:
  • Ease of use
  • ~90% lower emissions than traditional fuels.
  • Compatibility with existing ship engines (unlike green ammonia).
• Over 360 methanol-ready ships are in use or under construction, supported by Maersk, CMA CGM, Evergreen, etc.
• High costs:
  • Green e-methanol = $1,950/tonne (Singapore, Feb 2024)
  • VLSFO = $560/tonne
• Cost drivers:
  • Needs 10–11 MWh of renewable electricity per tonne.
  • High capital cost for electrolyser infrastructure.
• Demand–Supply Gap:
  • Demand is projected at 14 million tonnes by 2028, while supply may only reach 11 million tonnes.

India’s Decarbonisation Strategy & Green Fuel Export Plans

• India plans to decarbonise domestic shipping via:
  • Promoting green fuel for container ships.
  • Developing green fuel bunkering hubs at Tuticorin (VOC Port) and Kandla.
• Plans to export green fuels to Singapore, which manages 25% of global ship fuel demand.
• Leverages its large solar capacity and green tech expertise to emerge as a global green fuel supplier.

Building India’s Green Marine Fuel Hub – Challenges & Solutions

Key Challenges

• Dependence on imported solar panels and electrolysers.

Progress & Solutions

• Solar capacity growth: From 82 GW (2014) to 105 GW (2025).
• Use of sovereign guarantees to reduce borrowing costs via cheaper foreign financing.
• Policy tools like:
  • PLI schemes for electrolyser production.
  • CCUS (Carbon Capture, Utilisation & Storage)
• Goal: Build local green fuel value chains and reduce CO₂ transport costs.
• The government aims to create 5 GW of electrolyser manufacturing capacity.
• Expand industrial CO₂ sourcing for green methanol.
• Access to low-interest loans (4%) from multilateral development banks vs. 11–12% from domestic lenders.

Reviving Indian Shipbuilding via Green Fuel Push

• India supports shipbuilding and shipowning by:
  • Offering demand-side incentives.
  • Encouraging foreign collaborations (e.g., with South Korea, Japan).
  • Retrofitting old ships and building new green fuel-capable ships.
• Investment:
  • Committed $10 billion to build over 110 ships.
  • Target: 10–20% of ships to be green fuel-ready, Made in India, and flying the Indian flag.
• Aims to strengthen local shipbuilding while meeting global climate goals.

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