Up to US$2Tn of investment is needed to enable marine fuel producers to manufacture enough green fuel for the shipping industry to meet IMO decarbonisation targets by 2050
IMO is being urged to introduce high levies on shipping companies to encourage developing countries to produce fuels with renewable energy resources, enabling net-zero emissions targets to be met in the next 25 years.
Investment of around US$2Tn is required by the marine fuel industry to engineer and build plants to manufacture green ammonia from renewable energy sources to 2050, with capital expenditure estimated to be US$400Bn per year.
This is according to University College London associate professor, Tristan Smith, who anticipated next-zero (ZNZ) fuels, green ammonia to be more precise, to be uncompetitive with other fuels and requie subsidies until 2040.
Therefore, levies on other fuels will be required to provide finance for green marine fuels production infrastructure in what IMO has called a “just and equitable transition”.
“Business cases to unlock capital of US$2Tn overall will need subsidies, and US$400Bn per year,” said Prof Smith at a maritime decarbonisation roundtable in London, UK, on 10 March 2025.
This investment needs to begin immediately for marine fuel production and bunkering infrastructure to be contstructed from 2030.
“From final investment decision to fuel availability and first bunkering is around five years,” said Mr Smith.
However, this investment will not be forthcoming if shipowners continue to use low-carbon fuels such as LNG and methanol, instead of green ammonia.To generate this demand, the shipping industry must force shipowners and operators to transition away from marine fuels produced from fossil fuels, which requires IMO regulations.
In Mr Smith’s opinion, this should involve high levies on consuming non-green fuels rather than a credit-trading methodology, which is within the European Union’s latest legislation to encourage the maritime sector to switch to green fuels.
“Credit trading could postpone investment in green ammonia and enable LNG fuels. Credit trading mechanisms damage market expectations, and it is hard to unlock the scale of capital needed for investment in green ammonia production,” said Mr Smith.
