UCL Energy Institute


Shipping’s need for hydrogen derived fuels creates a range of opportunities for the energy sector

14 October 2021

New report prepared by UCL Energy Institute researchers for the Getting to Zero Coalition concludes the need for hydrogen derived fuels creates opportunities for first movers in new fuel production in a range of geographies.

Shipping container at sea with coast in background

The report, titled A Strategy for the Transition to Zero-Emission Shipping, was funded from the Mission Possible Partnership and co-autored by Dr Tristan Smith, Reader in Energy and
Shipping at UCL Energy Institute.

Decarbonizing shipping is estimated to unlock in the range of $1-1.9 trillion of investment, with 87% of this needed for land-based infrastructure and production facilities, primarily associated with new production of hydrogen. Shipping’s decarbonization is therefore a significant opportunity for a range of countries and corporates looking to stimulate investment in the broader energy transition.

The research shows that shipping’s transition will likely be dependent on green hydrogen used as a primary feedstock of Scalable Zero-Emission Fuels (SZEF) e.g. ammonia, synthetic hydrocarbons/alcohols or as a fuel itself in its liquid form.

Shipping’s demand for SZEF can support investment in green hydrogen for a number of reasons.

From a business case perspective, serving the shipping fuels market carriers lower risks for hydrogen producers than focusing on some other sectors that have some scope for direct or batterypowered electrification (e.g. heat, road transport). Deep-sea shipping has no electrification option, thereby de-risking investments in green hydrogen capacity.

Evidence gathered from previous transitions suggests that first movers in shipping’s adoption of SZEF can be expected where the business case for moving to the new fuel can be built on alignment between ship-side opportunities and those on the land-side. 

Considering only vessels making regular, predictable voyages and a small number of port calls that also operate in close proximity to low-cost hydrogen production potential, the study estimates that about 10% of shipping’s total fuel consumption has attractive fundamentals for moving to SZEF during the 2020s. This analysis also shows that there are opportunities in a number of locations globally. 

The report shows this transition is an opportunity that will create new markets, new technology, new jobs alongside wholescale benefits for society. The energy sector and land-side actors can use this information to strategize, take action, invest, collaborate, communicate, share best practices and lessons learned, and to call for supporting regulatory mechanisms that secure market demand and enable the necessary supply of Scalable Zero-Emission Fuels.