A joint analysis by marine power company WinGD and green fuels supplier Envision Energy has found that green ammonia could become cost competitive with very low-sulphur fuel oil and LNG as early as the 2030s under certain regulatory conditions.
The new report, which models operating costs for large container ships and bulk carriers trading between China and Australia, finds that under a moderate global regulatory framework green ammonia could reach parity with VLSFP and LNG without relying on additional subsidies. While conventional fuels remain cheaper at present, the findings indicate that regulatory pressure and boosting production could substantially improve the business case for green ammonia.
Under current conditions, operating a vessel on green ammonia can cost up to three times more than using VLSFO. However, this differential narrows when life-cycle emissions costs and projected carbon pricing measures under an international framework are considered, especially when penalties for higher-emission fuels are introduced.
The study forecasts green ammonia reaching cost parity with VLSFO between 2029 and 2036. Over a longer horizon, the fuel is expected to outperform LNG on a life-cycle cost basis, with operating expenses projected to be 5 to 6 per cent lower by 2050.
Frank Yu, senior vice president at Envision Energy, said that ‘by leveraging AI-driven optimisation at our Chifeng facility to harmonise renewable energy harvesting with fuel production, we have already reached a tipping point where green ammonia competes with VLSFO and LNG. As we further scale and refine these intelligent technologies, green ammonia will become the most practical and cost-effective choice for the next generation of shipping. This is the certainty we bring to an uncertain market.’
The Chifeng wind- and solar-powered facility in Inner Mongolia currently produce approximately 320,000 tonnes of green ammonia each year and a planned expansion project could see output reach 1.5m tonnes by 2028. The model assumes that ammonia produced inland can be transported to coastal bunkering hubs, which the report says could be replicated in other regions with strong renewable resources.
WinGD’s CEO Dominik Schneiter commented: ‘Using real fuel pricing, engine performance and emissions data, we show how green fuels can become commercially viable options for ship operators. With global policy on pause, now is the time for the industry to show how it can overcome the obstacles to decarbonisation using the fuels and technologies that already exist.’
The report also provides a more uncertain outlook for other synthetic fuels. E-LNG and green methanol are expected to require stronger policy support or higher carbon pricing to reach competitiveness than green ammonia, which is a result of their higher production costs and less mature supply chains.
