Decarbonisation of Global Shipping

The global shift towards net-zero emissions in shipping by 2040–2050 is driving adoption of green fuels, presenting India with a strategic opportunity to emerge as a key producer of green marine fuels and a hub for sustainable shipbuilding.

India’s Potential Role in the Global Maritime Energy Transition

1. Global Efforts Towards Decarbonisation of Shipping

• Emission Concerns
  • Maritime transport accounts for nearly 3% of global greenhouse gas (GHG) emissions.
  • Current fuels used include VLSFO, diesel, and LNG, with plans to transition to green fuels by mid-century.
• Global Targets
  • The International Maritime Organization (IMO) has set a target for net-zero emissions by 2050.
  • Several nations and companies are transitioning to methanol-ready ships as a transitional measure.

2. Green Fuels and Production Mechanisms

• Green Methanol
  • Produced from green hydrogen and captured CO? from industrial sources.
  • Compatible with existing ship engines with minimal modifications.
  • Over 360 methanol-capable ships are operational or on order globally.
• Green Ammonia
  • Derived from green hydrogen and nitrogen.
  • Emits zero GHG but requires extensive onboard handling systems.
• Cost Considerations
  • Green e-methanol costs $1,950/tonne (as of Feb 2025) compared to $560/tonne for VLSFO.
  • High costs are driven by:
    • Renewable electricity prices
    • Electrolyser capital expenditure
    • Storage and retrofitting costs

3. India’s Decarbonisation Plans in Shipping Sector

• Domestic Initiatives
  • India aims to decarbonise domestic shipping by adopting green fuels and developing bunkering facilities (Tuticorin and Kandla ports).
  • $10 billion allocated to support the procurement of over 110 vessels, with a share of green-fuel-capable vessels mandated.
• Export Aspirations
  • India plans to export green fuels to major hubs like Singapore, which handles 25% of global ship refuelling.
  • The government is encouraging green ammonia production to reduce LNG import dependency in fertilizers and tap into marine fuel markets.

4. Enabling Infrastructure and Financial Strategies

• Production Hubs
  • India’s strength in solar energy (105 GW installed) makes it suitable for green hydrogen production.
  • Plans to build 5 GW electrolyser capacity and leverage industrial CO? sources (steel, cement).
• Financial Mechanisms
  • Sovereign guarantees, like those used in the solar mission, could de-risk investments in green methanol.
  • Multilateral Development Banks (MDBs) can offer capital at 4% interest, compared to 11-12% domestically.
  • PLI schemes and carbon capture incentives can strengthen the supply chain and reduce input costs.

5. Opportunities in Shipbuilding and Shipownership

• Government is promoting shipbuilding incentives to support:
  • Retrofitting existing vessels
  • Building new green-fuel-capable ships
• Partnerships with Japan and South Korea are being explored.
• The focus is on Indian-flagged, Indian-built ships to revive domestic shipbuilding.

Way Forward:

• Establishing Green Maritime Corridors with global ports.
• Prioritising regulatory frameworks for green fuel certification and handling.
• Integrating decarbonisation targets in India’s Maritime India Vision 2030.
• Promoting R&D for green ammonia-compatible engines.