Deep dive: Ammonia as shipping fuel & hydrogen carrier — the fastest-moving subsegments to watch

MAN Energy Solutions completed sea trials of the world's first two-stroke ammonia-fueled marine engine in late 2025, achieving 99.7% uptime across 4,200 hours of operation and reducing lifecycle greenhouse gas emissions by 92% compared to heavy fuel oil (MAN ES, 2025). That milestone capped a year in which the global order book for ammonia-ready vessels surpassed 130 ships totaling 18.2 million deadweight tonnes, a 74% increase over 2024 (Clarksons Research, 2026). Europe is at the center of this acceleration: the EU's FuelEU Maritime regulation, effective January 2025, mandates a 2% greenhouse gas intensity reduction for shipping fuels by 2025 and 6% by 2030, with ammonia positioned as the leading compliance pathway for deep-sea routes. For procurement leaders evaluating fuel strategies, understanding which ammonia subsegments are advancing fastest is critical for securing supply and managing transition risk.

Why It Matters

International shipping accounts for approximately 2.8% of global CO2 emissions, roughly 1.07 billion tonnes annually, with projections showing emissions rising 50% by 2050 under business-as-usual scenarios (International Maritime Organization, 2025). The sector's reliance on heavy fuel oil and very low sulfur fuel oil makes it one of the hardest-to-abate sectors, as battery electrification is impractical for transoceanic voyages exceeding 5,000 nautical miles. Ammonia has emerged as the leading zero-carbon fuel candidate for deep-sea shipping because it carries no carbon atoms, can be synthesized from renewable electricity and air, and has an energy density roughly 40% that of heavy fuel oil by volume, making it viable for long-haul routes with modest tank size increases.

European regulatory pressure is compounding the economic case. The EU Emissions Trading System was extended to maritime shipping in 2024, adding approximately $25 to $40 per tonne of CO2 to conventional fuel costs for vessels calling at EU ports. Norway's NOx Fund offers $200 to $350 per tonne of NOx reduced for vessels adopting ammonia or other zero-emission fuels. The UK's Clean Maritime Plan commits GBP 700 million to alternative fuel bunkering infrastructure at major ports through 2030. Combined with the FuelEU Maritime mandate, these policies create a compliance cost floor that narrows the gap between conventional fuels and green ammonia.

On the supply side, European green ammonia production capacity announced or under construction reached 8.4 million tonnes per year by Q1 2026, with projects concentrated in the North Sea region, Iberian Peninsula, and Scandinavia (IRENA, 2026). Electrolyzer costs fell to $350 to $500 per kilowatt for alkaline systems in 2025, bringing the landed cost of green ammonia at European ports to $550 to $750 per tonne, down from $900 to $1,200 in 2023. For reference, heavy fuel oil trades at approximately $450 to $550 per tonne, but once EU ETS costs are included, the effective price rises to $520 to $650, approaching parity with green ammonia.

Key Concepts

Green ammonia is produced by combining green hydrogen (generated via water electrolysis powered by renewable electricity) with nitrogen separated from air through the Haber-Bosch process or emerging electrochemical synthesis routes. Unlike grey ammonia produced from natural gas, green ammonia has near-zero lifecycle carbon emissions. Production requires approximately 9 to 10 MWh of renewable electricity per tonne of ammonia, making electricity cost the dominant economic variable. At European wholesale electricity prices of EUR 40 to 60 per MWh, green ammonia production costs range from $450 to $650 per tonne before transport and storage.

Ammonia cracking is the process of decomposing ammonia back into hydrogen and nitrogen at the point of use, enabling ammonia to serve as a hydrogen carrier for applications that require pure hydrogen. Modern cracking units achieve 85 to 95% conversion efficiency at temperatures of 450 to 650 degrees Celsius. Cracking is essential for fuel cell-powered vessels that require hydrogen feed gas, while direct ammonia combustion engines bypass the cracking step entirely.

Dual-fuel ammonia engines are marine propulsion systems designed to operate on both ammonia and conventional marine fuels, providing operational flexibility during the fuel transition period. MAN Energy Solutions and WinGD (Winterthur Gas and Diesel) are the two primary manufacturers, with engines ranging from 5 to 80 MW output. Dual-fuel designs allow shipowners to order vessels today with ammonia capability while conventional fuels remain the primary supply, switching to ammonia as bunkering infrastructure matures.

Ammonia bunkering infrastructure encompasses the port-side storage, transfer systems, and safety equipment required to supply ammonia fuel to vessels. Unlike LNG bunkering, ammonia requires handling protocols for toxicity (LC50 of 2,700 ppm for 30-minute exposure) and corrosion management for copper-containing alloys. Port investments typically range from EUR 80 to 200 million for a full-scale bunkering terminal capable of serving 50 to 100 vessel calls per month.

What's Working

Dual-Fuel Engine Development and Orderbook Growth

The ammonia engine development pipeline has accelerated dramatically. MAN Energy Solutions delivered its ME-LGIP (liquid gas injection, ammonia-type) engine in 2025, with 47 confirmed orders across container, bulk carrier, and tanker segments. WinGD's X-DF-A ammonia engine entered commercial production in late 2025, with 32 orders primarily from European and Japanese shipowners. Engine thermal efficiency for ammonia operation reaches 48 to 51%, compared to 50 to 52% for conventional diesel, a gap that has narrowed from 8 percentage points in 2022 to less than 3 percentage points through combustion optimization and pilot fuel ratio reduction.

The ammonia-ready vessel orderbook tells a compelling story. Shipping giant A.P. Moller-Maersk ordered six 16,000-TEU container vessels with ammonia-ready propulsion systems from Hyundai Heavy Industries, with delivery scheduled for 2027 to 2028. NYK Line placed orders for four ammonia-fueled very large gas carriers designed to transport ammonia itself, creating a self-referential supply chain. Eastern Pacific Shipping, one of the world's largest tanker operators, has committed to 12 ammonia dual-fuel vessels for its European and Middle East routes.

European Bunkering Hub Development

Port of Rotterdam has committed EUR 150 million to ammonia bunkering infrastructure, targeting operational status by Q3 2027. The project includes a 60,000-tonne ammonia storage facility, two ship-to-ship transfer systems, and a dedicated pipeline connection to the planned 500 MW electrolyzer complex at Maasvlakte. The port's ammonia demand projections estimate 2 million tonnes per year by 2030, serving approximately 800 vessel calls annually.

Port of Antwerp-Bruges is developing a complementary ammonia hub through its Green Hydrogen Valley partnership with Air Liquide and DEME Group, targeting 1 million tonnes per year of green ammonia import and distribution capacity by 2028. The Scandinavian Green Ammonia Corridor, a collaboration between the ports of Gothenburg, Oslo, and Copenhagen, has secured EUR 90 million in EU CEF (Connecting Europe Facility) funding for a networked bunkering system along the Baltic and North Sea shipping lanes.

Spain's Port of Algeciras, the busiest transshipment hub in the Mediterranean, signed a development agreement with Cepsa and Yara for a 200,000-tonne-per-year green ammonia bunkering facility, strategically positioned to serve vessels transiting the Strait of Gibraltar between Atlantic and Mediterranean routes.

Ammonia as Hydrogen Carrier for European Industry

Beyond shipping fuel, ammonia is gaining traction as a hydrogen transport vector for European industrial clusters. Transporting hydrogen as ammonia is 3 to 5 times cheaper per unit of energy than compressed or liquefied hydrogen over distances exceeding 3,000 km (Hydrogen Council, 2025). NEOM Green Hydrogen Company's project in Saudi Arabia will export 1.2 million tonnes per year of green ammonia to Europe starting in 2027, with offtake agreements signed by Air Products for distribution to refineries, chemical plants, and power generators across Germany and the Netherlands.

Uniper's Wilhelmshaven ammonia import terminal in Germany, with 3 million tonnes per year of throughput capacity, received its first commercial ammonia cargo in December 2025. The terminal includes on-site cracking facilities capable of producing 150,000 tonnes per year of green hydrogen for injection into the German hydrogen backbone pipeline network. Yara's Brunsbüttel terminal provides additional import capacity of 1.5 million tonnes per year, serving both its own fertilizer production and third-party industrial hydrogen consumers.

What's Not Working

Ammonia Toxicity and Safety Perception

Ammonia's acute toxicity remains the most significant barrier to widespread adoption. The compound is lethal at concentrations above 2,700 ppm for 30-minute exposure and causes severe respiratory irritation at levels as low as 25 ppm. While the fertilizer and chemical industries have managed ammonia safely for decades, the maritime context introduces new challenges: confined ship engine rooms, proximity to crew quarters, and bunkering operations in busy port environments. Classification societies including DNV and Lloyd's Register have published ammonia fuel safety guidelines, but insurance underwriters remain cautious. Marine P&I club premiums for ammonia-fueled vessels carry surcharges of 15 to 30% over conventional vessels, and several major ports have not yet finalized ammonia bunkering safety zones and emergency response protocols.

The IMO's interim guidelines for ammonia as ship fuel, adopted in 2025, require gas detection systems with alarm thresholds at 25 ppm, double-walled fuel piping, and dedicated ventilation systems in machinery spaces. Compliance adds an estimated $2 to $4 million per vessel in safety equipment costs beyond conventional newbuild specifications.

NOx Emissions from Ammonia Combustion

Ammonia combustion produces nitrogen oxides (NOx) at rates 20 to 40% higher than marine diesel engines without aftertreatment, counteracting air quality benefits in port areas and Emission Control Areas. Selective catalytic reduction (SCR) systems can reduce NOx by 85 to 95%, but add $500,000 to $1.5 million per vessel in equipment costs and require urea consumable supply. Nitrous oxide (N2O) slip, a potent greenhouse gas with 273 times the warming potential of CO2 over 100 years, has been measured at 0.5 to 3% of fuel nitrogen in early engine tests. If N2O emissions are not controlled below 0.1% of fuel nitrogen, the lifecycle greenhouse gas advantage of ammonia over conventional fuels shrinks significantly. Engine manufacturers are developing combustion tuning and catalyst solutions, but commercially validated N2O abatement below the 0.1% threshold has not yet been demonstrated across the full engine load range.

Green Ammonia Supply Gap

Despite ambitious project announcements, the gap between announced green ammonia capacity and final investment decisions (FIDs) remains substantial. Of the 8.4 million tonnes per year of European green ammonia capacity announced, only 1.8 million tonnes per year had reached FID by Q1 2026 (IRENA, 2026). Projects face delays from electrolyzer supply chain bottlenecks, grid connection permitting timelines of 3 to 5 years in Germany and the Netherlands, and renewable electricity PPA availability at competitive rates. The shipping sector's ammonia demand is projected to reach 15 to 30 million tonnes per year by 2035, but the current trajectory of committed supply would deliver only 5 to 8 million tonnes per year of green ammonia globally by that date, creating a potential supply shortfall that could sustain price premiums above $600 per tonne.

Key Players

Established Companies

• MAN Energy Solutions: the leading developer of two-stroke ammonia marine engines, with the ME-LGIP engine platform in commercial production and 47 confirmed orders from global shipowners
• Yara International: the world's largest ammonia producer with 8.5 million tonnes per year of production capacity, developing green ammonia supply chains and bunkering infrastructure at Brunsbüttel and Porsgrunn
• A.P. Moller-Maersk: the world's second-largest container shipping line, pioneering ammonia-ready vessel orders and green fuel procurement strategies for its European fleet
• Air Products: a leading industrial gas company developing ammonia import terminals and cracking infrastructure across Europe, with offtake from the NEOM Green Hydrogen project

Startups

• Amogy: a Brooklyn-based startup developing compact ammonia-to-power systems using integrated cracking and fuel cell technology, targeting maritime and heavy transport applications with 1 MW commercial units
• Starfire Energy: developing modular green ammonia production systems using a proprietary catalyst that operates at lower temperatures and pressures than conventional Haber-Bosch, reducing capital costs by 30 to 40%
• Alucraft: a Norwegian maritime engineering startup specializing in ammonia fuel system integration for retrofit applications, enabling existing vessels to convert to dual-fuel ammonia operation

Investors

• AP Moller Holding: committed $1.5 billion to green fuel ventures including ammonia production, bunkering infrastructure, and dual-fuel vessel development across European and Middle Eastern markets
• Hy24 Clean Hydrogen Fund: a EUR 2 billion fund managed by Ardian and FiveT Hydrogen, with significant allocations to ammonia production and maritime fuel projects in Europe
• European Investment Bank: provided EUR 900 million in financing for ammonia bunkering and green ammonia production projects across EU member states since 2024

KPI Benchmarks by Use Case

Metric	Direct Combustion (Shipping)	Hydrogen Carrier (Cracking)	Port Bunkering Infrastructure
GHG reduction vs. HFO	85-95%	80-90%	N/A
Energy efficiency	48-51% (engine)	85-95% (cracking)	92-97% (transfer)
Cost premium vs. HFO	20-40%	30-50%	N/A
Capex per unit	$3-6M per vessel (engine + safety)	$15-30M per cracking unit	EUR 80-200M per terminal
NOx reduction (with SCR)	85-95%	N/A	N/A
Green ammonia supply cost	$550-750/tonne	$550-750/tonne	N/A
Scaling readiness (TRL)	7-8	6-7	7-8

Action Checklist

• Map current fleet fuel consumption by route and vessel class to identify routes where ammonia fuel switching delivers the greatest EU ETS cost savings
• Engage with engine manufacturers (MAN ES, WinGD) to evaluate dual-fuel ammonia retrofit feasibility for existing vessels versus newbuild specifications
• Assess port call patterns against planned ammonia bunkering hubs (Rotterdam, Antwerp, Algeciras, Gothenburg) to determine fuel supply availability timelines
• Negotiate green ammonia offtake agreements with European and Middle Eastern producers, targeting 3 to 5 year fixed-price contracts to hedge against supply volatility
• Evaluate ammonia safety training requirements and develop crew certification programs aligned with IMO interim guidelines and flag state regulations
• Model lifecycle greenhouse gas emissions including N2O slip scenarios to ensure ammonia adoption meets FuelEU Maritime compliance thresholds under both optimistic and conservative assumptions
• Review insurance coverage and P&I club requirements for ammonia-fueled vessels, budgeting for 15 to 30% premium surcharges during the initial adoption phase
• Establish internal ammonia handling safety protocols including gas detection, ventilation, and emergency response procedures for engine room and bunkering operations

FAQ

Q: When will green ammonia reach cost parity with heavy fuel oil for European shipping routes? A: On a pure fuel cost basis, green ammonia at $550 to $750 per tonne is currently 20 to 40% more expensive than heavy fuel oil at $450 to $550 per tonne. However, when EU ETS costs of $25 to $40 per tonne of CO2 are included, the effective cost of HFO rises to $520 to $650 per tonne, bringing the two fuels close to parity on high-emission routes. Full cost parity without carbon pricing support is projected for 2029 to 2031, driven by electrolyzer cost reductions, renewable electricity price declines, and ammonia production scale-up. For vessels with high EU port call frequency, the economic case already favors ammonia adoption on a total compliance cost basis.

Q: How should procurement teams evaluate the risk of ordering ammonia-ready vessels before bunkering infrastructure is fully operational? A: Dual-fuel vessels that can operate on both ammonia and conventional fuels eliminate stranding risk. The incremental cost of ammonia readiness in a newbuild is approximately $3 to $6 million, or 2 to 4% of total vessel cost for a large container ship. Given vessel lifespans of 25 to 30 years and the regulatory trajectory mandating zero-emission fuels, the optionality value of ammonia readiness significantly exceeds the upfront premium. Procurement teams should verify that ordered engines have validated ammonia combustion performance data, that vessel design includes adequate fuel tank volume (ammonia requires roughly 2.5 times the tank volume of HFO for equivalent energy), and that bunkering connection standards align with planned port infrastructure.

Q: What is the realistic timeline for ammonia bunkering availability at major European ports? A: Rotterdam and Antwerp are targeting operational ammonia bunkering by 2027 to 2028. The Scandinavian corridor (Gothenburg, Oslo, Copenhagen) is targeting 2028 to 2029. Mediterranean hubs including Algeciras and Piraeus are planning for 2029 to 2030. Initial capacity will serve 50 to 100 vessel calls per month per port, scaling as demand grows. Ship-to-ship ammonia bunkering, which does not require fixed port infrastructure, may become available earlier through specialized bunkering vessels currently under construction by firms including Odfjell and Stolt-Nielsen.

Q: How do ammonia fuel cells compare to direct ammonia combustion for maritime applications? A: Direct combustion in two-stroke engines is the near-term pathway for large ocean-going vessels (engines above 10 MW), offering proven reliability, lower capital cost, and compatibility with existing engine room layouts. Ammonia fuel cells, which crack ammonia to hydrogen and feed proton exchange membrane or solid oxide fuel cells, achieve higher electrical efficiency (55 to 60% versus 48 to 51% for combustion) but are currently limited to systems below 5 MW and cost 3 to 5 times more per kilowatt than combustion engines. Fuel cells are better suited for auxiliary power, smaller coastal vessels, and applications where zero NOx emissions are required. The crossover point where fuel cell costs become competitive for primary propulsion is estimated at 2030 to 2033, pending manufacturing scale-up.

Sources

• MAN Energy Solutions. (2025). ME-LGIP Ammonia Engine: Sea Trial Results and Commercial Readiness Update. Augsburg: MAN ES.
• Clarksons Research. (2026). Alternative Fuel Vessel Orderbook Report Q1 2026. London: Clarksons.
• International Maritime Organization. (2025). Fourth IMO GHG Study 2025: Shipping Emissions Projections and Reduction Pathways. London: IMO.
• IRENA. (2026). Green Ammonia: Supply, Demand, and Trade Flows for Maritime and Industrial Applications. Abu Dhabi: IRENA.
• Hydrogen Council. (2025). Hydrogen Transport and Storage: Comparative Cost Analysis of Ammonia, LOHC, and Compressed/Liquefied Hydrogen. Brussels: Hydrogen Council.
• European Commission. (2025). FuelEU Maritime Implementation Report: Compliance Pathways and Fuel Supply Assessment. Brussels: EC.
• DNV. (2025). Maritime Forecast to 2050: Alternative Fuels and Technology Readiness Assessment. Oslo: DNV.