The maritime industry, and in particular shipowners, are increasingly facing strategic dilemmas in their fleet decarbonization strategies, as they navigate in significant fuel-related, technical, regulatory, and commercial uncertainty. A key question is how to prepare newbuilds or convert existing vessels for the potential future fuels and how should the risk related to asset CAPEX be mitigated. The project will provide guidance on this, including direction on concrete design feasibility and economic impact of alternative fuel choices.

There are critical uncertainties in developing decarbonization strategies and de-risk investments, where ship design requirements to accommodate alternative fuels play a vital role. Therefore, strategic considerations relating to the newbuilding or retrofitting of the fleet, fuel flexibility and conversion timing can have a large impact on mitigating these uncertainties and shaping decarbonization pathways.

The project considered the conversion from fuel oil to methanol and ammonia, and from LNG to ammonia on container vessels, tankers, and bulk carriers. The project included development of a techno economic assessment tool, which was used to assess different ship conversion options and calculation of the total cost impact, including both CAPEX and value of lost cargo capacity. Additionally, an onboard carbon capture and storage (CCS) study and a greenhouse gas emission impact assessment were conducted.

The lower volumetric energy density of methanol and ammonia heavily impacts fuel storage arrangements and space requirements, which can result in reduced cargo capacity. Additionally, ammonia and methanol storage systems can be CAPEX intensive. However, CAPEX and cargo losses can be reduced by converting to a reduced alternative fuel range.

The project concluded that converting vessels to alternate fuels was technically feasible, the total cost can be optimized by choosing the right level of preparation and range, and conversion had a desirable impact on the lifetime emissions. Future fuel flexibility can be optimized through clever design preparation, supporting a desirable fuel pathway choice and de-risk investments based on expected timing of conversion.

Conversion pathways analyzed in this report (LNG= liquified natural gas)