The Hydrogen Economy #82
IMO’s Green Wave: Ammonia Fuels Hydrogen’s Future
Key Points
- The International Maritime Organization (IMO), shipping’s global regulator, has committed to adopting binding policy measures to drive its transition to net zero by 2050. It will further evaluate mid-term measures in April.
- The global shipping industry’s transition to low-to-no carbon, hydrogen-based fuel relative to conventional fossil fuels could significantly enhance the growth profile of ammonia relative to its traditional demand drivers.
- We discuss whether the outcome of the IMO meeting in April will likely be aggressive enough to expedite this transition before 2030 and lift confidence among developers to build further capacity to serve this market.
- Currently, global shippers do not face an incentive setting to decarbonize their operations urgently, and the prospect of lower freight rates ahead in 2025 amid increased capacity could further delay the transition.
- Otherwise, we look at recent ammonia and methanol price and margin movements, highlight a few global hydrogen project announcements, and flag several relevant industry trends worth considering in 1Q25.
Exhibit 1: UMAS price projections for primary shipping fuels, per its January 2025 comprehensive impact assessment.
Source: MEPC 82/INF.8/Add.1 – UMAS Report of the comprehensive impact assessment of the basket of candidate GHG reduction mid-term measures – see conversion factors HERE for a more direct comparison from GJ to metric tons.
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