Home Newsroom ENGINE – Future Fue...

News

ENGINE – Future Fuel Talks: Pilot projects critical to ‘de-risk’ ammonia bunkering – GCMD’s Lynn Loo

Published on

23 January 2025

Link copied to clipboard


First featured on ENGINE


Ammonia pilots can make bunkering safer by helping to establish operational guidelines, Lynn Loo told ENGINE.

Ship-to-ship ammonia transfer between the Navigator Global and the Green Pioneer at the outer anchorage of Port Dampier. Yara Clean Ammonia


Lynn Loo is the chief executive of the Global Centre for Maritime Decarbonisation (GCMD), a Singapore-based non-profit focused on piloting and testing alternative fuels. Last year, GCMD led a ship-to-ship (STS) transfer of ammonia in the Australian port of Dampier. 

The operation involved transferring approximately 2,700 mt of ammonia from the ammonia carrier Green Pioneer to the LPG tanker Navigator Global and back. Yara Clean Ammonia supplied the ammonia. 

The pilot demonstrated that ammonia bunkering via STS transfer can work, GCMD’s Lynn Loo said in an exclusive interview with ENGINE. 

Ammonia’s hazardous and toxic nature demands stringent safety protocols for its use and handling as a marine fuel, especially during bunkering operations and storage. 

Loo noted that STS pilots can help us understand the key steps involved in ammonia bunkering, as both operation types require specialised equipment, robust containment and strict handling procedures to minimise the risk of people being exposed to ammonia leaks during fuel transfers between vessels. 

How feasible is it to apply the high safety standards demonstrated during the controlled Pilbara ammonia transfers to everyday bunkering operations, given varying port conditions and operational environments?

It is important to note that the ammonia transfers at the Pilbara were a trial. As we aimed to test safety procedures and operational protocols for bunkering ammonia, we implemented numerous precautionary measures to manage risks and ensure safety.

As ammonia bunkering becomes the norm, we anticipate operational actions to evolve. However, reaching that point necessitates a learning-by-doing process. This pilot served as the first step, naturally required a high level of stringency.

You could draw a comparison with liquefied natural gas (LNG) bunkering. Over time, the safety distance for LNG bunkering significantly decreased and flow rates have increased as the process becomes more frequent and the industry has gained confidence. I believe the same will be true for ammonia.

Our trial started with extensive safety precautions. We had a firefighting tug on standby, emergency shutdown devices installed onboard, and various other safety measures in place to ensure smooth operations. These precautions were crucial and formed part of the overall learning process.

In everyday bunkering operations, some of these precautionary measures can be incorporated into the bunkering vessel itself. And with proper crew training, the same safety concerns can be addressed with greater confidence.


How might insurers approach the risks of ammonia bunkering and fuel use, and could hesitation to provide coverage or high premiums slow investments and adoption?

That’s a really good question. At the end of the day, insurers rely on data. They look at prior history, collect that data and then assess the associated risks. But with ammonia, we’re dealing with a new fuel that hasn’t been used before. So, where does one get the data to assess risks?

This is why our partnership with Gard, the largest maritime insurance company, is so important. They help assess the risks involved in our pilots, such as execution and operational risks. Through this learning, they can better evaluate the risks their customers may face when using fuels like ammonia on ships.

The transition is a learning process. The more data we collect and share, the faster the sector can progress collectively. That’s why we highly value our partnership with Gard. It has been a win-win overall: they provide risk advisory, underwrite some of our projects, and as active participants in our pilots, gain valuable insights from what we’re doing.

Does that mean that, as of today, marine insurers do not have a risk-averse mentality and are not completely opposed to the idea of using ammonia as a bunker fuel?

No, I believe they are cautious. Ultimately, as long as we acknowledge that this energy transition needs to happen, then we need to understand the risks and price them accordingly. That’s just what we need to do.

Let me give you an example what Gard has done in a different initiative focusing on energy efficiency technologies. We have been asking why these technologies are not being adopted at a faster rate.

One challenge is the uncertainty around fuel savings. For instance, when you install wind propulsion technologies or air lubrication systems to reduce hydrodynamic drag, there’s uncertainty about the actual fuel savings they’ll deliver. Another issue is the commercial barrier; while the shipowner pays for these technologies, it’s the charterer who benefits, as they are the ones paying for the fuel.

Then there’s the role of insurance. What happens if a technology underperforms, fails to perform, or breaks down impacting vessel operations?

Gard has addressed these issues by developing instruments to safeguard against such uncertainties. Even though the data is limited – because these technologies are relatively new – Gard is proactively understanding the risks, pricing them and creating incentives to encourage adoption. This approach will help the industry collectively move forward.

I think there needs to be a mindset of de-risking and learning, at least among a coalition of the willing. Risk-sharing is crucial. And with risk-sharing comes the opportunity for reward-sharing in the long run.

What infrastructure upgrades should ports prioritise for ammonia bunkering, including in less developed regions, and what standardised contingency measures can address worst-case scenarios like leaks or accidents?

You’re essentially asking two questions: one about safety and the other about infrastructure.

Let’s start with infrastructure. Currently, only about 20 million mt of ammonia is globally traded and the storage infrastructure at ports is scaled to match this demand. To meet future needs for shipping and other sectors, including power generation, much larger quantities will need to be traded via ships. This will require massive investment in storage facilities, pipelines and terminal infrastructure. Some estimates suggest that $2 trillion is needed to decarbonise shipping, with 80% of that allocated to land-based infrastructure.

And upgrading ammonia storage facilities at terminals and ports will have to be part of this.

On the safety front, pilot projects are critical. GCMD, for example, leveraged existing knowledge from ammonia cargo handling and adapted it for use as a fuel. We focused on personal protective equipment and used gas carriers that are already familiar with ammonia handling to draw on their existing expertise. Dampier was chosen for our trials due to its experience managing 5% of global ammonia trade, along with having the necessary infrastructure and personnel accustomed to ammonia operations.

While ammonia has been traded as cargo, its use as a fuel presents a different risk profile. All crew members were equipped with personal ammonia monitors, set to detect levels as low as 5 ppm and triggering alarms if levels exceed 25 ppm.

It is crucial to develop clear step-by-step protocols in collaboration with organisations and government agencies to build the ecosystem’s confidence for safe ammonia bunkering.

Considering the infrastructure and additional safety measures required, do you anticipate ammonia bunkering to be significantly more expensive than bunkering LNG? Do ports and suppliers have hesitations about making these investments?

I believe the energy transition, in general, is going to be inflationary because we are moving from an energy system that already has infrastructure in place. Oil is cheap. Oil is easy compared to the alternatives we are less familiar with –with different risk profiles that requires all the infrastructure we’ve discussed to be built.

The concept of ‘cost’ is a very tricky one. It depends on what kind of costs we are talking about. Is it just dollars and cents, or is it also the environmental costs? Is it the cost borne by future generations? We need to look at things in totality. In balance, it’s not just about return on investment per se; the investment must also account for the environmental impact.

If we take a broader perspective and acknowledge the need to transition to alternative fuels, the question we must ask is: how do we address the financial cost? This is where policy and regulations must step in. There needs to be a price associated with pollution. Implementing carbon pricing would help bridge the gap between alternative fuels and conventional fuels, and we need that to help the sector transition to alternative fuels.

Are demand-focused regulations like FuelEU Maritime or supply-focused ones like AFIR better for driving investments in ammonia bunkering, and how can governments and the IMO incentivise infrastructure, safety and training upgrades?

A chain is only as strong as its weakest link. And here we’re talking about building an entirely new value chain and supply chain. Every aspect, from demand signalling to supply infrastructure, must be redesigned. And this requires all the support it can get.

While this might sound like the industry should be heavily regulated, that’s not necessarily the case. Essentially, we’re talking about a transition to a steady state, during which market forces should guide us in the right direction. But the transition period is tough. So you need incentives on the demand side to signal strong demand to convince project developers to invest and build the infrastructure for fuel production, etc.

That said, supply-side support is also crucial, and governments can definitely play a role. One such initiative is the Clean Energy Marine Hubs which aims to engage governments on the opportunity to co-locate fuel and energy production near or at ports. This approach could help simplify logistics and supply chains, aggregate supply and make clean fuels cheaper, faster, safer and more accessible.

At the end of the day, it’s about matching demand and supply. Shipping is a global industry, so while regional policies have their place, consistent global regulations are essential. Regional regulations may create an unlevel playing field and lead to fragmented development.

For industries like shipping and aviation, which operate globally, consistent international regulations are essential to ensure fairness and effectiveness.

Join mailing list

Subscribe to stay in the know about GCMD’s latest news, insights, events and more!

Your contact details

Required
Required
Required
Required
Required
Required

For details on how we collect and use your personal information, refer to our data protection policy.