Readiness key takeaways Technology 3 –Methanol engines are in early adoption stage (TRL 9).159 –Hydrogen- and ammonia-powered engines are in large prototype stage (TRL 5 and 6).160 –Battery electric (TRL 9)161 and proton-exchange membrane (PEM) fuel cell technologies (TRL 8)162 are also in progress. Infrastructure 2 –To meet IMO targets, approximately 95% of energy from clean hydrogen-based fuels (like ammonia and methanol) is required by 2050, which will require 72 MTPA of clean hydrogen capacity. Currently, 99% of energy used comes from fossil fuels. –The current supply of low-emission fuels is limited. –The infrastructure readiness score remained the same as last year due to limited progress. Demand 3 –Only 4% of the 100 near-zero-emission shipping fuel plants needed by 2030 (as per MPP) are currently financed.163 However, 132% of the plants needed were announced, which contributed to increase in the demand readiness score.164 –The B2B green premium is high, at 30-80%, posing a challenge for ship owners to absorb the cost of a low-emission freight. While the business-to-consumer (B2C) premium is low, at 1-2%, it is a minor component of the final retail price of products. Capital 1 –Achieving net zero by 2050 for shipping requires approximately $2.6 trillion,165 out of which around $2 trillion is required for ZEFs production facilities and around $0.6 trillion to retrofit the existing fleet with ZEF-compatible engines. –Margins are low for the sector; it is difficult to raise investments in decarbonization due to low profitability. –The capital readiness score remained stagnant due to lack of substantial progress. Policy 2 –To meet IMO targets, policies should set production goals for zero-carbon fuels, and establish operational, bunkering and safety standards. –Several proposals have been made to IMO to introduce economic measures and how they can be designed. For example, the World Shipping Council proposed a “green balance mechanism” in 2024 to help close the gap between low-carbon fuels any fossil fuels.166 Sector priorities Company-led solutions Mid-term (by 2030) –Adopt new fuels derived from clean hydrogen at scale and continue exploring biofuels for a transition period, since biofuels are expected to form approximately 8% of fuel mix by 2030 as per the IEA’s NZE scenario.167 –Improve efficiency measures reducing the emission intensity through engine improvements, operational behaviour and design and hull options. Energy efficiency is expected to reduce emissions by 20%.168Long-term (by 2050) –Develop and deploy next-generation ships that run on zero-carbon fuels, since hydrogen-based fuels are expected to form approximately 66% of fuel mix by 2050 as per the IEA’s NZE scenario.169 –Form partnerships with fuel providers to deliver alternative clean fuels. Ecosystem-enabled solutions Mid-term (by 2030) –Expand the production and availability of low- and zero-carbon fuels like green ammonia, hydrogen and sustainable biofuels. –Develop cold ironing infrastructure to provide shore power to ships while docked in port. –Develop bunkering technologies and infrastructure to support next-generation ships that run on zero- carbon fuels.Long-term (by 2050) –Develop infrastructure to support ships using clean hydrogen-based ZEFs including ammonia and methanol. Ammonia is expected to form approximately 50% and methanol approximately 3% of fuel mix by 2050 as per the IEA’s NZE scenario.170 Net-Zero Industry Tracker: 2024 Edition 53

Net Zero Industry Tracker 2024