Decarbonization of Global Shipping | 17 Jul 2025

Source:TH 

Why in News?  

Global shipping is now on track to drastically cut its carbon emissions by 2040-2050. This shift is being driven by mounting climate pressures and global decarbonisation goals.  

• The move presents a big opportunity for India both in supplying green fuels and building the infrastructure needed for this transition.

What are the Green Fuels used for Decarbonising Shipping? 

• Green Methanol: Derived from green hydrogen (generated using renewable energy) and CO₂ captured from industrial processes. 
  • Advantages: It can be used as a drop-in fuel for existing engines, reducing carbon emissions by 90-95% compared to conventional fuels. 
  • Challenges: Green methanol incurs high production costs driven by renewable electricity prices and electrolyser infrastructure. 
• Green Ammonia: Produced by combining green hydrogen with nitrogen from the air. 
  • Advantages: Completely carbon-neutral, making it a long-term solution for shipping. 
  • Challenges: Green Ammonia has a highly volatile nature, requiring specialized storage tanks and modifications to engine technology. 
• Biofuels: Derived from organic matter, biofuels can offer a lower-carbon alternative but are not as scalable as methanol or ammonia. 
  • Advantages: Can be used in existing engines with minimal modifications 
  • Challenges: Limited scalability due to land and feedstock constraints, Biofuel production competes with food production in some cases. 

What are the Challenges in Adopting Green Fuels in the Shipping Industry? 

• Cost Considerations:  Producing green fuels like methanol requires electrolysers and large amounts of renewable energy, both of which are capital-intensive.  
  • It takes 10–11 MWh of renewable electricity to produce one tonne of green methanol, which costs around USD 1,950 per tonne compared to USD 560 for VLSFO, making it significantly more expensive.  
  • Demand for green methanol is expected to exceed 14 million tonnes by 2028, while supply may reach only 11 million tonnes, adding to price pressure. 
• Technological and Infrastructure Barriers: The adoption of green fuels requires substantial modifications to both ships and port facilities. This includes retrofitting engines and building bunkering infrastructure at global ports. 
  • Ammonia engines are still experimental, and many shipping firms prefer green methanol, which is safer and more compatible. The Maritime is a conservative sector and slow to adopt untested tech, and global standards for green fuels are still lacking. 
• Regulatory and Certification Issues: International Maritime Organization (IMO) regulations are evolving but not yet uniformly adopted. Lack of certification frameworks for green fuels impedes market confidence. 
• Storage and Safety Concerns: While hydrogen is a potential fuel, its storage and transportation challenges make it unfeasible for direct use in shipping. Therefore, green ammonia and green methanol are considered more viable options. 
• Geopolitical Dynamics: The discussions at the IMO were heavily influenced by geopolitical tensions. Oil-exporting countries such as Saudi Arabia opposed drastic changes to safeguard their fossil fuel markets. China favored minimal levies to maintain global competitiveness. 
  • Smaller nations, particularly small island states, advocated for steep carbon levies to finance green development initiatives. 
  • India, alongside Singapore, piloted a compromise solution that integrated both environmental effectiveness and economic fairness. 

What is India’s Role in Global Shipping Decarbonisation? 

• Policy Leadership and Global Collaboration: India played a key role in shaping the Market-Based Measure (MBM) framework to reduce emissions from global shipping, which was adopted at the IMO’s 83rd Marine Environment Protection Committee (MEPC) session. 
  • Under the MBM framework, India suggested a ‘bridging mechanism’ to penalise polluters, while rewarding those adopting Zero or Near-Zero (ZNZ) fuels. 
  • India hosted the Green Shipping Conclave 2025 in Mumbai, underscoring its leadership in shaping global decarbonisation frameworks. 
• Clean Fuel Production: India’s National Green Hydrogen Mission aims to make India a global hub for green hydrogen production, essential for green ammonia and methanol key fuels for shipping. 
  • India has vast solar potential and aims to reach 280 GW of solar power by 2030, forming a major part of its 500 GW renewable energy target, making it an ideal hub for green hydrogen production, supporting global shipping decarbonisation 
• Maritime Infrastructure and Green Ports: India is enhancing green bunkering facilities and investing in green ports through initiatives like the Harit Sagar Green Port Guidelines and the Green Tug Transition Programme. 
  • India is focused on green fuel production and has ambitious plans to develop green fuel bunkering ports at locations like Tuticorin V.O. Chidambaranar and Kandla. 
• Financial Commitment to Green Shipping: The Rs 25,000 crore Maritime Development Fund for FY26 will catalyse investments in green infrastructure, fleet modernisation, and alternative fuels to meet the IMO’s emission reduction targets. 
  • Policies like Maritime India Vision 2030 align with global decarbonisation goals. 

How can India Lead in Shipping Decarbonisation? 

• Green Fuel Infrastructure Development: India must invest in developing green hydrogen production hubs powered by its abundant solar energy resources. 
  • There is a need to scale up carbon capture and storage (CCS) technologies to facilitate the production of green methanol from industrial CO₂. 
• Policy and Financial Incentives: The government should continue to offer Sovereign Guarantees to reduce risk for green fuel investments and make green methanol production financially viable. 
  • Production Linked Incentive (PLI) schemes can support the domestic manufacturing of electrolyzers and help build a robust green fuel supply chain. 
• Shipbuilding and Retrofitting: India’s government can bolster its maritime capabilities by providing incentives for green fuel-ready shipbuilding in Indian shipyards. 
  • India has pledged USD 10 billion to support the purchase of over 110 ships, with 10-20% of these being green fuel-compatible, will help create economies of scale and attract global shipbuilders. 
• Export Potential: Under the National Hydrogen Mission, Indian green hydrogen must meet a GHG intensity of no more than 2 kg CO₂e per kilogram, or 16.7 grams of CO₂ per megajoule (MJ) well within the IMO’s reward thresholds, which are capped at 19.0 g CO₂e/MJ until 2034 and 14.0 g CO₂e/MJ thereafter.  
  • This alignment creates a significant opportunity for India to export green fuels globally and capitalise on international incentives.  
  • This supports India’s energy security, aligns with maritime goals, and helps meet the target of a 40% carbon intensity cut by 2030 and net-zero emissions by 2070. 
• International Partnerships and Technological Collaboration: India should partner with South Korea and Japan for green shipping tech transfer and build alliances with countries like Singapore to boost green fuel exports. 

Conclusion 

India plays a pivotal role in global shipping decarbonisation through policy leadership, green technologies, and international collaborations. By focusing on green hydrogen, clean fuel production, and sustainable port development, India aims to align its maritime sector with global climate goals, while also reaping long-term economic benefits.