From zero to hero: Unlocking shipping’s global investment opportunity


For countries with a large renewable energy generation potential, decarbonising the shipping industry provides a huge investment opportunity. To decarbonise the sector in line with the Paris Agreement’s temperature goals, zero-carbon fuels and ships need to be ready by the second half of the 2020s. This presents a near-term opportunity to draw investment, including into many developing countries, for scaling up renewable energy generation and producing these urgently needed fuels. This opportunity will be beneficial in particular for those economies needing to recover from the negative economic impacts of the pandemic.

For many countries, it can be difficult to find clean energy investors due to uncertainty around steady income from the generation of large-scale renewable energy generation. However, demand for sustainable bunker fuels could remove this barrier and provide dependable revenue over a guaranteed time period. This would be especially so if supporting policies, such as a carbon price on greenhouse gas (GHG) emissions from ships, were put in place to de-risk long-term supply agreements for investors. Consequently, this would make the shipping sector key to the economic development of any country around the world that seizes this opportunity.

The need for zero-carbon fuels

When the International Maritime Organization (IMO) set the goal of reducing GHG emissions by at least 50% by 2050 compared with 2008 emissions levels, this highlighted the need for zero-carbon fuels that can be viable for use within the shipping industry. Moreover, if the shipping industry is to be in line with the 2°C temperature goal of the Paris Agreement, shipping should fully decarbonize no later than in the 2050s, and even earlier to meet the 1.5°C goal, adding additional time pressure to the shipping industry. Estimates require at least 5% of shipping fuels to be zero-carbon by the year 2030, assuming a fast increase in uptake thereafter. Regardless of the exact target, a ship’s life span is 20-30 years, so it is vital that action is taken imminently if fuels are to be available at scale by 2030.Zero-carbon electrofuels (e-fuels), such as green ammonia and green hydrogen produced by renewable electricity, are suitable candidates due to their versatility, but so far also come at high costs and with uncertain availability. Both green ammonia and green hydrogen do not contain carbon and consequently do not emit carbon dioxide when used in ship’s engines as a fuel. Though regardless of the final fuel produced, the lifecycle of all fuels must be considered to gain an accurate picture of the GHG emissions generated by shipping. Some production pathways for ammonia and hydrogen simply transfer the emissions from the ship onto land which does nothing to reducing the climate impact of shipping. Therefore, robust lifecycle GHG accounting must be in place from the outset to ensure that no investments are made in assets that may turn out to be stranded in a few years when climate regulation tightens.

Figure 1: Sailing on Solar (2019)

Figure 1: Sailing on Solar (2019)
Representative map showing the total amount of land needed to produce enough green ammonia from solar power for the international shipping fleet in 2050. The white square represents the 2050 case with minimal shipping fuel needs whereas the larger solid blue square represents the 2050 case with maximum predicted shipping fuel needs, both these cases without fossil fuel carriers included on the basis that fossil fuels are no longer being shipped in 2050. The dashed blue line denotes the entire fleet, including fossil fuel carriers.

How to produce e-fuels on a large scale

Once ambitious climate policies are applied to shipping, investment will follow. The demand for zero-carbon e-fuels could provide a constant long-term revenue stream, which is an attractive feature for investment. A carbon price or other investment signal would de-risk the creation of long-term supply agreements between developing countries who produce e-fuels and shipping companies who provide the demand. An earlier insight brief showed that the scale of this investment will be over US$1 trillion from 2030-2050. This investment can unlock the creation of new quality jobs, reduce local air pollution to the benefit of public health, or enhance energy security and improve the trade balances of many countries which currently rely heavily on fossil fuel imports.

Some countries are already looking into the future hydrogen economy to see how they can best draw this investment. The opportunity at hand is to build up green hydrogen pioneers, including in the developing world, where countries benefit from large-scale investments in renewable energy generation shipping and become the first producers of zero-carbon e-fuels for shipping. Countries with high potential to draw this investment and turn into green hydrogen pioneers for shipping can be found around the world: From Australia in Oceania, to India in Asia, Morocco, Namibia, and South Africa on the Africa continent, or Brazil, Chile, and Mexico in Central and South America.

A recent report by the World Bank identified 19 middle- and lower-income countries that have high to promising potential to produce green ammonia or green hydrogen for shipping. Some of these countries may struggle to attract commercial investment due to credit ratings but shipping might provide the perfect opportunity to unlock concessional climate finance to address this challenge.

What gives a country a high potential to draw this investment into zero-carbon bunker fuel production?

  • Large renewable energy resources: It is not only important that the country has the potential to produce renewable electricity on a large scale, but that it can also do so at the lowest possible cost. The reduction of fuel cost has been identified as the most critical driver in the development of first-mover projects for zero-carbon shipping. Strategies to lower fuel cost include: reducing electricity cost (i.e. location-based cost minimization, tax exemptions, power purchase agreements); leveraging existing infrastructure where possible;1 and taking advantage of concessional loans.

  • Favorable access to large shipping volumes: Ideally, a country is strategically situated near one or multiple busy shipping lanes. Such a prime location may be enhanced by a lot of port calls in national ports providing for initial demand. All this together will facilitate a country’s development into one of the zero-carbon bunker fuel hubs of the future.

  • Good governance on climate change: Investors will want to know that the country will not welcome investment in low-carbon technology one year and then change course the next year. This political long-term commitment to low-carbon technology deployment can be demonstrated through consistent national and international policymaking.

  • Availability of infrastructure that could be retrofitted or adapted: As mentioned above, using existing infrastructure is a way in which fuel cost can be reduced, which ultimately helps a country to become a first mover. It is estimated that a first mover could reduce the cost up to 33% by adapting existing infrastructure compared with building a greenfield green ammonia plant.

The following provides a short overview of selected countries that have been identified to have large potential to produce zero-carbon bunker fuels, and are taking the opportunity of producing zero-carbon e-fuels for shipping seriously.

Morocco has ideal conditions for attracting investment in producing zero-carbon e-fuels for shipping. The country benefits from a high renewable energy potential and hosts several large commercial ports which are close to many key shipping routes. The sources of renewable energy available to Morocco are rich and diverse: Morocco has a long history of producing hydropower energy and has recently started to capitalise on its solar and wind energy potential by building solar farms and onshore wind parks at utility scale.As an example, when considering ammonia production in Morocco, the potential investment value (aggregate capital costs) of green ammonia plants and the renewable energy facilities needed to produce the fuel is estimated to be around USD 100 billion. This shows the vast amount of investment that can be tapped into for Morocco and countries with similar potential if adopting the use of green ammonia.

Chile is one of the countries with the greatest renewable energy potential worldwide. This relates, for instance, to large solar, wind, hydro and geothermal resources. The country is already aware of the huge opportunity that green hydrogen and green ammonia can have on their economy. Accordingly, Chile has published a hydrogen strategy and an ambitious renewable energy strategy. It is also a country that has been identified as an ideal first producer of zero-carbon e-fuels for shipping due to having a vibrant commercial shipping sector with more than 50 ports. Chile also relies on shipping for the vast majority of its international trade, both for imports (89%) and exports (97%) (percentages in terms of tonnage). With Chile’s reliance on shipping for trade, it can provide a steady demand for zero-carbon e-fuels at Chile’s ports making the country attractive in terms of green investment. It is estimated that, if Chile is able to provide all ships leaving Chilean ports with zero-carbon e-fuels, this could unlock $65 to $90 billion USD of investment into clean infrastructure alone.

Out of all countries in South America, Brazil is the most active trading country, and is featured in both of the top two highest valued bilateral trades (Brazil and Argentina at $26 billion, and Brazil and Chile at $9.8 billion, annually. Brazil’s main trading partner, however, is China, followed by the United States. Its high trade volumes, alongside its proximity to many shipping routes, make it a good candidate for a potential zero-carbon bunkering hub. An interesting location for the production and supply of zero-carbon bunker fuels in Brazil may be Porto do Pecém, as identified by a report from Ocean Conservancy. This is mainly due to the strategic location of the port making it a key nod for international and national voyages. For instance, the port is part of the shipping lanes that connect the East coast of South America and the Southern tip of Africa with the East coast of the United States, or alternatively through the Panama Canal to Asian destinations. In countries like Brazil and Chile, decarbonisation of shipping by adopting zero-carbon e-fuels in ports could also have spill over effects where nearby industrial zones with heavy industry, to assist them to decarbonise in parallel, adding an additional business case for countries to become first movers.


Countries with abundant renewable energy resources, including developing and emerging economies, can reap the rewards of shipping’s decarbonisation pathway. This will be true especially as sensible policy is agreed to provide certainty to investors interested in being among the green hydrogen pioneers.

Countries that are looking to capitalise on this opportunity can:

  • Foster the roll-out and upscaling of maximum renewable electricity generation on national territory;

  • Develop a national hydrogen strategy that includes and leverages the shipping sector’s climate targets;

  • Support ambitious policy (such as a meaningful carbon price on bunker fuels) at the International Maritime Organization to create a playing field between zero-carbon bunker fuels and conventional fossil fuels, and raise revenues for additional research, development and deployment;

  • Ensure good governance on climate change and enhance shipping and port regulation on a national level to provide effective incentives for zero-carbon shipping;
    Facilitate the development of pilot and demonstrator projects through direct subsidies, concessional loans, guarantees, or fiscal incentives

There is of course no one magic order or method with which to engage in these steps to start a country’s path to investment, but there is a right time which is undoubtedly now. Countries should seek to employ the recommendations made by this brief as soon as possible to provide the greatest benefit to both the country and the environment.

1] Though it is important that when making electrofuels that renewable energy is not displaced from other sectors that currently use renewable energy, otherwise there could be an increase in GHG emissions.