Countries across the Asia-Pacific and Africa regions have great potential in the emerging hydrogen economy. However, as well as opportunities, there are challenges when it comes to scaling up the production and distribution of these greener fuels. Many countries in these regions are already developing national hydrogen strategies for domestic industries and export markets, increasing the potential for more energy-producing countries to prevail in the future.
Africa is widely regarded as a potential global leader in the production of green hydrogen, not only for itself but also for other regions such as Asia-Pacific, which is poised to become a major demand centre for Africa’s green hydrogen potential. The ambitious net-zero goals committed to by the maritime sector could have a major role to play in stimulating investment in the green hydrogen supply chain between the two regions.
Ahila Karan, senior lead on green initiatives at Lloyd’s Register’s maritime decarbonisation hub
To reap the rewards, the industry must find creative ways to tackle various obstacles. While the Asia-Pacific region is the world’s largest hydrogen consumer, less than 1% of its hydrogen is green. The key challenge is the high price of green hydrogen, which costs at least six times more than grey hydrogen, and the lack of mechanisms to bridge the cost gap of green hydrogen-derived fuels, such as e-ammonia, e-methane and e-methanol.
Regardless of the growth opportunities within the maritime industry, financing hydrogen infrastructure is not going to be easy. Building from the ground up is an expensive feat. Due to limited demand and significant cost differences compared to conventional fossil fuels, few are willing to lead from the front.
As demand for green energy grows and hydrogen markets continue to emerge, there is increased scope for willing nations to discuss untapped market opportunities for hydrogen-derived fuels for the shipping sector.
This was the focus of the second Maritime Fuel Supply Dialogues earlier this year – a roundtable discussion hosted by the Lloyd’s Register maritime decarbonisation hub – shining a light on investments needed to support the development of hydrogen-based fuels to service shipping’s decarbonisation.
The hub is a joint initiative between Lloyd’s Register and Lloyd’s Register Foundation, aiming to accelerate the safe and sustainable decarbonisation of the maritime industry. This second roundtable brought together ministries, fuel developers, the shipping industry and climate and development financiers operating across the Africa and Asia-Pacific region.
Held during the three-day Global African Hydrogen Summit in Windhoek, Namibia, participants shared perspectives on the opportunities posed by clean fuels and highlighted key investment barriers and means to overcome hurdles through regional cooperation.
A more cohesive effort that brings demand and supply hubs together is required to build a compelling case for alternative fuel investment.
While some countries in the region have been active in decarbonisation discussions, a more cohesive effort that brings demand and supply hubs together is required to build a compelling case for alternative fuel investment, which could see success within a regional context.
Countries may also reap developmental benefits by building a robust regional fuel supply chain. With these economic measures, policymakers need to factor in risks and the wider human, social, and biodiversity impacts so that these uncharted market opportunities are not at the expense of a just and equitable transition.
Working with key maritime, transport, and energy stakeholders in these nations could prove mutually beneficial to understanding the wider risks and opportunities – embarking on the large-scale infrastructure required for fuel production and distribution may also be repurposed to unlock and accelerate the roll-out of other energy sources across the territory, such as electricity.
The International Maritime Organization (IMO) has set a target for 5% of the international shipping fleet, striving for 10%, to run on scalable zero-emission fuels by 2030, which positions Green shipping corridors as a critical maritime decarbonisation mechanism.
There are currently more than 40 green shipping corridors established globally, with several trading in the Asia-Pacific region, including The Silk Alliance green corridor cluster. These green shipping corridors are now at an inflexion point, where stakeholders are moving from the conception phase into implementation and execution.
But of the critical issues facing maritime stakeholders is securing a sufficient supply of green hydrogen-derived fuels through infrastructure investments. For this reason, the Maritime Fuel Supply Dialogues aims to link up national hydrogen strategies in Asia-Pacific and Africa with new shipping demands for hydrogen-based fuels. This would help direct infrastructure and policymakers’ interest and planning towards maritime decarbonisation, thereby building stronger business cases to overcome the investor inertia challenge.
Demand for hydrogen and other green energies will only increase and as policy catches up.
The dialogues will build on these discussions with regional stakeholders through various action areas. This includes working on supply and demand linkages, presenting stronger justification for flexible fiscal policy measures in fuel-producing countries, and driving port and maritime hub locations to facilitate domestic cross-sector demand aggregation.
The dialogues will be looking to hold its next roundtable to bring together stakeholders across Africa and Asia-Pacific regions to drive forward solutions around the discussion takeaways and explore other mechanisms to support regional developments.
Demand for hydrogen and other green energies will only increase and as policy catches up, scaling will become the biggest challenge facing key stakeholders. This is why regional dialogues between large, established ports must continue to be promoted while bringing in experts from sectors beyond maritime: namely, energy and transport.
“Unlocking green hydrogen fuel supply chains” was originally created and published by Ship Technology, a GlobalData owned brand.
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