Grieg Star shares ‘surprising’ findings of a study involving retrofitting deep-sea ships to ammonia

A group of cross-industry experts, led by Grieg Star, has conducted a study involving the potential retrofitting of an open hatch vessel to run on green ammonia.

Initial findings of the study said that elements perceived as challenges turned out not to be barriers or present major risks for moving forward with a retrofit project.

Namely, the study has identified a concept for retrofitting a vessel and based on the regulations screening, the necessary modifications can be carried out within the existing framework.

As explained, until prescriptive requirements for the design of vessels are in place an alternative design approach through the IGF Code may be utilized. The main remaining uncertainty is the potential diverging approaches by national and local authorities.

That being said, the report also concludes that the main challenge today is the combination of high retrofit investment costs, lack of availability and competitively priced ammonia, and unclear effects of regulatory frameworks.

The price and regulatory uncertainties have been described as the main governing factors for return on a retrofit investment.

The study was initiated and facilitated by the Norwegian Green Shipping Programme,  a public-private partnership, that aims to advance the Norwegian government’s maritime strategies and plans. 

In total, 21 entities participated in the study’s five workstreams, with workstream leads from Yara, the Norwegian Maritime Authority, G2 Ocean and Grieg Maritime Group.

The study focuses on a specific vessel (Grieg Star L-Class) in one particular trade South America, Europe/ARA region, and the Gulf of Mexico. (SA-ARA-GOM).

The study evaluated five categories, focusing on green ammonia availability, relevant safety issues and regulations, potential onboard retrofit solutions, ESG/ Finance, and operational impact.

The availability of green or even blue ammonia in the evaluated regions is rather scarce, with Europe leading the way with 16 projects, followed by the Gulf of Mexico with four projects, and finally Brazil which might be faced with challenges to providing the fuel to its bunkering ports.

From a technical perspective, retrofitting an L-class vessels to bunker, store, handle and sail on green ammonia would be feasible, but would require more extensive modifications than initially anticipated and the complexity is significant. The retrofit could take place within a reasonable timeframe, given a working motor technology solution, the study said. The chosen configuration would allow the vessel to sail the longest leg on ammonia. As such, it would be possible to operate the vessel on full ammonia utilization given available bunkering at, or close to, the three relevant ports.

Financially speaking, retrofitting a vessel to run on green ammonia represents a significant investment, in the evaluated case 50% higher than the vessel’s fair market value.

Operationally, consequences are lower than expected, the study said, the main effect being from the placing of ammonia holding tanks in a cargo hold.

For the wood pulp trade relevant for this pilot, the calculations show an approximate 3,5% reduction in cargo intake by such a modification. By installing additional tanks for ammonia and not reducing the original onboard fuel oil capacity, the vessel will retain its operational flexibility, the findings indicate.

As explained, the vessel will be limited to trade where ammonia is available to capitalize on the investment and ensure a return on equity. The cost of such limitations is hard to estimate, the findings show.

The main barrier to move forward with the pilot is this combination of high conversion investment costs and the uncertain availability of competitively priced green ammonia.

“Without the stability of green ammonia availability/ pricing for the maritime sector (potentially green corridors) and, even more importantly, stable framework conditions, financing such a venture is not viable, even with significant soft project funding,” the report concludes.

To achieve competitive pricing, it is necessary to securing local green energy pricing/availability for maritime green ammonia production and increasing global pricing of carbon fuel emissions (e.g. EU-ETS). Furthermore, the industry will require government support to ensure the rapid development of a functional market supporting competitive operations on green ammonia.

Contracts of difference are necessary to achieve competitive pricing of green ammonia in the short term. Such contracts secure compensation for the extra costs connected to green ammonia compared to conventional fuel, the study further adds.

The primary regulation driving the new market is IMO’s CII framework which aims to push reduction by setting increasingly stringent limits on allowed CO2 emissions towards 2050. The current regulation is, by many, expected to be vulnerable to gaming. With the regulation coming up for revision in 2026, the outcomes and potential market volatility are incredibly challenging to predict. Another aspect is that the CII regulation by measuring each vessel is not incentivizing close-to-zero conversion of single vessels but rather a slower reduction across a fleet.

Commenting on the safety of both personnel and the environment, changing cargo to fuel will introduce new challenges concerning regulations and competency. However, these are expected to become manageable with the right regulatory approach on safety.

The required motor technology is under development, with some central questions on maximum potential ammonia utilization, management of emissions, and timeline for a ready commercial product to be answered.

“Although these questions are challenging and need to be answered before shipowners can make an investment decision, the technology development is far progressed, and testing is ongoing. With the strong commitment from the engine manufacturer (MAN Energy Solutions), we view the risk of failing to reach a sufficiently strong solution as moderate,” the study said.

“We still see green ammonia as one of many possible fuels for shipping in the future. Currently, it seems more viable for multifuel-ready new buildings than for retrofitting current ships. The study also shows that we need changes on a political and regulatory level to make the change for the existing world fleet,” says Atle Sommer, Head of Grieg Star.

“We are forever grateful for our partners’ eagerness and willingness to share their knowledge and insights. A special thank you to the Green Shipping Program, their pilot coordinator, Hans-Christian Wintervoll, and all the workstream leads; Tessa Major (Yara), Therese Landås (NMA), John Garbiel Östling (GS), Henrik Bredesen (GMG), Henning Rebnord (G2O) and Torleif Frimannslund (GS).”

“Ammonia as fuel will most likely be a preferred alternative for deepsea shipping to achieve IMOs ambition and the Paris agreement’s targets. As Norway and the Norwegian maritime industry have been a front runner when it comes to battery-powered ships for coastal shipping, we will follow up and be ready for the green shift into deep sea shipping and ammonia as fuel too,” says Narve Mjøs, director of the Green Shipping Programme.

He urges other similar projects also to take advantage of the GSP-developed “Ammonia as a Marine Fuel Safety Handbook”