With EU carbon costs rising, shipowners bet big on ammonia

This summer, a midsize gas carrier slid into the water at Hyundai Mipo Dockyard, marking a first for the global shipping industry. At 46,000 cubic meters, it looks like just another large vessel, but it carries a groundbreaking difference: it’s the world’s first oceangoing ship designed to run on ammonia.

Belgian operator EXMAR has four of these on order. The first is equipped with a new two-stroke WinGD engine that can burn ammonia as fuel. This is a technology that could slash greenhouse gas emissions by up to 90% on a full “well-to-wake” basis if powered by green ammonia. Engineers installed the engine in June after months of testing, and the ship is expected to enter service by 2026. According to the Ammonia Energy Association, more than 150 ammonia-fueled ships are now in the global pipeline, with another 260 plus “ammonia-ready” vessels under construction that can be converted in the future.

Big players step in
Some of the world’s largest commodity movers are already placing their bets on ammonia. In Australia, mining giant BHP has signed charter contracts with China’s COSCO Shipping for two Newcastlemax bulk carriers designed to run on ammonia. Scheduled for delivery in 2028, these ships will transport iron ore from Western Australia to Asia. BHP estimates the dual-fuel vessels could cut emissions per voyage by at least 50% — and possibly as much as 95% — compared to today’s fuel oil-powered bulk carriers. For a company under scrutiny for supply chain emissions, this is as much about leadership as it is about economics.

Other players are making similar bets on clean fuels — ammonia included. Geneva-based commodity trader BGN International is incorporating such capabilities into its maritime fleet expansion. The firm has commissioned state-of-the-art dual-fuel gas carriers from Hyundai Heavy Industries that can run on both conventional fuel and cleaner alternatives. BGN International is also investing in retrofitting its older vessels to enable them to operate on ammonia, naming the initiative as one of its flagship projects. “Sustainability is embedded into our strategy,” said BGN Group CEO Rüya Bayegan, noting that the company has set up an ESG taskforce with “clear targets to reduce Scope 1 and Scope 2 emissions by 40% by 2030.” Investing in ammonia-capable newbuilds and conversions is a key pillar of meeting those targets, alongside moves into cleaner commodities. By investing in ammonia-fueled ships, BGN is part of a group of early maritime logistics firms getting serious about direct operations emissions. In parallel, the firm is expanding its clean fuels trading portfolio, especially in LNG and ammonia, effectively doubling down on emission-reduction goals as both a consumer and trader of transition fuels.

In 2023, the International Maritime Organization committed to eliminating shipping emissions “by or about 2050,” with steep interim goals: a 20% cut by 2030 and 70% by 2040. Meeting those targets will likely require rapid adoption of zero-carbon fuels like ammonia. The European Union is moving even faster. Starting in 2025, shipping will be pulled into the EU’s Emissions Trading System, and the FuelEU Maritime initiative will force cleaner fuels into the mix. For shipowners, that means the choice is clear: invest in vessels that can comply now, or face mounting carbon costs later.

Why it matters
Ammonia-fueled ships could transform global trade. Bulk commodities like iron ore, coal, grain, and LNG could move across oceans with a fraction of today’s emissions. For companies like BHP, where ocean transport accounts for a significant share of Scope 3 emissions, cleaner ships directly tackle one of the toughest parts of their carbon footprint.

The stakes are high. Shipping accounts for about 3% of global CO₂ emissions — enough to rank it among the top five emitters if it were a country. That’s why the emergence of serious zero-carbon options is drawing so much attention. Ammonia isn’t a perfect fuel, and challenges remain around safety, cost, and scalability. But the progress of the past two years has been faster than most observers thought possible. Over the coming years, these new vessels will serve as floating demonstrations. Their performance, reliability, and economics will determine whether ammonia remains a niche experiment or becomes a cornerstone of global shipping by 2030.

For now, though, the voyage has begun — and the course is pointing in a promising direction.

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