Global Shipping's Green Turn: India’s Strategic Response

Context: 

The global maritime sector, responsible for nearly 3% of global greenhouse gas emissions, is undergoing a major shift to achieve net-zero emissions by 2040–2050. This involves transitioning from conventional fuels like Very Low Sulphur Fuel Oil (VLSFO), diesel, and LNG, to green fuels such as green ammonia, e-methanol, and biofuels.
This shift presents a strategic opportunity for India to emerge as a producer, exporter, and user of green marine fuels.

Green Fuel Production and India’s Potential

• Green hydrogen is produced using electrolysis of water powered by renewable energy.

• In shipping, more stable and energy-dense alternatives are preferred:

  • Green Ammonia – derived from green hydrogen and nitrogen.

  • Green Methanol – produced using green hydrogen and captured industrial CO₂.

• India is promoting green ammonia as part of its strategy to reduce LNG imports, especially in fertiliser manufacturing.

Green Methanol: A Preferred Transition Fuel in Shipping

• Green methanol is gaining preference due to:

  • Ease of handling.

  • Lower emissions – around 10% of emissions compared to conventional fuels.

• It is more practical than green ammonia as it requires minimal engine modification.

• Over 360 methanol-capable ships are operational or under construction, backed by major companies like Maersk, CMA CGM, and Evergreen.

Cost and Supply Constraints of Green Methanol

• Green e-methanol costs about $1,950 per tonne in Singapore (as of Feb 2025), while VLSFO costs around $560 per tonne.

• High costs are due to:

  • High energy requirement: 10–11 MWh per tonne of methanol.

  • Capital-intensive infrastructure for electrolysers.

• Demand is expected to reach 14 million tonnes by 2028, but supply may fall short at 11 million tonnes, increasing price pressures.

India’s Strategy for Shipping Decarbonisation

• India is working to decarbonise domestic shipping by:

  • Promoting green fuels for container vessels.

  • Establishing green fuel bunkering hubs at Tuticorin (VOC Port) and Kandla.

• Plans include exporting green fuels to Singapore, which handles 25% of the world’s ship refuelling needs.

• With a strong base in solar energy and industrial capacity, India aims to become a global hub for green marine fuels.

Challenges in Building India’s Green Marine Fuel Ecosystem

• India is currently dependent on imported electrolysers and solar panels.

• However, India’s solar capacity grew from 2.82 GW (2014) to 105 GW (2025), showing the effectiveness of sovereign guarantees and policy support.

• Key measures needed:

  • Sovereign guarantees for cheaper international financing.

  • PLI schemes for electrolyser manufacturing.

  • Incentives for Carbon Capture, Utilisation and Storage (CCUS).

  • Investment in industrial CO₂ sourcing and localised supply chains.

• Multilateral development banks offering loans at 4% interest (vs 11–12% from Indian lenders) can reduce project financing costs.

Reviving Indian Shipbuilding through Green Fuel Integration

• India is promoting foreign collaborations in shipbuilding, especially with South Korea and Japan.

• Focus:

  • Building new vessels compatible with green fuels.

  • Retrofitting existing ships.

• India has allocated $10 billion to procure 110 ships, with 10–20% planned to be:

  • Green fuel-capable.

  • Built in Indian shipyards.

  • Flying the Indian flag.

• This aligns domestic shipbuilding with global decarbonisation efforts.