The maritime industry is entering a period of major change as global efforts intensify to cut greenhouse gas (GHG) emissions. The International Energy Agency (IEA) has highlighted the need for clean energy solutions—especially green hydrogen and ammonia—to help shipping cut emissions and reach climate goals.
Ships now emit about 3% of global greenhouse gases (GHG). So, there’s growing pressure to decarbonize fast. The IEA recently stated that we need urgent improvements in storage, safety rules, and policy support. These changes are essential for making these fuels viable for widespread use.
The industry’s goal is to reach zero emissions by 2050. However, the road to decarbonization is complex and demands progress in technology, safety, and policy. This is where green hydrogen and ammonia come in.
The Promise of Green Hydrogen and Ammonia
Green hydrogen is made using renewable energy, like wind or solar, to split water into hydrogen and oxygen. Ammonia, which can be made from green hydrogen, is another low-carbon fuel option.
Both fuels provide a cleaner option than fossil fuels. This is especially true for long-distance shipping, where battery-powered ships aren’t practical yet. These fuels are essential to meeting the International Maritime Organization’s (IMO) climate targets.
The IMO aims to reduce shipping’s total annual emissions by at least 50% by 2050 compared to 2008 levels, and to peak emissions as soon as possible. Achieving these targets will require the wide-scale adoption of alternative fuels.
The IEA highlights that green hydrogen and ammonia can support these goals. However, industry players must tackle several key challenges:
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Storage Challenges: Hydrogen is difficult to store due to its low energy density. It needs high-pressure tanks or must be cooled to cryogenic temperatures. Research is focused on safer and smaller storage methods. This includes metal hydride systems and compressed gas solutions.
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Safety Concerns: Hydrogen is highly flammable, while ammonia is toxic. To avoid risks, ships need new safety systems, and crew members must receive updated training. The development of international safety standards will help guide proper handling and storage.
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Cost Barriers: Green hydrogen is currently 2-3 times more expensive than traditional marine fuels. Ammonia is also costly to produce at scale. According to BloombergNEF, costs could drop by 2030 with scaling and technology advances. Reducing these costs will require financial support from governments and private investors.
Bloomberg further estimates that clean ammonia could represent 13% of global ammonia supply by 2030.
DNV, a global maritime classification society, says ammonia and hydrogen could be 60% of shipping fuel by 2050. This depends on policies that support their growth. Yet today, they account for less than 0.1% of total fuel use at sea.
Both clean fuels’ costs would go down by 2050, per IRENA’s projections.
Boosting Maritime Decarbonization Through Policy
Policy support is critical to drive the shift toward cleaner fuels in shipping. Experts and industry groups are calling on governments and international regulators to create favorable conditions for investment in green hydrogen and ammonia.
Proposed policy measures include:
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Clean Fuel Subsidies. Direct incentives can help shipowners adopt low-emission technologies and offset higher fuel costs.
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R&D Grants. Public funding can support research into fuel storage, fuel cells, bunkering infrastructure, and vessel designs optimized for alternative fuels.
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Carbon Pricing. Implementing a carbon tax or emissions trading system in the maritime sector can make green fuels more competitive.
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International Standards. Harmonized regulations across countries can prevent market fragmentation and ensure global progress.
Some countries are already taking steps. Norway has introduced zero-emission requirements for cruise ships in its fjords by 2026. The EU has included shipping in its Emissions Trading System (ETS) starting in 2024, requiring ships to pay for carbon pollution. The bloc has also launched the “FuelEU Maritime” initiative to promote green fuel adoption.
The IEA and IMO are also working with ports, shipbuilders, and fuel producers to design a shared roadmap for green fuel adoption. In addition to cargo vessels, ferries and cruise ships are being looked at as early candidates for green fuel use.
GHG Emissions and the Urgency to Act
The shipping industry emits over 1 billion tonnes of CO2 annually. Without action, emissions could rise by 50% to 250% by 2050, according to IMO projections. The IEC stresses that if these emissions are not reduced, they can hinder global efforts to limit warming to 1.5°C above pre-industrial levels.
To stay on track, the shipping industry must embrace low-carbon technologies and provide clear emissions reports. Many digital tools are being created to track emissions in real time. This helps companies stay accountable and make smart choices.
Some shipping companies have already begun testing hydrogen and ammonia-powered vessels. NYK Line and Maersk are testing ammonia-fueled ships. Others are looking into hybrid vessels that mix green fuels and batteries.
The Poseidon Principles, signed by over 30 global banks, require shipping lenders to align their portfolios with climate goals. This initiative puts additional pressure on companies to invest in cleaner ships or risk losing access to finance.
Trends Shaping the Clean Fuel Market
The market for green fuels is expanding rapidly, driven by both regulation and investor interest. IEA forecasts say the global hydrogen demand could reach over 6 Mtpa by 2030.
By 2050, the total demand for green hydrogen will reach 46 million tonnes, according to IRENA. About 74% of this will be used to produce ammonia, 16% for making methanol, and the remaining 10% will be used directly as hydrogen.
Ammonia demand is also expected to rise, especially in sectors like shipping and power generation. It can grow at an annual rate of 70% through 2030.
Key developments include:
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EU Green Deal Initiatives. New climate laws are allocating billions of euros to fund clean energy, including maritime fuel infrastructure.
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Private Investments. Companies such as BP, Shell, and TotalEnergies are investing in hydrogen production and supply chains. Maersk, the second-largest shipping company in the world, is investing in vessels powered by methanol and hydrogen. Other firms, like NYK Line and MOL from Japan, are testing ammonia-powered ships.
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Green Corridors. More than 20 “green shipping corridors” are being planned worldwide. These include routes between Asia and Europe, and across the Atlantic. These corridors will enable ships to refuel with green fuels and test low-emission technologies.
These initiatives show progress. But to fully implement them, we need stronger partnerships. This includes working with governments, industries, and environmental groups.
In January 2024, the Global Maritime Forum announced that over 200 companies had joined efforts to decarbonize shipping, focusing on scalable fuel alternatives and supportive regulations.
Navigating Toward Zero Emissions
Decarbonizing the maritime sector is no longer optional. It’s a needed change due to environmental issues, investor demands, and new rules. The transition needs big investments and teamwork. But it also offers chances for new ideas and long-term savings.
The push for green hydrogen and ammonia is helping to reshape the industry’s future. These fuels offer a path to meet zero-emission targets while supporting cleaner global trade. With ongoing backing from governments, industry players, and the public, the move for maritime decarbonization is speeding up.
The post Shipping Toward Net Zero: Maritime Turns to Green Hydrogen and Ammonia appeared first on Carbon Credits.
Most businesses that decide to act on their net-zero targets reach the same point of friction. Buying carbon credits has meant tracking down brokers, sitting through sales calls, and requesting a quote just to learn a price, sometimes with limited proof of what you are buying.
The earnings calls that quietly reframed climate from sustainability question to operating risk.
Three earnings calls in the last 18 months tell the story without any help from a press release.
Hershey, May 2024: cocoa price exposure compresses margin, and the company attributes part of the cost shock to West African weather. Olam, July 2024: coffee climate exposure quantified in the annual report. JBS, January 2025: supply chain climate disclosures expanded materially in response to investor pressure and regulatory expectation. None of these companies issued the announcement as climate news. They issued it as financial news. The climate-linked supply chain risk did not arrive with a sustainability framing; it arrived as a P&L line.
You are probably reading this article because you suspect the same thing is happening to your business. This piece walks through what is showing up on which earnings calls, how procurement and finance leaders are quantifying the exposure, and what serious corporates are doing about it before the regulator asks.
Where climate risk has already appeared in earnings
The pattern is consistent across resource-intensive sectors. A weather event compresses supply, the price spikes, the cost flows through the income statement, and the analyst on the call asks whether the event is anomalous or structural. Increasingly, the honest answer is the second one.
Cocoa is the cleanest example. The 2023 to 2024 West African harvest fell sharply on the back of erratic rainfall and disease. Cocoa futures more than tripled. Companies with concentrated West African sourcing absorbed the cost; companies with diversified sourcing absorbed less. The exposure was not climate as ESG topic. It was climate as cost of goods.
Coffee follows the same pattern. Brazilian and Vietnamese harvests have moved on weather more sharply across the last several seasons. Roasters with long-tenor supplier relationships and origin diversification have managed the volatility; roasters with spot-market exposure have not. Wheat, sugar, palm oil, beef: the same dynamic in different commodities, a pattern the IPCC AR6 Working Group II report projects will intensify across agricultural systems through mid-century.
What this means: climate risk is no longer a footnote in the 10-K. It is a line item the CFO has to explain on the call.
The three commodity exposures that hit margin first
For most companies with material Scope 3 exposure, three exposures dominate the near-term P&L risk.
- Concentrated single-origin sourcing in a climate-vulnerable region. If your tier-one supply for any material commodity sits in one geography, you have a concentration risk that climate amplifies. Diversification across origins is the obvious hedge, but it takes years to build and requires relationships you cannot acquire by tender.
- Supplier financial fragility under climate stress. Smallholder farmers, who supply a large share of the global cocoa, coffee, and palm oil market, do not carry the balance sheets to absorb yield shocks. When yields collapse, they exit. When they exit, your supply base shrinks, and the surviving suppliers raise prices. The risk is structural, not cyclical.
- Logistics and storage exposure to extreme weather. Hurricane disruptions to Gulf shipping, drought-driven Panama Canal restrictions, flooding in European inland waterways: each of these has moved input costs in the last three years, a pattern documented in Munich Re’s natural catastrophe data. The exposure shows up as a one-quarter event in the financial press but accumulates over time on the cost line.
TCFD and ISSB disclosure changes
The disclosure architecture has now caught up with the risk. The Task Force on Climate-related Financial Disclosures, whose recommendations are now embedded in the ISSB’s IFRS S2 climate standard, requires companies to disclose climate-related risks across physical and transition categories, with quantification where possible.
For physical risk specifically (the climate-linked supply chain risk you are reading about), the disclosure must address both acute exposures (extreme weather events) and chronic exposures (gradual changes in temperature, precipitation, and growing seasons). The disclosure must address the time horizon over which the risk is material, the parts of the value chain exposed, and the financial impact under different scenarios.
The CSRD imposes similar requirements under European law, with double materiality (both financial and impact materiality) embedded in the assessment. The practical effect: your auditors and your investor relations team now need a defensible answer to the climate-linked supply chain risk question, and the answer needs to be quantified.
What procurement and finance can do now
Three actions matter near-term.
Map your exposure. Most companies do not have a clear view of which tier-one and tier-two suppliers sit in which climate-vulnerable geographies. Without the map, you cannot quantify the risk, and without the quantification, you cannot disclose it credibly. The map is the foundation, and World Resources Institute climate risk research provides useful public tooling to start.
Diversify and deepen, in that order. Diversification across origins reduces concentration risk, but the deeper move is to invest in the resilience of the suppliers you already have. Regenerative practices, agroforestry, soil health interventions: these reduce yield volatility under climate stress and protect your input cost trajectory.
Embed the climate spend inside procurement, not outside it. Treating climate risk as a sustainability cost line subordinates it to the ESG budget. Treating it as a procurement and resilience investment puts it in the budget that matters, which is the cost-of-goods budget that the CFO defends quarterly.
Nature-based supply chain investments are the asset class designed for exactly this purpose. They sit inside the value chain, they reduce climate-linked supply risk, they generate verifiable Scope 3 reductions, and they produce the documentation an auditor and a regulator can both test.
If you are quantifying climate-linked supply chain risk in advance of the next earnings cycle or the next disclosure period, the carbon and sustainability experts at Carbon Credit Capital can help you map your exposure and structure a Dual-Value Model response that addresses reduction, resilience, and disclosure-readiness in a single program. Schedule a consultation.
More and more small and medium-sized businesses are hearing the same question from their larger customers: What is your carbon footprint? That question now travels down entire supply chains, and it arrives next to tender requirements, certification criteria, and rising customer expectations.
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