Mentor’s Comment:  India is positioning itself as a global hub for green marine fuels like green methanol and green ammonia, aligning with global shipping’s decarbonisation goals by 2040–2050. With strong policy support, India is accelerating electrolyser manufacturing, advancing carbon capture technologies, and reviving its shipbuilding sector. By promoting green fuel exports, the country aims to seize a strategic opportunity in the global transition to clean energy and assert its maritime leadership in the emerging green shipping economy.

Today’s editorial analyses the green fuels in shipping decarbonisation. This topic is important for  GS Paper III (Environment) in the UPSC mains exam.

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Why in the News?

Recently, Global shipping is moving towards reducing carbon emissions by 2040–2050, which offers a major opportunity for India. Currently, most merchant ships run on fuels like Very Low Sulphur Fuel Oil (VLSFO), diesel, and liquefied methane gas.

How do green fuels aid in shipping decarbonisation?

• Reduction of Greenhouse Gas Emissions: Green fuels like green methanol and green ammonia significantly reduce or eliminate CO₂ and GHG emissions compared to traditional fossil fuels such as VLSFO and LNG. Eg: Green methanol emits about 10% of CO₂ compared to VLSFO, while green ammonia emits virtually zero greenhouse gases.
• Compatibility with Existing Systems (for Transition): Green methanol is a suitable transitional fuel requiring minimal retrofitting of existing ship engines, supporting a smooth shift from fossil fuels. Eg: Over 360 methanol-capable ships are already in service or on order, including by global giants like Maersk and CMA CGM.
• Enables Compliance with Future Emission Norms: Adoption of green fuels ensures alignment with global decarbonisation goals and helps meet emission standards set for 2040–2050 by international maritime bodies. Eg: India’s initiative to build green fuel hubs at Tuticorin and Kandla supports compliance with IMO’s emission targets.

How can India become a global hub for marine green fuel production?

• Utilising Coastal Industrial Clusters for Integrated Green Fuel Zones: India can leverage existing coastal industrial zones to integrate green fuel production with port logistics, reducing supply chain costs and boosting efficiency. Eg: The Mumbai–Pune industrial corridor near the Jawaharlal Nehru Port can be developed into a green methanol hub with co-located renewable energy, CO₂ sources, and export terminals.
• Exporting Green Fuels Through Strategic Trade Partnerships: By forging long-term green energy export agreements with fuel-deficit countries, India can secure demand and scale up production. Eg: A partnership with the European Union’s FuelEU Maritime initiative could enable India to export green methanol to European ports aiming for carbon-neutral shipping.
• Establishing Research and Innovation Centers in Maritime States: Setting up marine green fuel R&D centres in states like Tamil Nadu, Andhra Pradesh, or Odisha can drive innovation in fuel production, storage, and engine retrofits. Eg: A dedicated Marine Energy Innovation Park in Visakhapatnam could support pilot projects for green ammonia engines and advanced electrolyser technology.

What are the challenges? 

• High Capital Costs and Infrastructure Requirements: Transitioning to green fuels requires significant investments in retrofitting ships, building new vessels, and developing bunkering infrastructure. Eg: Installing methanol-compatible systems or ammonia handling setups onboard involves major design changes and safety adaptations, slowing adoption.
• Limited Availability and High Price of Green Fuels: Green fuels like e-methanol and green ammonia are still expensive and scarce due to high renewable electricity costsand limited production capacity. Eg: In February, e-methanol cost $1,950/tonne in Singapore, compared to $560/tonne for VLSFO, making the shift economically difficult.

What are the policy and financial tools that are key to scaling green methanol in India?

• Sovereign Guarantees and Off-take Assurance: Government-backed sovereign guarantees reduce investment risks and enable access to low-cost international finance, while off-take agreements ensure steady demand, improving project bankability.
• Production-Linked Incentives (PLI) and Domestic Manufacturing Support: PLI schemes for electrolyser manufacturing help reduce import dependence, lower production costs, and localise the green fuel value chain.
• Carbon Capture and CCUS Incentives: Policy incentives for Carbon Capture, Utilisation, and Storage (CCUS) make it viable to obtain CO₂ from industrial sources, which is essential for green methanol production using green hydrogen.

In what ways can green fuel shipbuilding boost India’s maritime sector?

• Revival of Domestic Shipyards through High-Value Orders: Building green fuel-compatible ships can generate consistent demand for Indian shipyards, modernising infrastructure and creating skilled employment. Eg: Reviving the Hindustan Shipyard Limited (HSL) in Andhra Pradesh with contracts for green ferries and coastal cargo vessels can reinvigorate domestic shipbuilding.
• Enhancing India’s Global Ship Export Potential: Developing expertise in green shipbuilding can position India as an exporter of eco-friendly vessels to emerging markets transitioning to low-emission fleets. Eg: India can export hybrid-electric and green methanol-compatible vessels to island nations in the Indian Ocean and Africa implementing IMO emission norms.
• Strengthening India’s Role in the Green Maritime Supply Chain: Green shipbuilding can attract global OEMs and technology partners, integrating India into the international green maritime supply chain. Eg: Setting up a Green Marine Innovation Cluster in Kochi with global collaboration could turn the region into a hub for next-gen ship components and propulsion systems.

Way forward: 

• Develop Integrated Green Maritime Ecosystems: India should establish green fuel production, bunkering, and shipbuilding hubs along key coastal regions by combining policy incentives, infrastructure investment, and private sector participation.
• Leverage Financial Tools and Global Partnerships: Use sovereign guarantees, PLI schemes, and international green financing to scale up green methanol projects, while forging strategic trade and technology alliances with global maritime leaders.

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