Countries should complement rather than all-out compete against one another to get shipping’s energy transition going. 

IMAGE: Aerial view of the Gulf of Bothnia. Getty Images

Regional clusters could play a critical role in complementing the IMO’s Net-Zero Framework by pooling resources, reducing financing risks and creating practical pathways for low-emission fuels, Lisa Sachs, director of the Columbia Center on Sustainable Investment, said at a recent webinar.

“IMO member states should form regional clusters to optimise opportunities and de-risk developmental finance,” Sachs said.

She pointed to the Association of Southeast Asian Nations (ASEAN) as an example. Singapore offers bunkering infrastructure and experience to handle alternative fuels, but has limited land for large-scale production. The Philippines has land and labour, but lacks port capacity.

Linking those strengths could accelerate methanol or ammonia bunkering that might otherwise stall if each country acted alone, she said.

And the potential can go well beyond finance. Regional clusters can also knit together to create a multi-fuel basket – methanol in one place, ammonia in another, methane elsewhere – that can be far harder for IMO member states to build on their own.

Beyond the borders

Asia already shows the range of possibilities. Singapore offers LNG and methanol bunkering, and could start ammonia bunkering by next year. China is pushing methanol by combining large-scale biomethanol projects with shipbuilding capacity and bunkering infrastructure at ports such as Tianjin, Dalian and Qingdao. South Korea brings advanced shipyards and a growing fleet of methanol- and ammonia-capable vessels, creating demand alongside supply.

India, Australia and Japan can add ammonia to the table, from production to supply.

Large-scale plants are planned near India’s Kandla, Krishnapatnam and Kakinada ports. In Australia, mining companies including BHP and Fortescue are backing green ammonia projects and bunkering trials in Pilbara and Tasmania. Japan’s Itochu is working to develop ammonia bunkering infrastructure domestically.

In Europe, ARA ports already offer biofuel, LNG and liquefied biomethane (LBM) bunkering, with methanol gradually being added. Rotterdam is also pursuing ammonia bunkering.

There is no local production of e-fuels in the ARA, however. It lacks the land and renewable power needed for large-scale e-fuel production.

A SmartPort study estimates that meeting Dutch e-fuel demand across shipping, aviation and road transport would require around 600 hectares of production space, two-thirds of it for direct air capture. That scale cannot be met within Rotterdam’s Harbour Industrial Cluster, where land and grid connections for offshore wind are already constrained, the study found.

Neighbouring areas, from the Baltics to the Nordics, can help fill this gap with land and renewable energy for large-scale production.

E-methanol plants are planned in Sweden, Denmark, Finland, Estonia and Lithuania. Finland’s Balticconnector pipeline can move biomethane and synthetic methane into the EU grid, while Lithuania's port of Klaipėda is developing a hydrogen supply station.

Together, such projects could feed fuels into ARA’s bunkering network.

Africa’s potential role is also beginning to take shape.

At least nine green hydrogen projects are under development in Namibia, according to a World Economic Forum (WEF) study. Mauritania’s “high solar irradiation and strong, stable winds" have encouraged development of a green ammonia plant at Port de l’Amitié in Nouakchott.

A Global Maritime Forum study found that Kenya’s renewable resources could support competitive e-fuel production with potential for both domestic and export markets.

Further south, a WEF study identifies South Africa's Boegoebaai and Saldanha Bay as promising sites for green ammonia production. The country's ports in Ngqura, Durban and Richards Bay can become ammonia and methanol bunkering locations, it added.

Durban and Richards Bay are already major ports. Many ships now spend more time rerouting around the Cape of Good Hope because of Red Sea risks. If they run on fuels with lower energy density - like ammonia, methanol and hydrogen - they could be forced to bunker in South Africa before reaching Europe, the study notes.

The Americas present a different model.

Panama’s geography makes it a natural bunkering hub. The US and Canada can bring infrastructure and bunkering experience to the table. Brazil, Argentina and Mexico can offer land, biomass and renewable energy capacity to produce both bio- and synthetic bunker fuels at scale.

Strategic crossroads

The Middle East and Mediterranean combine geography with fuel ambitions.

Saudi Arabia, the UAE and Oman are investing heavily in hydrogen and ammonia, supported by ports such as Fujairah, Sohar and Duqm.

Egypt’s position on the Suez Canal makes it a critical connector between the east and west. The Suez Canal Economic Zone is working with Itochu to develop and operate green ammonia bunkering infrastructure in Egypt's Sokhna and East Port Said ports.

In the Mediterranean, Spain, Portugal and Italy are pushing biomethanol projects. Japan’s Nippon Yusen Kaisha (NYK Line) recently completed its first ship-to-ship (STS) ammonia transfer off the coast of Ceuta, showing the region’s potential for ammonia bunkering. Italy’s Grimaldi Group has ordered seven ammonia-ready vessels, possibly adding to future demand.

Risks and rewards

Sachs noted that regional clusters can play a complementary role to make the IMO’s Net-Zero Framework bankable. Borrowing costs are higher in emerging markets and currency volatility makes financing harder. Pooling demand across several states, including developed ones, can lower single-country risk and make projects more attractive to banks and private capital, she said.

But this approach can mean much more than just de-risking finance.

For producers, clusters can provide access to major shipping lanes and stable offtake that justifies investment. For buyers, this could mean more reliable supply of multiple fuels at lower transport costs.

Smaller states can secure guaranteed demand by plugging into larger ports, and major hubs can diversify supply without hosting production themselves.

Still, rivalries, uneven development and regulatory overlap could undermine cooperation. Governments need clear blueprints that set out responsibilities, financing and how standards will align if such clusters are to succeed.

The test will be whether countries can move past rivalry and align around shared strengths, because only then can the IMO’s framework shift from ambition on paper to reality.

In other news this week, Norwegian technology company Pherousa is working with a consortium of partners to scale up its onboard ammonia cracking technology for commercial use on any ship type. This pilot will first be installed on a host ship, and once validated, the technology will be scaled to megawatt capacity by 2028–2029.

Green methanol has emerged as the most viable alternative to decarbonise ferry services between Holyhead in Wales, and Dublin in Ireland, according to a study by consulting firm Ricardo. The report underscored methanol’s advantages over other emerging options, noting that it presents fewer operational and safety challenges compared to ammonia or hydrogen for ferry services across the Irish Sea.

Canadian methanol producer Methanex has partnered with barge operators to deliver stems in Europe’s Amsterdam-Rotterdam-Antwerp (ARA) hub and in South Korean ports. Tanker operator TankMatch will handle barge deliveries in the ARA region. In South Korea, last-mile deliveries and bunkering will be managed by local tanker operators Hyodong Shipping and Alpha Maritime.

By Konica Bhatt

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