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Introduction

According to the International Maritime Organization (IMO), shipping accounts for nearly 3% of global greenhouse gas (GHG) emissions. With the IMO targeting net-zero emissions by 2050, decarbonising the global shipping sector is imperative. India, with its rising shipping capacity and renewable energy potential, can play a pivotal role in this transition.

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Major Challenges in Decarbonising the Global Shipping Sector (2040–2050)

• High Cost of Green Fuels: Green methanol costs over $1,950/tonne in 2024 compared to $560/tonne for VLSFO, driven by high renewable electricity costs and capital for electrolysers.
  Eg: Each tonne of green methanol requires 10–11 MWh of power, creating price pressure.
• Slow Technological Adoption in Shipping Sector: Shipping is a conservative industry with slow adaptation of novel engines and fuel systems.
• Lack of Infrastructure for Fuel Storage and Handling: Green fuels like ammonia require significant modifications to fuel handling and storage systems.
  Eg: Methanol is easier to store, but Hydrogen  needs onboard safety protocols and structural overhauls.
• Supply-Demand Imbalance for Green Methanol: Projected demand for green methanol will reach 14 million tonnes by 2028, but supply is expected to be just 11 million tonnes, leading to shortages.
• Heavy Dependence on Imported Technology: Electrolysers and solar panels for green hydrogen production are largely imported, increasing dependency.
• Financing Constraints and Risk Perception: High capital cost and lack of affordable green finance hinder transition.
  Eg: Domestic lending rates are 11–12%, while multilateral banks offer lower 4% interest rates, but require sovereign guarantees.
  

India’s Strategies and Policy Interventions to Support Transition

• Developing Green Fuel Hubs: India is setting up green fuel bunkering at Tuticorin and Kandla ports and aims to supply fuels to Singapore, the world’s largest ship fuelling hub.
• Production-Linked Incentives (PLI) and Sovereign Guarantees: PLI schemes for electrolysers and sovereign guarantees can de-risk investments and lower prices.
  Eg: India’s solar revolution was driven by similar guarantees and policy frameworks (from 2.82 GW in 2014 to 105 GW in 2025).
• Supporting Shipbuilding with Green Incentives: India has pledged $10 billion for 110 ships, with incentives for green fuel retrofitting and new builds in Indian shipyards.
  Eg: 10–20% of these ships are to be green fuel-compatible and Indian-flagged.
• International Partnerships for Technological Know-how: India is collaborating with South Korea and Japan to strengthen shipbuilding capacity.
• Enabling Green Finance Access via MDBs: Multilateral Development Banks (MDBs) offer cheaper capital at 4% rates.
  Eg: Leveraging MDBs can reduce India’s dependence on high-cost domestic capital (11–12%).
• Investing in Retrofitting Infrastructure: India’s strategy includes retrofitting existing ships for compatibility with methanol and ammonia.
  

Conclusion

India’s role in global shipping decarbonisation is pivotal given its renewable energy ecosystem and shipbuilding ambitions. By investing in green fuels, building port infrastructure, and creating policy certainty through sovereign backing, India can not only decarbonise domestic shipping but emerge as a global green fuel leader.

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