The Ammonia Arbitrage: Why Shipping Is Abandoning Hydrogen

The Physics of the Long Haul

For the better part of a decade, “Green Hydrogen” was the undisputed protagonist of the energy transition. Political leaders and venture capitalists envisioned a world where gaseous hydrogen ($H_2$), split from water via renewables, would power everything from family SUVs to massive container ships. But as 2026 begins, the industrial reality has diverged sharply from the press release.

While hydrogen excels in specific niches, the global maritime industry - responsible for 90% of global trade - is quietly walking away from the “Hydrogen Dream.” The reason isn’t political: it is purely mathematical. Container ships do not have the luxury of infinite space. To move 20,000 TEU (Twenty-foot Equivalent Units) across the Pacific, a ship needs an energy source that doesn’t consume half of its cargo hold.

This is the “Ammonia Arbitrage.” Ammonia ($NH_3$) has emerged as the winner because it solves the two greatest engineering constraints of hydrogen: density and temperature.

The Technical Deep Dive: Volumetric Reality

To understand why ammonia is winning, you have to look at the energy density comparison. When engineers discuss fuels, they look at Specific Energy (MJ/kg) and Energy Density (MJ/L). In shipping, Energy Density—the amount of energy per liter of tank space—is the metric that determines profitability.

The Cryogenic Penalty

Liquid Hydrogen ($LH_2$) is a miracle of chemistry, but a nightmare for logistics. To keep hydrogen in a liquid state, it must be cooled to $-253^\circ C$ (only 20 degrees above absolute zero). This requires massive, heavily insulated “thermos” tanks that are heavy, expensive, and prone to “boil-off”: a process where the fuel simply evaporates even when the ship is docked.

Ammonia, by contrast, becomes a liquid at a relatively mild $-33.4^\circ C$ at atmospheric pressure, or can be stored at room temperature under moderate pressure (~10 bar).

Metric	Liquid Hydrogen ($LH_2$)	Liquid Ammonia ($NH_3$)	Marine Gas Oil (MGO)
Storage Temperature	$-253^\circ C$	$-33.4^\circ C$	Ambient
Energy Density (MJ/L)	~8.5	12.7	35.8
Relative Tank Volume	4.2x (vs. Oil)	2.8x (vs. Oil)	1.0x

The math is brutal for hydrogen. A ship powered by $LH_2$ would require tanks four times larger than those for traditional oil to achieve the same range. Ammonia, while still less dense than diesel, requires only 2.8x the volume. In the world of global logistics, that 30% difference in tank volume represents thousands of containers of lost revenue per voyage.

Direct Combustion vs. Fuel Cells

The second technical win for ammonia is the engine. While hydrogen typically requires expensive Platinum-based Proton Exchange Membrane (PEM) fuel cells, ammonia can be burned in modified internal combustion engines.

In late 2025, companies like Wärtsilä and MAN Energy Solutions finalized commercial readiness for “dual-fuel” ammonia engines. These engines allow a ship to start on traditional fuel and switch to NH3 once at sea. This path allows shipowners to retrofit existing fleets rather than spending $200 million per vessel on unproven fuel cell technology. The ability to use existing mechanical engineering expertise is a massive “de-risking” event for the industry.

Furthermore, these engines address the “Ammonia Slip” problem. Ammonia is a slow-burning fuel, and early prototypes struggled with unburned ammonia escaping into the exhaust. By 2026, high-pressure injection systems and selective catalytic reduction (SCR) have lowered slip to levels that meet the strictest IMO environmental standards.

Contextual History: The 1920s Oil Pivot

This is not the first time the shipping industry has faced a “Fuel Schism.” In the early 20th century, the global fleet was powered by coal. The transition to oil (Marine Gas Oil) was initially met with fierce skepticism.

Coal was abundant, infrastructure was everywhere, and oil was seen as a dangerous, volatile liquid that required specialized tanks. But the British Royal Navy, under Winston Churchill, realized that oil provided twice the thermal efficiency and allowed ships to refuel at sea via “bunkering” hoses rather than manual shoveling.

The Ammonia shift of 2026 mirrors the oil pivot of the 1920s. Global infrastructure for ammonia already exists because it is the primary ingredient in fertilizer. The ports, the pipelines, and the storage tanks for $NH_3$ are part of a 100-year-old supply chain. Hydrogen, by contrast, requires a ground-up rebuild of the entire global energy grid. As the industry realized in 2025, it is easier to change the engine than to change the entire planet’s plumbing.

Forward-Looking Analysis: Food Security as a Subsidy

The most profound second-order effect of the ammonia pivot isn’t environmental: it is agricultural.

Because ammonia is fertilizer, every gigawatt of “Green Ammonia” production built for the shipping industry acts as a massive subsidy for global food security. In 2025, the volatility of natural gas prices - the traditional feedstock for ammonia - led to fertilizer shortages in the Global South.

As Maersk and Hapag-Lloyd sign 10-year “offtake agreements” for green ammonia, they provide the bankable demand needed to build massive electrolyzer plants in regions like North Africa, Chile, and Australia. These plants do not just fuel ships; they stabilize the price of nitrogen for local farmers.

The Cost Gap: 2026-2030

The industry is currently in the “Early Adopter” cost phase. Green ammonia currently costs between $600 and $900 per ton, compared to $300 for traditional “Grey” ammonia. To bridge this gap, the International Maritime Organization (IMO) is expected to finalize a global carbon levy by late 2026.

This levy will effectively “tax” dirty fuel to subsidize the green transition. For a 15,000-TEU container ship, this could add $2 million in costs per Pacific crossing, which translates to less than $0.10 per pair of sneakers or $1.00 per television. However, the economy of scale is expected to tip in 2028. As the installed capacity of green hydrogen (the raw input for green ammonia) grows, the cost of ammonia is projected to drop below $450 per ton.

Safety and the “Toxic Trap”

Critics of ammonia often cite its toxicity. A major leak on a container ship could be lethal to the crew. To address this, current 2026 designs incorporate “Double-Wall” piping and automatic “Gas-Tight” compartment sealing. Unlike LNG (Liquefied Natural Gas), which is explosive, ammonia is primarily a respiratory threat. Sensors calibrated to parts-per-billion (ppb) levels can trigger emergency ventilation systems long before the gas reaches a dangerous concentration. The industry has accepted this risk as manageable, drawing on decades of experience from the refrigerated vessel (reefer) sector.

The Realist’s Conclusion: Density Always Wins

The maritime industry’s abandonment of the “Hydrogen Dream” is a victory for realism over hype. Hydrogen remains a critical tool for heavy industry (steel and glass) and potentially for short-haul aviation. But on the high seas, physics is the final arbiter.

Liquid ammonia is toxic, it requires strict safety protocols, and it emits Nitrogen Oxides ($NOx$) that require sophisticated after-treatment. But it is dense. In a world that runs on the movement of physical goods, the density of fuel is the density of profit. Shipping has chosen the “Arduous Real” over the “Clean Theoretical,” and the global supply chain will be more stable - and more sustainable - because of it.

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The “Smart Friend” Summary on Ammonia Shipping

If an explanation is needed for why “Hydrogen isn’t the future” of shipping, highlight these three realities:

1. The Space Tax: Hydrogen tanks are 4x larger than oil tanks. Ammonia’s are 2.8x. That extra space is worth millions in cargo capacity.
2. Existing Plumbing: The industry already moves 180 million tons of ammonia a year for farming. Almost zero hydrogen is moved in the same way.
3. Engine Logic: Ammonia can be burned in a piston engine. Hydrogen requires a multi-million dollar fuel cell that is sensitive to salt water.

The future of the ocean isn’t a gas: it’s a liquid fertilizer.