The maritime industry is under increasing pressure to decarbonize, and hydrogen-based propulsion systems are emerging as a potential solution. Evaluating the cost competitiveness of hydrogen marine propulsion requires an analysis of capital expenditures, operational expenditures, fuel pricing trends, and external economic factors such as subsidies and carbon pricing. A comparison with conventional marine fuels and biofuels further clarifies its economic viability.
Capital expenditures for hydrogen marine propulsion systems are currently higher than those for conventional fossil fuel-based systems. A hydrogen-powered vessel requires fuel cells or internal combustion engines adapted for hydrogen, specialized storage tanks capable of handling compressed or liquefied hydrogen, and additional safety systems. Estimates suggest that retrofitting an existing vessel for hydrogen propulsion can increase costs by 30-50% compared to traditional diesel engines, while new builds may see a 20-40% premium. Liquid hydrogen storage, which offers higher energy density than compressed gas, further raises costs due to cryogenic requirements.
Operational expenditures present a mixed picture. Hydrogen fuel cells have fewer moving parts than internal combustion engines, potentially reducing maintenance costs over time. However, the energy efficiency of hydrogen systems varies. While fuel cells can achieve efficiencies of 50-60%, losses from hydrogen production, storage, and distribution reduce the overall well-to-propeller efficiency. In contrast, conventional marine diesel engines operate at 40-50% efficiency but benefit from a mature supply chain and lower fuel costs in the near term.
Fuel pricing trends are critical in determining long-term competitiveness. Currently, gray hydrogen, produced via steam methane reforming without carbon capture, is the cheapest form at approximately 1-2 USD per kilogram. Blue hydrogen, which incorporates carbon capture, ranges between 2-4 USD per kilogram, while green hydrogen, produced via renewable-powered electrolysis, costs 4-7 USD per kilogram. These prices are expected to decline as electrolyzer technology improves and renewable energy costs decrease. By contrast, marine diesel prices fluctuate with crude oil markets but have historically averaged between 500-800 USD per metric ton, translating to a lower energy cost per unit compared to current green hydrogen.
Subsidies and carbon pricing significantly influence the economic landscape. In regions with strong policy support, such as the European Union, green hydrogen projects benefit from grants, tax incentives, and low-interest loans. Carbon pricing mechanisms, such as emissions trading systems, impose additional costs on conventional fuels, narrowing the gap with hydrogen. A carbon price of 50-100 USD per ton of CO2 could make blue hydrogen competitive with diesel, while green hydrogen would require further cost reductions or higher carbon prices.
Return on investment timelines for hydrogen marine propulsion remain extended compared to conventional systems. The higher upfront costs and current fuel price disparities result in payback periods of 10-15 years under present conditions. However, as carbon regulations tighten and hydrogen production scales, this timeline could shorten. Early adopters may also gain strategic advantages in emissions compliance and corporate sustainability branding.
Biofuels present an alternative pathway for decarbonization, with drop-in fuels like biodiesel and renewable diesel requiring minimal engine modifications. These fuels currently offer a lower-cost transition than hydrogen, with prices ranging between 800-1200 USD per metric ton. However, scalability concerns due to limited feedstock availability and land-use constraints may restrict long-term adoption.
In summary, hydrogen marine propulsion is not yet cost-competitive with conventional marine fuels under current market conditions. High CAPEX, volatile hydrogen fuel pricing, and infrastructure limitations pose barriers. However, with anticipated technological advancements, declining renewable energy costs, and stronger carbon pricing, hydrogen could achieve parity within the next decade. Biofuels offer a nearer-term solution but face their own scalability challenges. The maritime industry’s transition will likely hinge on a combination of policy support, fuel innovation, and operational efficiencies.