Net Zero by 2050? This Decade's Fuel Choices Will Decide

Green-hydrogen based synthetic fuels are stalled by a coordination problem across industries. Pooling demand and investment across sectors could unlock the production scale needed for shipping and other hard-to-abate industries, while strengthening energy security in the transition to net zero.

The debate over whether net zero is possible by 2050 may continue for years, while global emissions and temperatures continue to rise. But the question of green hydrogen’s role in achieving it has swung from hype to skepticism to a pragmatic center: shipping and several other hard-to-abate sectors need green hydrogen to reach net zero. Yet, the hydrogen itself remains elusive. Demand waits for supply. Supply waits for demand. It’s an ouroboros.

Technology ahead of fuel

Taking shipping as an example, the industry has innovated and invested in dual-fuel ships capable of running on both conventional fuels and synthetic ammonia or methanol – and these ships are already setting sail. Their engines are designed to use fuel as efficiently as possible: today to reduce emissions from fossil fuels, and in the future, to make the most efficient use of the more expensive synthetic ammonia and methanol.

The problem is that while ship technology ran ahead, the fuel front was stalling.

First, hydrogen fuel production is a massive undertaking: renewable energy, electrolysis, synthesis plants, storage, pipelines, and ports.

Second, the bill. To reach net zero by 2050, shipping alone will need 100 to 150 million tons of green hydrogen annually as feedstock, even at maximum efficiency across the sector. The hard-to-abate sectors together will need 500 to 600 million, an investment of $9 trillion.

So, just for the feedstock, shipping would need to fund $2 to 3 trillion upfront. Which sector can afford today to commit three trillion dollars for a fuel that will be ready in 5-10 years and require upfront purchase contracts of 10 to 15 years?

And yet, that’s the timeline: 25 years to 2050.

The snake eating its tail

Meanwhile, the collapse of hydrogen projects around the world proves that the challenge is more than isolated anomalies; it is systemic.

Underpinning shipping’s deadlocked fuel transition is a set of five tightly linked factors – fuel fragmentation, geography, finance, regulation, and port constraints, that reinforce each other.

First, fuels. In the absence of synthetic fuels, shipping is trying to juggle oil, diesel, liquefied natural gas, and biofuels. This hedging is rational, but it dilutes investment and prevents any single fuel from scaling. It would be comparable to an electric vehicle charging infrastructure with 12 different types of current, which thankfully isn’t the case, or there would probably be no electric vehicles.

Second: geography. Following the oil and gas model, hydrogen production is concentrated in a few nation-scale projects – some as large as half of Switzerland. For shipping, 80% of the global fleet operates on flexible routes. An early market that forces trade to reroute from 6,000 ports to a mere handful of fuel supply hubs will limit adoption. Aviation would face a similar challenge.

Third: finance. Shipping’s low-cost, low-margin business model is predicated on the universal availability of the cheapest fuel in the global mix. Synthetic fuel contracts overturn every precedent: expensive, long-term, limited.

Fourth: regulation. Shipping’s global regulation should be a strength. Global carbon pricing could level the playing field for the entire industry. However, that strength depends on a two-thirds vote from member states. With the onus on national governments and local producers to assemble subsidies, permits, materials, and financing, many are reticent to approve the carbon pricing that would force demand. Aviation faces a similar challenge.

Fifth: ports. Ports are already stretched for power, land, and trained operators. Most cannot justify investment in new bunkering systems without predictable supply and demand.

The ouroboros tightens, and every hard-to-abate sector faces some version of this deadlock loop.

Breaking the loop

There is one way to get the snake to release its tail: give it more to eat – with coordinated demand across sectors.

Both shipping and aviation giants have tried to make their own hydrogen and synthetic fuel supplies. Each industry has tried to pool demand within the industry. It hasn’t worked, because no single company or sector can carry the cost and scale of green hydrogen alone. The balance sheet requires multiple industries. Shared offtake produces contracts large enough to start building, and allows sequential planning. Shared risk makes early projects insurable, and shared infrastructure avoids duplication.

Competition across sectors is stalling production, but collaboration can enable it.

Chance or illusion?

The willingness to embrace cross-sector collaboration depends on whether fossil fuels are still regarded as the safer economic bet.

However, even the oil majors are beginning to question that assumption. Wood Mackenzie estimates that oil and gas production could fall nearly 40% by 2040 without hundreds of billions of dollars in new upstream investment. Oil companies therefore face the same dilemma as hydrogen producers: demand uncertainty is freezing investment on both sides of the energy transition.

In the Asia-Pacific region, that same uncertainty, combined with volatile fossil import supply, is accelerating the shift toward carbon-neutral energy security.

China made that decision before many others had even asked the question. It cornered the global market in critical mineral processing for clean technologies, overbuilt renewables that can now be converted into hydrogen and synthetic fuels, and scaled its shipbuilding industry within four decades. As with electric vehicles, China can absorb early fuel price differentials through subsidies and leverage its domestic market to drive costs down.

China’s integrated energy, industrial, and shipping policy is material to developing the cross-sector sequencing required to make the transition work. Despite its size, it is also bringing smaller, modular e-fuel facilities online faster and cheaper, with one unit producing over 300,000 tons of green ammonia per year, already on export to Asia Pacific and Europe.

In Japan, Korea, and Singapore, the focus is on imports. Utilities are committing to ammonia offtake under national energy strategies, allowing safety standards, terminals, and bunkering systems to develop ahead of shipping demand.

Meanwhile, the Chinese modular approach is already being exported to Brazil. Vast land availability and very low solar power costs give Brazil a strong advantage in exporting synthetic fuels, and the country is already developing the ports of Açu and Pecém as green hydrogen and e-fuel hubs for power generation, industry, and shipping.

Across these cases, the pattern is consistent: land-based sectors lead; investment, risk, infrastructure, and offtake are shared and publicly supported; shipping follows once the regulatory framework is in place.

The decade of decision

At a time when the global debate between reinvesting in fossil systems and accelerating a fossil-free future is hardening once again, which path is industry betting on?

Is net zero possible by 2050? That depends on the decisions taken in this decade. The trade-offs will be felt by the next generation, one way or the other.

The task for industry and institutions is to move beyond siloed efforts and coordinate demand, infrastructure and investment across sectors to build a secure, net-zero energy future.

Daniel Bischofberger is chief executive of Accelleron, a maker of turbochargers, fuel-injection systems and digital technologies for the energy and shipping industries.

The opinions expressed herein are the author's and not necessarily those of The Maritime Executive.