S. Korean shipbuilders lead hybrid ship boom

This year, hybrid ships account for 60% of orders received by South Korea’s five major shipbuilders, including HD Hyundai Heavy Industries (HHI), HD Hyundai Samho, HD Hyundai Mipo, Hanwha Ocean, and Samsung Heavy Industries. Out of 187 ships ordered, 116 (62%) are dual-fuel vessels capable of using eco-friendly fuels like LNG, ammonia, and methanol, in addition to traditional heavy oil.

As global environmental regulations tighten, the automotive industry has already embraced hybrid vehicles as a transition to fully electric cars. Now, the maritime sector is following suit. Stricter carbon emission standards are pushing ships towards hybrid models, as fully green fuels are not yet viable for long-distance travel or powering large vessels, making hybrid ships a practical alternative.

Hybrid ships require advanced technology to use different fuels in a single engine, making them about 15% more expensive than conventional ships, thus offering higher added value. While South Korean shipyards currently dominate this market, competition is heating up with Chinese shipyards focusing on lower-cost ships.
The rising demand for hybrid ships is driven by stricter eco-regulations. Last year, the International Maritime Organization (IMO) set a target to cut ship greenhouse gas emissions to 80% of 2008 levels by 2030, 30% by 2040, and reach zero by 2050, with hefty fines for non-compliance. As ships generally have a lifespan of 20-30 years, demand for eco-friendly vessels is rapidly increasing.

According to U.K.-based maritime market tracker Clarkson Research, only 35% of bulk carriers, oil tankers, container ships, and product tankers ordered globally in 2021 were dual-fuel vessels. However, from January to October this year, that figure rose to 59%. In the case of container ships, 91% of orders this year were dual-fuel models capable of using LNG and ammonia.

The increasing proportion of hybrid ships has pushed up overall ship prices. Clarkson Research data shows that global ship orders from 2021 to 2024 amounted to around 212 million CGT, just 81% of the level seen from 2004 to 2007. However, the Newbuilding Price Index, which tracks ship construction costs, reached 190 points as of September, close to the all-time high of 192 points in September 2008. This increase is largely due to the higher cost of eco-friendly ships.

Building hybrid ships is more complex. For example, using LNG alongside heavy oil requires technology to store LNG in a liquefied state at ultra-low temperatures. Ammonia, another eco-friendly fuel, is toxic and corrosive, necessitating safe handling technology. Developing control systems for engines using multiple fuels is also challenging. While South Korean shipbuilders have maintained a competitive edge, Chinese competitors are rapidly catching up.

Leading companies are accelerating their efforts in next-generation eco-friendly ship technology. In October, HD HHI developed the world’s first high-pressure direct injection ammonia dual-fuel engine, addressing the low power output of existing ammonia engines, with plans for commercialization. Hanwha Ocean is developing gas turbines that can operate entirely on ammonia. Samsung Heavy Industries is working on ammonia fuel cells that generate electricity through chemical reactions after splitting ammonia into hydrogen and nitrogen.
Source: The Chosunilbo