China builds world's largest eco-friendly vessels, putting South Korea on edge

China's standing in the global eco-friendly shipbuilding market is growing. The country recently completed the world's largest methanol-powered container ship and is on track to deliver the world's first ammonia-powered bulk carrier before year's end — developments that have kept South Korea, which once led the green vessel market, on high alert.

According to industry sources Thursday, Nantong COSCO KHI Ship Engineering (NACKS) — a joint venture between China's COSCO and Japan's Kawasaki Heavy Industries — delivered a 24,168-TEU (one TEU equals a single 6-meter container) methanol-powered container ship to Hong Kong carrier OOCL late last month. It is the largest methanol-powered container ship ever built.

Constructed at a shipyard in Nantong, China, the vessel measures about 400 meters in length, 61.3 meters in width and 33.2 meters in height. Methanol fuel cuts SOx, nitrogen oxide and carbon dioxide emissions by more than 99 percent, 80 percent and 20 percent, respectively, compared with conventional bunker C fuel oil.

Another Chinese shipbuilder, CSSC, plans to deliver the world's first ammonia-powered bulk carrier later this year. The vessel, ordered in 2024, displaces 210,000 tons. Ammonia produces no carbon dioxide when burned, making it one of the leading clean fuels for shipping.

South Korea once led the eco-friendly vessel market, with HD Hyundai Heavy Industries at the forefront. The company secured the world's first orders for a methanol-powered container ship in 2021 and an ammonia-powered gas carrier in 2023.

Chinese shipbuilders have since worked to close the gap, backed by sweeping government support. They have advanced their technology in line with an action plan for the green development of the shipbuilding industry (2024–2030), jointly announced by five Chinese ministries in late 2023.

As a result, Chinese shipbuilders have consistently grown their eco-friendly vessel order books. According to the China Association of the National Shipbuilding Industry, new orders for green ships placed with Chinese yards last year totaled 28.5 million tons — more than double the 12.25 million tons recorded in 2022.

South Korean shipbuilders, feeling the pressure from China, have also been ramping up green vessel orders. HD Hyundai Heavy Industries has secured a total of 38 methanol-powered container ships to date, along with eight ammonia-powered vessels. Samsung Heavy Industries booked 16 methanol-powered container ships in 2023 and is currently building them. HJ Shipbuilding & Construction also won orders for two 9,000-TEU methanol-powered container ships that same year.

Competition between South Korea and China for green vessel orders is expected to intensify. Tightening carbon emissions regulations are driving rapid growth in the eco-friendly ship market. Fortune Business Insights projects the methanol vessel market will expand from $7.57 billion this year at a compound annual growth rate of 25.4 percent, reaching $46.25 billion by 2034.

South Korean shipbuilders plan to gain the upper hand over China by developing high-value eco-friendly vessels. HD Hyundai is developing a container ship powered by small modular reactor (SMR) technology, targeting commercial deployment by 2030. Last month, the company received approval in principle from a British classification society for the conceptual design of a large car carrier equipped with a molten salt reactor (MSR), a type of SMR. Hanwha Ocean and Samsung Heavy Industries are also accelerating efforts to commercialize ammonia-powered vessels.