The recently published study by University College London’s Energy Institute, titled Nuclear Reactors for Merchant Shipping: A Total Cost of Ownership Assessment of a Low-Carbon Pathway, highlights that nuclear-powered container ships face steep commercial hurdles. The technology can only compete with conventional and ammonia-powered alternatives by 2040 if reactor costs drop drastically and global carbon regulations are strictly enforced.
The report models a large container ship (14,500 to 19,999 TEU) operating at 14.85 knots. TEU – Twenty-foot Equivalent Unit, is a standard unit of measurement used in the maritime shipping and logistics industry to measure cargo capacity, vessel size, and port throughput. The model reveals a significant capital expenditure gap driven entirely by the price of reactor technology:
- Conventional Fuel Oil Vessel: $119.6m
- Ammonia Dual-Fuel Vessel: $148.5m
- Nuclear (optimistic/mass production): $228m
- Nuclear (first-of-a-kind reactor): $582.3m
The 47-page study underscores that a nuclear vessel’s economic viability does not stem from fuel savings alone. Instead, it hinges entirely on the International Maritime Organisation’s (IMO’s) Net-Zero Framework (NZF), which caps greenhouse gas (GHG) fuel intensity. Ships exceeding the cap must buy compliance units, while under-emitting ships can sell them.
Because nuclear ships have zero emissions at the funnel, they can continuously generate and sell surplus carbon units to the rest of the global fleet. However, without the NZF in force, nuclear propulsion cannot compete on cost with conventional vessels, even if reactor manufacturing costs drop to the absolute lowest projected estimates ($2,600/kWe),
The study addresses three questions:
- Can nuclear propulsion be a credible low-carbon option compared with other decarbonisation pathways?
- What are the main barriers currently limiting its adoption, and why?
- To what extent is nuclear reactor use in shipping enabled by effective IMO greenhouse gas policy?
It found that reactor cost decides the outcome. Estimates for this cost currently range from about $2,600 to $12,400 per kWh. “At the low end, which assumes series production that has realised deep cost reductions by 2040, the nuclear vessel is the cheapest option. At the high end, which represents first-of-a-kind reactors and minimal cost-reduction through learning or production related effects, nuclear is not the cheapest option in any scenario.”
The study concludes: “Nuclear propulsion can theoretically become a cost-competitive low-carbon option for shipping, but only if reactor costs fall to levels not yet demonstrated, and if an effective global GHG emissions policy is in place to close the cost gap to conventional fuels. Vessels with first-of-a-kind reactors are not competitive, and it remains open who would bear their cost. A favourable cost comparison is also not sufficient: the first vessels will require agreements between states on liability, insurance and regulation.”
