- LNG has become the preferred alternative fuel for new vessel orders, surpassing methanol due to cost and infrastructure concerns.
- While not yet viable, ammonia is seen as a strong candidate for long-term alternative fuel adoption by 2050.
- Regional regulations like FuelEU Maritime create unpredictability, with the US showcasing regulatory risks.
As the shipping industry navigates decarbonization, LNG has overtaken methanol as the most popular alternative fuel for new vessels. Meanwhile, long-term prospects favor ammonia, though regulatory uncertainty remains a challenge, reports SP Global.
LNG Takes the Lead in Alternative Fuels
Despite methanol gaining attention, LNG has emerged as the preferred fuel for new ship orders due to cost efficiency and infrastructure readiness.
In 2024, two-thirds of dual-fuel container ship orders were LNG-capable, while only one-third were methanol-ready.
Ammonia’s Long-Term Potential in Decarbonization
Industry forecasts predict that ammonia and methanol will play key roles in meeting IMO environmental targets post-2030.
However, ammonia remains costly, with prices significantly higher than LNG or conventional fuels.
Regulatory Risks Impacting Investment Decisions
Global shipping regulations remain fragmented, making investment decisions uncertain.
The IMO’s efforts for a carbon levy face regional challenges, with the US exemplifying regulatory volatility due to shifts in government policies.
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Source: SP Global
