There’s a slow-speed race going on to determine which “green” alternative marine fuel will prevail in the years ahead — and it’s far from clear at this point who the winner will be.
The only certainty is that the global shipping industry must transition away from the “dirty” fossil fuels on which it has relied since the advent of machine propulsion.
The driving force is a push by the United Nations’ International Maritime Organization to cut carbon dioxide emissions from international shipping by at least 40% by 2030. The IMO’s 2023 strategy on greenhouse gas reductions sets an ultimate goal of phasing out such emissions entirely “as soon as possible in this century.”
As of January 1, 2025, all ocean carriers must begin calculating their GHG emissions and total climate footprint. The IMO will track and enforce the rule, which will affect nearly 90% of global shipments.
Achievement of that goal will require a wholesale shift in marine fuel types. There are a number of options for powering the ships of the future, including biofuels, liquefied natural gas, methanol, hydrogen and ammonia.
Each would go some way toward reducing GHG emissions from ships, but all are more expensive than the high-sulfur-content fuels in wide use today — two to three times more, by some estimates.
They also vary in effectiveness and practicality. Among the most viable in the short term are biofuels, in particular the mixture known as B24, consisting of 76% low-sulfur fuel oil and 24% methyl ester, derived from vegetable oil. Given its partial reliance on fossil fuels, that option would eventually have to be supplanted by a greener alternative to meet the IMO’s target, says William Chia, chief executive officer and chairman of Banle Group, a marine fuel logistics provider serving the Asia-Pacific region.
Which of those fuel types will be broadly adopted by the global shipping industry remains to be seen. “Liner shipping companies have not come into common consensus about which is going to be the new one,” Chia says.
In the short- to medium-term future, he expects vessel operators to explore multiple fuels, perhaps in combination, until a consensus is reached.
The most widely available alternative fuel at the moment is LNG, which burns much cleaner than diesel, and has a distribution infrastructure already in place, as well as adequate supply to support the industry’s needs. It is also harder to ignite than diesel, and is not held under pressure, which greatly reduces the likelihood of explosions. It’s still a fossil fuel, however, and so doesn’t offer ship operators a long-term solution. In addition, Chia says, LNG is subject to seasonal pricing, ticking upward in the winter when the demand for heating increases.
Chia personally favors methanol, in part because it can be incorporated into dual propulsion systems that also burn diesel fuel, through the retrofitting of existing vessels. Methanol is the choice of many newbuilds as well. Maersk, for one, has 18 methanol-enabled vessels on order, the first of which was launched late in 2023, and entered service between Asia and Europe in February of this year. Cosco Shipping and Evergreen Line also have methanol-burning ships on order.
“The orderbook for the last 12 months for methanol vessels sharply increased compared to other types of new energy,” Chia says.
Operators will pay more for alternative fuels of all types, he says, but that extra cost will be at least partially offset by the more efficient engines of modern-day vessels, and the benefits of CO2 reduction. That said, Chia speculates that hydrogen and ammonia will be the most expensive options, given the need to scale up production and distribution to meet industry demands.
The cost and logistics of refueling must also be taken into account. B24 biofuel can be stored and transported in current facilities and tankers, while LNG, hydrogen and ammonia require pressurized storage tanks and specially designed barges.
Chia says that biofuel can utilize almost every kind of infrastructure in place today, and that there are some chemical tankers that supply methanol, but any of the other fuel options would require a completely new infrastructure investment.
Although the IMO has called for extremely short timeline
in making steep reductions in GHG emissions from marine fuels, the shipping industry is likely to take much longer than that to decide how best to “green” its vessels. Chia says the alternative-fuel picture could become clearer within 15 years, but it could take between 20 and 30 years before all operators agree on a single type.
Because of the heavy investment required in ships, barges, storage facilities and refueling points, as well as the long lead times needed to order and launch new vessels, operators are adopting something of a “wait and see” attitude about the optimal fuel choice. Says China: “No one wants to invest in something that is not going to last.”
