10/01/2026
The Engine Choice That Locks in Decades
For shipowners today, choosing the type of engine means making decisions that will influence consumption and costs for decades to come. A vessel ordered in 2026 will still be sailing in 2050. With the global fleet renewing at only around 4% annually, and vessels operating for 25 to 30 years, more than half of the ships that will be operational in 2050 will be built before 2035. That simple arithmetic transforms what might otherwise be a routine procurement decision into a strategic bet on the future price of carbon, the availability of green fuels, and the pace of regulatory change.
Boston — Fuel costs and climate policies, rather than engine technology, will determine the energy future of maritime transport. This is according to a study by the Global Centre for Maritime Decarbonisation (GCMD) and the Boston Consulting Group (BCG), which analysed 12 possible scenarios for the energy transition of the global fleet through 2050. The report, Navigating the Maritime Fuel Transition: How Fuel Economics, Regulations, and Fleet Decisions Shape the Future Bunkering Landscape, models 12 fuel pathways and six engine configurations to mid-century, and its central finding is both elegant and unsettling: having the capacity to burn a new fuel does not mean a vessel will actually burn it.
Dual-fuel engines allow shipowners to switch between conventional fuels and a selected new fuel as economics and regulations evolve. That flexibility is precisely the problem for fuel suppliers and ports betting on a particular pathway. A methanol dual-fuel vessel can simply continue burning cheaper conventional fuel if the green alternative remains uncompetitive. “Many vessels ordered over the coming decade will still be operating in 2050,” said Lynn Loo, chief executive of the GCMD. “Shipowners are therefore making long-lived engine choices before the relative economics of future fuels are clear”.
The Carbon Price Threshold
The study’s base scenario assumes the Tier-2 penalty under the IMO Net-Zero Framework remains at $380 per tonne of CO₂ equivalent through 2050. Under those conditions, methanol dual-fuel engines account for around 10% of fleet engine capacity in 2050 — but methanol itself supplies just 2% of fleet energy consumption. Conventional fuel oil, particularly when paired with onboard carbon capture, remains the cheapest option through mid-century.
The picture changes materially when the carbon price rises. At $700 per tonne of CO₂ equivalent by 2050, new fuels — including drop-in fuels — reach approximately 61% of fleet energy consumption. The study finds that methanol and ammonia together could account for 36% of global fleet energy demand under this stronger price signal, compared with just 4% if the levelised cost of hydrogen remains at $3 per kilogram rather than falling to $2 per kilogram. The gap between 4% and 36% is not a rounding error; it is the difference between a marginal transition and a structural one.
Yet even the $700 threshold represents a formidable policy challenge. The IMO’s initial Tier-2 rate is set at $380 per tonne of CO₂ equivalent for the 2028–2030 reporting periods, and the framework’s adoption has already been delayed amid political resistance. The study’s authors are careful to note that EU regulations alone will not drive a marked global shift, as they cover only around 20% of international shipping’s energy demand. A truly global carbon price signal at the level required to make green methanol and ammonia competitive remains, for now, a projection rather than a certainty.
No Clear Winner Between Methanol and Ammonia
The study does not identify a clear winner between e-methanol and e-ammonia. Ammonia is cheaper to produce, but the costs associated with safety, management, and bunkering infrastructure reduce its advantage. E-ammonia’s production cost advantage is largely offset by higher logistics costs arising from its toxicity, including specialised crew training, larger exclusion zones, and more complex bunkering procedures. As a result, the overall cost of using e-ammonia and e-methanol is near parity through to 2050.
That parity, however, masks very different infrastructure implications. Methanol, a liquid fuel at ambient conditions, can exploit existing bunkering ports and fuel-handling infrastructure. The Port of Rotterdam commissioned a major expansion of its methanol bunkering facilities in February 2026, including enhanced jetties, expanded dedicated storage tanks, and upgraded transfer capabilities specifically designed for green methanol. Singapore recorded its first methanol bunker sales in January 2026, rising from nil in December 2025, and bio-methanol sales in Rotterdam reached 12,000 metric tonnes across 2025, nearly three times the volume recorded a year earlier. Hamburg became bunker-ready for methanol through ship-to-ship operations at the Burchardkai and Predöhlkai container terminals. The number of methanol-capable vessels in operation has risen to 112, with a further 337 on order expected to join the global fleet by 2030.
Ammonia, by contrast, is more likely to foster the emergence of new hubs linked to production or imports. Because ammonia is toxic and corrosive, its handling requires specialised tanks, vapour return systems, and emergency response frameworks that do not exist at scale. The Port of Hamburg is working towards ammonia bunkering readiness through a risk analysis and safety concept developed with MB Energy, with an ammonia import terminal expected to be operational from 2029. OCI Global and Victrol are developing an ammonia bunkering supply chain in the Netherlands and Belgium, sourcing clean ammonia from production hubs in the US, Middle East, North Africa, and Asia. The report suggests ammonia could produce two new kinds of port: production-linked hubs competing on cheap fuel, and import-aggregation hubs competing on scale by pooling maritime demand with industrial and power-sector demand.
Safety Is Not a Footnote
The ammonia safety challenge is not a distant concern to be resolved after commercial deployment begins. The IMO’s Maritime Safety Committee made progress in May 2026 on interim guidelines for ammonia as a marine fuel, focusing on safe bunkering procedures, onboard storage requirements, advanced ventilation systems, and crew training protocols to mitigate the risks associated with ammonia’s toxicity. A UK Chamber of Shipping report published in August 2026 mapped the safety risks of alternative marine fuels, noting that ammonia’s toxicity makes loss of containment a key concern, particularly during bunkering, and highlighting the need for ports and nearby vessels to be prepared to respond to ammonia-related emergencies.
Methanol carries its own risks: loss of containment, toxic exposure, non-visible flames, and the dangers of simultaneous bunkering and cargo operations. These are manageable with established chemical-handling protocols, but they are not trivial. A study on accidents involving eco-friendly marine fuels found that leakage, fire, and explosion risks are particularly frequent during bunkering operations across LNG, methanol, ammonia, and liquid hydrogen. The transition to new fuels is, in part, a transition to new safety cultures — onboard ships, at ports, and in the bunker supply chain.
The Regulatory Fog and the Ordering Slowdown
The gap between the study’s modelled scenarios and the industry’s current behaviour is stark. Uncertainty around a global regulatory framework has slowed near-term investment in alternative fuel-powered newbuilds. In the first half of 2026, shipowners ordered just four methanol/ethanol-powered vessels, four ammonia-capable vessels, and one hydrogen-fuelled newbuild. Over the same period, shipbuilding deals were struck for 73 LNG-capable vessels and 55 LPG-capable ships, accounting for 94% of the 134 alternative-fuelled newbuildings.
Pacific Basin Shipping axed previous commitments to build four 64,000-dwt methanol dual-fuel Ultramax newbuildings in favour of conventionally powered tonnage. Chief executive Martin Fruergaard described the move as reducing “unnecessary near-term capital expenditure” and a “financially prudent response to renewed uncertainty around the timing and final shape of a global regulatory framework”. The company has not abandoned methanol entirely — an option on two methanol dual-fuel Ultramaxes exercisable by February 2027 remains open — but the signal is clear. Owners are hedging, and the hedge of choice is LNG and LPG, not methanol or ammonia.
This is precisely the dynamic the GCMD-BCG study describes. Dual-fuel engines offer optionality, but optionality has a cost. A methanol dual-fuel vessel costs more to build than a conventional one. If the fuel it is designed to burn remains more expensive than the fuel it can also burn, the premium paid for that capability is a stranded investment — or at least a deferred one. The study notes that bio-methanol cost trajectories could influence the near-term uptake of methanol dual-fuel engines, potentially affecting longer-term engine technology lock-in. If bio-methanol becomes competitive earlier than e-methanol, the case for methanol-capable engines strengthens. If it does not, owners may delay or default to LNG.
The Hydrogen Cost Lever
The single most powerful variable in the study is the levelised cost of hydrogen. At $2 per kilogram by 2050 rather than $3 per kilogram, the combined methanol and ammonia share of fleet energy demand rises to 36% from just 4%. That is a nine-fold increase driven by a one-dollar difference in hydrogen cost. The sensitivity underscores a fundamental truth about maritime decarbonisation: the fuel transition is not a shipping problem. It is an energy problem, and shipping is downstream of it.
Green hydrogen production costs remain stubbornly above the level needed to compete with fossil fuels. Forecasts suggest hydrogen may reach $3–4 per kilogram by 2050, still above the approximate $2 per kilogram needed to match fossil fuels. The GCMD-BCG model treats $2 per kilogram as an achievable but not guaranteed scenario. India’s first port-based e-methanol plant at Kandla is expected to produce e-methanol at around $750 per metric tonne, compared with a global rate of approximately $1,300 per metric tonne — a significant cost advantage, but still far above conventional marine fuel prices. By 2030, e-fuels remain two to four times costlier than very low sulfur fuel oil, and cost parity is not achieved even with EU ETS revenues.
Biogenic CO₂ is another critical input for e-methanol, and its cost is equally uncertain. At $150 per tonne rather than $50 per tonne, methanol’s share of fleet energy demand falls to 14% from 23%, while ammonia’s share rises to 22% from 14%. The availability of concentrated biogenic CO₂ streams — from biogas plants, ethanol distilleries, and industrial processes — will determine whether e-methanol can scale at the cost levels the study’s optimistic scenarios assume.
What This Means for Shipowners and Ports
The study’s implications are uncomfortable for anyone seeking certainty. There is no clear fuel winner. There is no clear engine winner. There is no clear port winner. What there is, instead, is a set of conditional pathways that depend on decisions made by actors far beyond the shipping industry — hydrogen producers, electricity markets, carbon capture developers, and policymakers.
For shipowners, the practical implication is that engine choice should be evaluated not as a bet on a single fuel but as a portfolio of options. Dual-fuel engines provide the flexibility to switch between conventional and alternative fuels as relative prices shift. But that flexibility is only valuable if the alternative fuel is actually available at the port where the vessel needs to bunker. The study notes that liquid fuels such as methanol and ethanol reinforce established hubs because they are straightforward to move and deliver, while ammonia could create new port archetypes linked to production or imports. A shipowner choosing ammonia today is not just choosing an engine; they are choosing a supply chain that may not yet exist.
For ports, the study offers a sobering message about the scale of investment required. Around 120 new hydrogen-based fuel terminals and port infrastructure developments are planned, with a larger number of methanol facilities already under construction. But the geography of these investments is uneven. Methanol bunkering access remains largely concentrated in a small number of major ports, with Rotterdam leading by volume, and availability beyond established hubs is still limited and fragmented. Ammonia infrastructure is even earlier in its development, with most projects still in the planning or pilot phase.
The GCMD-BCG study does not predict which fuel will win. It predicts, instead, that the transition will be shaped as much by policy and cost uncertainty as by technology readiness, as BCG managing director Anand Veeraraghavan put it. That uncertainty is not a reason for paralysis. It is a reason for building flexibility into every capital decision — engines, vessels, terminals, and supply chains — because the only certainty in maritime decarbonisation is that the relative economics of methanol, ammonia, and conventional fuels will look different in 2035 than they do today.