International shipping is facing pressure to reduce carbon emissions, but the future fuels are still uncertain.
A report from the Global Centre for Maritime Decarbonization and Boston Consulting Group highlights a significant issue: while ships are being designed to run on fuels like methanol, ammonia, and ethanol, these alternatives are not yet affordable enough to replace traditional bunker fuels widely. Moreover, discussions about regulations intended to make these fuels competitive are ongoing.
The study projects fuel adoption through 2050 under three different regulatory scenarios based on the International Maritime Organization's Net-Zero Framework. Although this framework was initially approved in April 2025, it faced delays due to disagreements among member states, notably due to objections from the United States, pushing the formal vote to December 2026. Until then, shipowners are making investments in new ships without clarity on the future cost of carbon emissions.
The study reveals that the price of carbon is crucial. If it remains at the current proposal of USD 380 per tonne of CO2 equivalent, conventional fuel oil combined with onboard carbon capture will stay the most cost-effective option until mid-century, maintaining the dominance of fossil fuels in the fleet. It’s only if the carbon price rises to around USD 700 per tonne that the scales would tip in favor of alternative fuels like methanol, ammonia, and ethanol. Therefore, the actual carbon price becomes a key factor that lawmakers need to address.
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Regional regulations alone cannot replace the need for a global carbon pricing signal. The EU’s emissions trading system and FuelEU Maritime Regulation account for only about 20% of international shipping’s energy consumption, as they apply only to voyages that involve European ports. According to the modeling, outside this area, ships will continue to burn the cheapest available fuel. Recognizing this reality, the European Commission proposed a revision on July 17, 2026, that would allocate up to 110 million emissions allowances from 2028 to 2040 to help subsidize the costs of low- and zero-emission marine fuels. The UK has responded by expanding its emissions trading scheme to include domestic shipping starting July 1, 2026, adding another layer of carbon costs for shipping companies.
The analysis highlights two main fuels for the long term, with neither showing a clear advantage. E-ammonia is less expensive to produce than e-methanol, but the savings are offset by the challenges of handling toxic and refrigerated cargo, which require special storage, larger exclusion zones, more crew training, and complicated bunkering processes. On the other hand, e-methanol is easier to manage but depends on a sustainable carbon source, making the cost of biogenic CO2 a crucial factor. The study suggests that if the cost of biogenic CO2 stays below roughly USD 150 per tonne, methanol will generally be cheaper; if it exceeds that, ammonia becomes the better choice. In both cases, the price of green hydrogen plays a significant role, comprising over half the total cost of fuel by 2050.
Recent developments indicate how swiftly this landscape could change. In March 2026, WinGD, a manufacturer of engines, and Envision Energy, a renewable energy company, studied ammonia bunkering economics along the China-to-Australia route, noting real bunker prices of USD 710 per tonne from Envision's facility. They concluded that ammonia-fueled bulk carriers and container ships could already operate more cost-effectively than vessels powered by VLSFO during the initial compliance period of the IMO framework. Although this example is just one instance in a volatile market, it suggests that the cost trends predicted for the 2030s might already be emerging.
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Ethanol’s future is largely contingent on regulatory decisions. First-generation ethanol, made from food crops, is currently competitive and can significantly contribute to the fleet’s energy needs by 2050. However, the EU's FuelEU Maritime Regulation does not favor food-crop-based biofuels, equating them to the least sustainable fossil fuel sources. If this approach were adopted globally, it would drastically reduce ethanol's role, with the lost volume primarily taken up by conventional fuel oil. Therefore, ethanol's viability hinges more on regulatory classifications than its inherent qualities.
On the technical side, there are promising signs that modern engines can adapt to different fuels. For example, Maersk's methanol-fueled Laura Maersk successfully ran on 100% ethanol earlier this year, confirming that it could be used without sacrificing engine efficiency. This flexibility is crucial, as it allows ship owners to hedge against uncertain fuel prices by switching between new fuels and traditional bunkers. However, this same flexibility can lead to discrepancies between engine capacity and actual fuel consumption. For example, methanol dual-fuel engines may constitute 10% of the projected fleet by 2050, while methanol itself could supply only about 2% of the overall energy consumed because ship owners may opt for cheaper conventional fuels.
This finding is particularly important for anyone involved in chartering, building, or financing ships today. Ordering a dual-fuel vessel doesn’t guarantee the use of the new fuel. Ships typically have a lifespan of 25 to 30 years, and only about 4% of the global fleet is updated annually, meaning that the engines set to be built in the next few years will still be operational in 2050, regardless of future regulatory developments. The study advises that fleet strategies should prioritize flexibility rather than committing to a single fuel, acknowledging that nobody, including the researchers, can confidently predict which fuel will ultimately prevail.
The distribution of bunkering facilities will likely evolve unevenly as a result. Liquid fuels like methanol and ethanol can be transported easily, suggesting that established hubs such as Singapore and the Amsterdam-Rotterdam-Antwerp region will continue to thrive by importing the latest fuels their customers need. In contrast, ammonia poses challenges due to its toxicity and low boiling point, making long-distance transport costly. The study predicts that future ammonia bunkering will develop in two types of ports: those near inexpensive domestic production and those with sufficient vessel traffic to justify investment in import infrastructure. The choice of which type of port succeeds will depend on current decisions regarding hydrogen and ammonia plant locations and commitments to port infrastructure.
Ultimately, for an industry that relies on long asset lifespans and contracts, the mix of fuels in 2050 will be shaped not by a single technological breakthrough but by a carbon price that remains unsettled, an emerging biogenic CO2 market, and ongoing regulatory discussions in Brussels and London. Ships ordered in the coming years will adapt to whatever regulatory decisions and market conditions emerge.