The maritime industry is investing heavily in new vessels while the economics of alternative fuels remain uncertain.
A study by the Global Centre for Maritime Decarbonisation (GCMD) and Boston Consulting Group (BCG) examines 12 fuel pathways and six engine configurations through to 2050. Its findings indicate that the transition will depend less on the emergence of a single preferred fuel and more on carbon pricing, hydrogen production costs, feedstock availability and the engine decisions made by shipowners over the coming decade.
Under the study’s base scenario, which assumes an IMO Tier 2 remedial-unit price of USD 380 per tonne of CO₂ equivalent, conventional fuels retain a significant share of the market.
By 2050, very low sulphur fuel oil and fossil LNG would still account for approximately 40% of the fleet’s energy consumption. A further 30% would come from vessels combining very low sulphur fuel oil with onboard carbon capture.
The projected fuel mix changes considerably if the carbon price reaches USD 700 per tonne by 2050. At this level, alternative fuels become more broadly competitive and could account for approximately 61% of shipping’s energy consumption. The share of conventional fossil fuels would fall to around 13%.
This suggests that engine availability alone will not determine which fuels are used. Dual-fuel vessels may continue operating on conventional fuels whenever these remain the more economical choice. The relative cost of each fuel will therefore be central to actual consumption.
The study finds that e-methanol and e-ammonia may be closer in cost than generally assumed.
E-ammonia benefits from lower production costs. However, much of this advantage is offset by higher expenses associated with storage, transportation, bunkering and safety. By 2050, the levelised cost of both fuels is estimated at approximately USD 52 per gigajoule.
Renewable hydrogen is the largest cost variable, representing between 54% and 60% of the levelised cost of both e-fuels. The base scenario assumes a hydrogen price of approximately USD 3 per kilogram. If this falls to USD 2 per kilogram by 2050, methanol and ammonia could together meet around 36% of global fleet energy demand.
For methanol, the cost and availability of biogenic CO₂ will also be important. More affordable bio-methanol could provide an intermediate option, supporting orders for methanol-capable vessels before a wider transition to e-methanol becomes commercially viable.
Separate lifecycle assessments by the Society for Gas as a Marine Fuel reach a similar conclusion: the production pathway may be as important as the fuel itself.
Low-carbon ammonia and renewable methanol offer considerable emissions-reduction potential. LNG remains the most technically mature near-term alternative, while methanol has advantages in storage and handling.
The available evidence therefore does not identify one clear long-term fuel. Shipowners may instead need to preserve flexibility through dual-fuel engines, adaptable vessel designs and investment strategies that allow for changes in fuel availability and pricing.
The timing of the current newbuilding cycle adds further pressure. More than half of the vessels expected to be operating in 2050 will come from orders placed before 2035. Decisions taken during the present decade will therefore influence the industry’s fuel options for many years.
Maritime economist Martin Stopford reported that shipping has generated approximately USD 3.1 trillion in cash since 2021, exceeding the amount generated during the 2004 to 2008 supercycle. Around one-quarter of this capital has already been invested in new vessels.
Stopford had previously expected the main fleet investment cycle to begin during the 2030s. Strong shipping markets and substantial available capital have instead brought the investment boom forward by approximately eight years.
Shipowners are consequently making decisions about assets with operating lives of around 25 years while carbon prices, hydrogen costs, fuel supply and technological development remain unsettled. In this environment, maintaining flexibility may be more practical than committing entirely to a single fuel pathway.