Alternative fuel capable ships are only as “clean” as the fuel they run on. Establishing robust supply chains for low/zero-emission fuels— from production to storage and bunkering at ports— is essential for decarbonising shipping. However, building the necessary infrastructure, ensuring safe fuel handling, and securing the required investment remain critical bottlenecks, and addressing these challenges will require substantial efforts from the shipping industry, ports, energy suppliers, governments, and financial stakeholders. This chapter examines developments in the production and bunkering of selected alternative fuels, with a particular focus on methanol and ammonia. It also maps offtake and supply agreements already established between shipowners, ports, and energy suppliers to help create demand and ensure a reliable fuel supply for the sector.
The Role of Shipbuilding in Maritime Decarbonisation
Abstract
This chapter analyses current trends and forecasts in alternative marine fuel production and infrastructure, with the following main conclusions:
LNG and biofuel are currently the most widely used fuels, but forecasts point to future ammonia uptake: Shipping’s LNG and biofuel consumption has been on the rise in recent years, with LNG consumption reaching approximately 11 million tonnes in 2022, accounting for about 5% of total marine fuel usage. By 2030, other fuels, particularly ammonia and methanol, are projected to grow, representing 6% and 1% of total energy consumption by the shipping industry, respectively.
There is a general increase in alternative fuel port infrastructure despite strong differences by region and fuel type: There is a noticeable global rise in alternative fuel bunkering and storage, especially for LNG, demonstrating progress in marine industry’s shift towards lower carbon fuels. For methanol and ammonia port bunkering remains limited and shows uneven readiness across the globe.
A mapping of offtake demand from the maritime sector in OECD countries shows that methanol is the most common focus of current supply agreements: out of 104 offtake/ supply agreements studied between ship owners, ports and/or energy suppliers, 44% focus on methanol. Europe is the leading region for offtake agreements, with Denmark, Norway, and France being home to most buyers, while Finland, Norway, and the Netherlands are key locations for suppliers.
The availability of low/zero-emission fuels is a primary concern for the shipping industry as it targets maritime decarbonisation. The IMO’s current GHG Strategy represents the internationally guiding regulation for a net-zero maritime industry “by and around” 2050, as well as its medium-term target to “increase uptake of zero or near-zero GHG emission technologies, fuels and/or energy sources to represent at least 5%, striving for 10%, of the energy used by international shipping by 2030” (International Maritime Organization, 2023[1]). The incorporation of low/zero-emission solutions on board of vessels is inextricably linked to the concurrent development of onshore facilities capable of supplying and handling emergent fuel types (DNV, 2023[2]). Industry experts have highlighted that establishing a robust supply for alternative fuels is likely to represent a significant challenge, potentially acting as a critical bottleneck for maritime decarbonisation that will necessitate substantial investment to overcome (Mærsk Mc-Kinney Møller Center for Zero Carbon Shipping, 2022[3]). There are several challenges to alternative fuel production and bunkering that limit maritime decarbonisation efforts.
A major obstacle is the lack of infrastructure for carbon-neutral fuels like e-methanol and e-ammonia, which currently do not have the necessary systems in place for widespread production, distribution, and supply. Additionally, there is uncertainty over the long-term fuel solution, making it difficult for stakeholders to commit to specific technologies. Regional disparities in alternative fuel supply chains further complicate adoption, as bunkering options beyond LNG remain limited, creating fuel supply risks.
The cost gap also poses a significant barrier, with alternative fuels costing up to 300% more than conventional fuels. Current projections suggest that, without strong regulatory support, there is no viable business case for these fuels, even in the long term (Mærsk Mc-Kinney Møller Center for Zero Carbon Shipping, 2024[4]). This is also reflected in the significant investment needs around alternative fuel supply infrastructure. A 2020 study conducted by the University Maritime Advisory Services and the Energy Transitions Commission estimated that achieving shipping decarbonisation through an ammonia-dominant approach by 2050 would require an investment of USD 1.2 trillion to USD 1.6 trillion. This translates to an annual expenditure of USD 60 billion to USD 80 billion between 2030 and 2050. Of the total investment, 87% would need to be allocated to fuel production, storage, and distribution (Global Maritime Forum, 2020[5]). This raises further questions around the distribution of decarbonisation costs across the maritime value chain, which remains uneven.
Regulation is essential to bridging the cost gap and ensuring the economic viability of alternative fuels. This includes both regulatory measures at the IMO as well as national and regional legislation to develop alternative fuel supply chains and support technology advancements. Forward-looking green industrial strategies can position countries as leaders in alternative fuel production, while strong regulations— such as incentivising long-term offtake agreements— are key to drive investment in renewable fuels. Beyond decarbonisation, renewable fuel production can also stimulate economic growth, create jobs, enhance domestic value chains, and generate positive spillover effects across industries (Global Maritime Forum, 2024[6]).
Regulatory measures and government support to establish alternative fuel supply chains are complemented by voluntary efforts from stakeholders throughout the supply chain, including cargo owners, financiers, and port authorities, who are seeking tangible commitments to emissions reduction (COZEV, 2023[7]). In 2024, 50 maritime companies issued a “Call to Action” for faster adoption of zero-emission fuels, investment in low/zero-emission vessels, and global hydrogen infrastructure. Signatories pledged to use zero-emission services by 2040, while hydrogen producers committed to supplying a significant share of the 11mt green hydrogen needed for IMO’s 2030 emission targets, with 50% sourced from developing economies (RMI, 2024[8]).
While alternative fuel supply is not within the direct purview of the shipbuilding sector, the establishment of these supply chains, alongside the infrastructure for alternative fuels, constitutes an area of strategic importance for maritime decarbonisation.
The interconnected and convergent pathways among shipbuilding processes, maritime operations and the provisioning of marine fuel supplies show the critical intersections that underpin the transition to a decarbonised maritime industry (UNCTAD, 2022[9]). To achieve international shipping’s decarbonisation goals, as expressed in the IMO 2023 GHG Strategy, sector-wide maritime decarbonisation requires relates the application and management of new technologies and practices in vessel operations. This must be underpinned by low/zero-emission ship construction and circularity, reflecting the importance of efficient vessel design and the reusability of materials, including ship recycling marine fuel supply. At the same time, decarbonising ship operations requires alternative fuel production and bunkering at ports, which encompasses infrastructure and port measures (including storage and bunkering) to establish the supply chains of alternative fuel production and distribution.
The separate maritime value chains are similarly impacted by wider industry-efforts as well as regulation in support of maritime decarbonisation. As such, there is a symbiotic relationship between the utilisation of various fuel types, the assortment of available energy sources for maritime propulsion and the essential role of regulatory and financial frameworks in facilitating the maritime industry’s shift to alternative fuels and technologies (Ricardo & DNV, 2023[10]).
Historically, over 99% of the energy consumed in international shipping was made up of oil products (International Energy Agency, 2023[11]). As of 2024, conventional fossil fuels continue to dominate the marine fuel market, with shipping consuming approximately 280 million tonnes of fuel annually. In 2023, the reported fuel oil consumption for ships with a gross tonnage of 5,000 or more trading internationally was 213 million tonnes, with nearly all of it being fossil fuels, including heavy fuel oil, light fuel oil, and diesel/gas oil (DNV, 2024[12]).
5.3.1. Alternative fuel production
LNG and biofuels are the most widely used alternative fuels in shipping, with vessels capable of running on these fuels having experienced a significant uptake in the global fleet. LNG consumption was around 11 million tonnes in 2022, making up about 5% of total marine fuel usage. Biofuels, particularly biodiesel blends, represented over 7% of total bunker sales at the Port of Rotterdam and approximately 1% at the Port of Singapore, totalling an estimated 0.4 million tonnes of pure bio-based diesel in 2023, up from 0.3 million tonnes in 2022 (DNV, 2023[13])
Methanol’s chemical properties make it an attractive fuel alternative. Despite its lower energy density, it shares combustion characteristics with heavy fuel oil, simplifying storage and handling compared to ammonia or LNG. Additionally, methanol's 'drop-in' capability allows modern dual-fuel marine engines to operate on both methanol and heavy fuel oil (Methanol Institute, 2023[14]). Green methanol can be classified into bio-methanol, derived from biomass or biogas, and e-methanol, produced by combining green hydrogen with CO₂ from direct air capture or biogenic sources. Both have minimal lifecycle emissions, making them viable for net-zero shipping. The existing methanol capable tonnage in the global fleet incentivises increased production capacity for methanol. Based on methanol projects targeting shipping, the Global Maritime Forum estimates that around 3,5 million tonnes per years could be available to shipping by 2030. The cost estimation of green methanol based on expected projects ranges between $900 and $2,500 per metric tonne VLSFO equivalent (Global Maritime Forum, 2024[15]). A supply gap for green methanol could arise in 2030 in parts resulting from constraints on availability of biogenic CO2 and high cost of transportation. This could lead to an increase in cost and in hindering the potential creation of production sites.
Ammonia is expected to see the highest uptake in the global fleet by 2050, with the IEA projecting that it will account for 44% of final energy consumption in the shipping sector by mid-century (International Energy Agency, 2023[16]). Ammonia can be produced with zero carbon emissions when derived from renewable energy sources. Its greater energy density relative to hydrogen and its ability to be stored as a liquid under relatively manageable conditions make it a promising long-term option for deep-sea shipping. However, ammonia as a marine fuel comes with significant safety challenges due to its toxic and corrosive nature. The increased frequency of handling will therefore necessitate stringent safety measures and operational protocols to mitigate risks associated with storage, bunkering, and ship operations (Global Centre for Maritime Decarbonisation, 2024[17]). Nearly 8 million tonnes of near-zero-emission ammonia production capacity is expected to come online by 2030, representing about 3% of total capacity from 2020. However, these projections are not specifically aimed at the shipping sector (International Energy Agency, 2021[18]). According to the Global Maritime Forum (GMF) and Zero-Emission Shipping, announcements suggest approximately 32 million tonnes of green ammonia per year could be available for shipping by 2030. Cost estimates for ammonia by 2030 range from $900 to $2,700 per metric tonne, Very Low Sulphur Fuel Oil (VLSFO) equivalent, which could result in a substantial premium compared to conventional bunkers. Notably, US-produced green ammonia may achieve cost parity with VLSFO due to the tax credits included in the US Inflation Reduction Act (IRA) (Global Maritime Forum, 2024[15]).
While there is still uncertainty over which fuel will be the dominant choice for shipping in the short, medium and long-term, IEA forecasts suggest that for 2030 international shipping activity will result in the following share of final energy consumption: 8% of share in energy consumption for biofuels, 6% for ammonia, 4% for hydrogen and 1% for methanol (International Energy Agency, 2023[16]).
5.3.2. Storage and bunkering at ports
The availability of fuel supply and bunkering infrastructure at ports is essential to support the maritime sector’s net-zero transition. In addition to assessing (future) production capacity, it is of interest to look to the existing supply chains for alternative fuels and projections of bunkering capacity across global maritime ports. Storage and bunkering are defined as follows:
Storage (active and potential): port storage facilities worldwide for alternative fuels, highlighting their capacity and readiness to ensure consistent supply;
Bunkering (active and potential): the operational and potential bunkering facilities for alternative fuels, which are critical touchpoints for fuelling vessels. Bunkering options include: 1) Truck to Ship (TTS), where fuel is transferred from a truck directly to the vessel, suitable for smaller operations; 2) Ship to Ship (STS), involving fuel transfer between vessels, often used offshore; and 3) Shore to Ship, where fuel is supplied from onshore facilities to the ship, enabling larger volume transfers (ALG, 2024[19]).
The analysis maps estimates for current and projected bunkering from several sources. For methanol and ammonia bunkering, data from Clarksons World Fleet Register is used. The data is complemented by IEA data from the Hydrogen Production and Infrastructure Projects Database.
The number of ports globally offering LNG bunkering has doubled over the past five years, increasing from approximately 80 to 195 active LNG bunkering ports (and 81 planned facilities) in 2024. Projections suggest that this figure will surpass 250 by 2026 (see Figure 5.1).
Note: Data as of October 2024.
Source: Clarksons Research (2024), World Fleet Register, https://www.clarksons.net/wfr/fleet.
For methanol, bunkering capacity stood at 12 active port facilities end of 2024, and 24 potential bunkering projects under development. Current bunkering infrastructure projects are mainly concentrated in Europe, East Asia and North America but potential bunkering points to an increase of bunkering for the rest of the world. For instance, a $1.1 billion memorandum of understanding (MOU) for green bunkering in Egypt was signed by SCZONE and Scatec at COP28 (Clarksons Research, 2024[20]).
For ammonia, potential bunkering projects could be identified primarily in East Asia and Europe. There is currently no ammonia bunkering for shipping in operation, but the world’s first ship-to-ship transfer of ammonia using vessels at anchorage in a working port environment was carried out in September 2024 (Yara, 2024[21]). A 2024 study by the Global Maritime Forum and RMI suggests that a global green ammonia trade could develop, with fuel transported from low-cost production regions like the US, South America, Australia and Sub-Saharan Africa to key bunkering hubs. While early-adopter ports should have sufficient supply by 2030, competition for the cheapest volumes may be intense, benefiting those who secure supply early (Global Maritime Forum; RMI, 2024[22]).
Note: Data as of October 2024.
Source: Data from (Clarksons Research, 2024[23]) and (International Energy Agency, 2024[24]).
5.3.3. Offtake agreements for alternative marine fuels
Industry stakeholders have highlighted the importance of offtake or supply agreements between shipowners, ports, and energy producers to help aggregate fuel demand for clean fuels, thereby facilitating bankable investments in large-scale production capacity and fostering certainty for fuel buyers and suppliers (Mærsk Mc-Kinney Møller Center for Zero Carbon Shipping, 2022[3]).
Which alternative fuel has attracted the most attention from maritime stakeholders in OECD countries? To help answer this question, a mapping of 104 offtake and supply agreements was conducted, focusing on demand for alternative fuels from maritime stakeholders in OECD countries. The analysis includes only agreements that explicitly involve maritime sector actors— such as shipowners or ports— and excludes broader energy deals not directly linked to maritime use. While the suppliers involved may originate from both OECD and non-OECD countries, the scope is limited to agreements reflecting demand from within the maritime sector in OECD countries. Of the agreements, 28% are dedicated to e-methanol and 16% to bio-methanol, indicating a clear preference for methanol-based solutions. LNG and bio-LNG together account for 20% of the agreements and represent the largest share of announced production capacity, suggesting strong near-term investment and scalability. Green ammonia is the subject of 20% of agreements, reflecting growing interest despite limited infrastructure readiness. Green hydrogen appears in 12% of cases, largely in early-stage projects.
Among the mapped offtake/ supply agreements, the suppliers of alternative fuels are predominantly located in Finland, Norway, the Netherlands, and France, with significant contributions—outside of Europe— also coming from the United States and the United Arab Emirates. On the demand side, Denmark leads in alternative fuel offtake agreements, largely driven by the shipping company A.P. Moller – Maersk A/S, which has entered into 15 identified agreements. Buyers in Norway, France, Sweden, Germany and Japan have also entered into several offtake/ supply agreements, reflecting a growing effort by the industry to ensure supply of alternative fuels for future ship operations (see Figure 5.3).
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