A new joint study from the Global Centre for Maritime Decarbonisation (GCMD) and Boston Consulting Group (BCG) suggests that alternative marine fuels will not capture the majority of shipping’s bunker demand unless carbon pricing rises well beyond current proposals, according to Ship & Bunker.
The report, titled Navigating the Maritime Fuel Transition, models 12 fuel pathways and six engine configurations through 2050. Its central conclusion, as reported by Ship & Bunker, is that dual-fuel engines allow shipowners to revert to conventional fuel whenever it remains cheaper, meaning fuel economics—not engine installation—ultimately determine what vessels burn.
Engine Capacity Versus Actual Fuel Use
Under the IMO’s Net-Zero Framework’s currently proposed Tier 2 penalty of $380/tCO2e, methanol dual-fuel engines are projected to represent around 10% of the world fleet’s capacity by 2050. However, Ship & Bunker notes that methanol itself would supply only about 2% of the fleet’s actual energy consumption at that carbon price, since operators could opt for cheaper conventional fuels instead.
The study finds that at the $380/tCO2e level, conventional fuel oil paired with onboard carbon capture remains the most cost-effective option through mid-century. It would take a carbon price of $700/tCO2e by 2050 for new fuels, including drop-in alternatives, to account for 61% of fleet energy consumption, according to the report.
Fleet Renewal Timing
GCMD chief executive Lynn Loo, as cited by Ship & Bunker, pointed out that the fleet renews at roughly 4% annually, meaning more than half of the ships operating in 2050 will stem from orders placed before 2035. This creates a challenge, as owners must commit to long-lived engine choices before the future economics of alternative fuels become clear.
No Clear Winner Between Methanol and Ammonia
The report finds no definitive cost advantage between e-methanol and e-ammonia. While ammonia is cheaper to produce, Ship & Bunker reports that costs associated with crew training, exclusion zones, and specialised bunkering infrastructure largely offset that advantage, leaving the two fuels near cost parity through 2050.
Upstream variables could shift this balance. According to the study, green hydrogen priced at $2/kg instead of $3/kg by 2050 would boost the combined methanol and ammonia share of fleet demand to 36% from 4%. Meanwhile, biogenic CO2 priced at $150/t rather than $50/t would reduce methanol’s share to 14% from 23%, while lifting ammonia’s share to 22% from 14%.
Implications for Bunkering Hubs
The report suggests that liquid fuels such as methanol and ethanol will reinforce existing bunkering hubs due to ease of transport and delivery. Ammonia, by contrast, could give rise to new hub types: production-linked hubs competing on low-cost fuel, and import-aggregation hubs that pool maritime demand alongside industrial and power sector needs.
BCG managing director and senior partner Anand Veeraraghavan told Ship & Bunker that the fuel transition is being shaped as much by policy and cost uncertainty as by the readiness of the technology itself.
Does This Matter to You?
The findings carry practical weight for anyone involved in fuel procurement, bunkering infrastructure planning, or long-term vessel investment decisions. The report’s core message—that engine flexibility does not guarantee fuel switching—suggests that demand for alternative fuels like methanol and ammonia could remain limited unless carbon pricing rises substantially above current proposals.
For those tracking bunkering hub development, the report’s distinction between liquid fuels reinforcing existing ports and ammonia potentially creating new production-linked or import-aggregation hubs offers a framework for anticipating where infrastructure investment may concentrate. The study also highlights that upstream cost factors, such as green hydrogen and biogenic CO2 pricing, will influence which alternative fuels gain traction over others.
Gulf Bunkering does not provide operational or security guidance. This article is for informational purposes only. Operators should consult flag state authorities, P&I clubs, and relevant advisories for decisions relating to transit planning.
Sources: Ship & Bunker
