The maritime industry is facing significant delays in the adoption of methanol engines due to a lack of available e-fuels. A recent study by Lloyd’s Register highlights that without a robust supply of these alternative fuels, shipowners may struggle to meet international emissions targets, pushing back the timeline for necessary retrofits.
Lloyd’s Register overview
- Limited e-fuel supply is hindering the transition to methanol engines.
- Shipowners are currently favoring conventional fuels over green alternatives.
- Regulatory frameworks are crucial for driving the adoption of zero-emission fuels.
- Shipyard capacity for retrofitting may fall short of future demand.
Current State of Methanol Engine Adoption
Lloyd’s Register (LR) has updated its 2023 study on clean-fuel engine retrofits, revealing that the anticipated timeline for methanol-fueled engine adoption is being pushed back due to the low availability of e-fuels. The study indicates that more vessels must undergo retrofitting later than expected if the maritime fleet is to meet the International Maritime Organization (IMO) emissions goals.
A key assumption in previous modeling was that all vessels built after 2027-2030 would be capable of using zero- and near-zero emissions fuels. However, without effective drivers to encourage the uptake of these fuels or clarity on their availability, this timeline may be extended. Consequently, shipowners may face increased pressure to retrofit a larger number of vessels in a shorter timeframe, straining retrofitting capacity.
Regulatory Landscape and Market Trends
Currently, only Europe has implemented regulations that could incentivize shipowners to transition to zero-emission fuels. Ongoing discussions regarding carbon taxes at the IMO, coupled with fluctuating U.S. government policies on climate change, add uncertainty to the decision-making process for shipowners. As a result, many are opting for conventional bunker-fueled propulsion or dual-fuel LNG engines, leading to a slowdown in orders for vessels capable of using green fuels.
In 2024, a notable shift occurred as shipowners increasingly turned to LNG to mitigate exposure to carbon pricing. Over 305 LNG-fueled ships were ordered, significantly outpacing the growth of the methanol- and ammonia-fueled fleet. Major shipping companies, including Maersk, which had previously championed methanol as a progressive decarbonization solution, are now prioritizing LNG.
Future Prospects for Methanol Conversions
While methanol conversions are just beginning, they are expected to gain momentum over the next four years, particularly within the container shipping segment. Methanol is projected to account for the majority of planned conversions through 2029, although the numbers remain modest, typically in the single digits annually.
If the IMO establishes a regulatory framework to promote the adoption of zero-carbon fuels, the demand for retrofitting may exceed the available shipyard capacity. LR has identified 16 shipyards with the necessary experience to perform these conversions, along with an additional 11 highlighted by MAN. Collectively, these facilities could handle approximately 465 conversions per year, which falls short of the 1,000 conversions per year that LR anticipates at peak demand.
The maritime industry’s transition to methanol engines is at a critical juncture, heavily influenced by the availability of e-fuels and regulatory support. As shipowners navigate these challenges, the future of green fuel adoption will largely depend on the signals received from both fuel producers and regulators. The coming years will be pivotal in determining whether the growth in orders for methanol-capable vessels will accelerate, shaping the landscape of sustainable shipping for years to come.
