Which maritime fuels will dominate in the next decade and beyond?

If we take FuelEU as a sign of things to come, it is evident that conventional fuels will remain predominant in shipping for the foreseeable future. This prognosis will remain largely unaffected by FuelEU’s current five-year GHG intensity reduction threshold of 2% and the next 6% reduction threshold set to kick in from 2030 to 2035, especially considering that the FuelEU and EU ETS regulations impact only 15% of global shipping fuel consumption. A significant overshoot of the prescribed reductions through large-scale replacement of conventional fuels with biofuels appears unlikely due to price and availability issues in this period. In the coming decades, the industry will struggle to secure sufficient supplies of the most attractive waste-based biofuels to meet demand. E-fuels will start to emerge towards the end of the 2020s and then ramp up in the 30s, but production costs and high investment requirements will limit availability. Looking farther ahead over a 15-20-year horizon, the FuelEU mandate of a 31% emissions reduction from 2040 to 2045 can trigger a more significant shift, though conventional fuels will remain in the ascendancy.

At ERMA FIRST, we anticipate a complex fuel landscape over the next 10 years, with existing and new trends and technologies overlapping. While a gradual increase in the uptake of “new” fuels (e.g., methanol and ammonia), capable of addressing the decarbonisation challenges if produced sustainably, is very likely, we believe that the next decade will still see a sizable majority of “traditional” fuels (diesel oils and LNG) as the pillar of the whole maritime sector. Those traditional fuels will undoubtedly benefit from the increasing shares of renewable production (e.g., biodiesel and bioLNG), even though achieving significant market shares will present several challenges to the production and refining industry. It is also likely that from 2035 to 2040 onwards, carbon-free fuels (green ammonia and green hydrogen) will achieve competitive production costs and, consequently, widespread adoption. However, many technical and economic issues still need to be addressed over the next 10 years for this to occur. Given the numerous uncertainties and potential scenarios, we firmly believe that the need for decarbonisation technologies, including energy-saving solutions and CCUS, will continue to grow in the coming years.

The shipping sector’s transition towards net zero requires a phased approach, starting with bio-derived marine diesel and advanced biofuels in the early 2030s. These fuels use current engine platforms to reduce greenhouse gases, allowing time for new alternatives to develop. By the mid-2030s “blue” fuels, which are produced with carbon capture, will rise in popularity before synthetic e-fuels take over. E-fuels, made from renewable hydrogen and captured CO₂, provide the same energy as conventional fuels without needing major engine redesigns. Scaling up depends on policy incentives and expanding low-carbon electricity and carbon-capture infrastructure. Post-2030, hydrogen and ammonia will likely be prominent. Green hydrogen offers zero-carbon combustion but faces storage challenges. Ammonia, with its higher energy density and established production pathways, is more practical for long-range trades if its supply transitions to green. LNG will continue to play a role due to mature engine technologies and a global bunkering network, with bio-methane and e-methane variants aiding immediate carbon reduction. Ongoing innovations to reduce methane slip will also enhance LNG’s appeal as a transitional fuel.

Over the next 10 to 15 years, we are going to see a combination of solutions chosen according to vessel type, voyage profile, and local regulations. In the short term, LNG and methanol are already gaining traction because the infrastructure is there and both offer immediate emission benefits. As we move further into the 2030s, green methanol and ammonia are expected to increase in importance, particularly for deep sea ships that are aiming for full decarbonisation. The real challenge is not just choosing a fuel – it’s ensuring there is scalable production, safe onboard handling, and fully integrated power and propulsion systems. At STAMFORD | AvK, we work closely with marine OEMs, shipyards, and classification societies, in order to deliver alternator and electrical solutions that support hybrid and dual fuel vessels. Whatever the future fuel mix, one thing remains certain: reliable onboard power will be critical to make these transitions work.

In the short to medium term, biofuels and LNG are expected to be among the most prominent alternative marine fuels. At this stage, it remains difficult to predict which fuel will ultimately dominate, and any projection involves a degree of uncertainty. However, based on current data and industry trends, biofuels such as FAME (Fatty Acid Methyl Ester) and HVO (Hydrotreated Vegetable Oil) are likely to maintain a significant role in the marine fuel mix throughout this decade and into the next.

With increasing demand for biofuels and potential competition from competing sectors, such as the road transport and aviation sector, prices for conventional biofuels used today might increase and it is of utmost importance for the industry to identify and use alternative biofuel bunkers that are fit-for-use. 

This outlook is reinforced by the upcoming Net Zero Framework introduced by the International Maritime Organization (IMO), which is set to enter into force in 2027. The regulation will require ships to progressively reduce the greenhouse gas intensity of their fuels on a well-to-wake basis. Although many details of the framework are still being finalised, preliminary calculations suggest that B100 (100% biodiesel) and Bio-LNG could emerge as two of the most favorable alternative fuels for compliance and emissions reduction during the transition period from 2028 onwards.

The big question is which of the two fuels - ammonia or methanol- will take on a dominant role in the long term. It is difficult to predict with certainty, but we can explore the pros and cons of each.

Methanol, particularly biomethanol, is gaining rapid traction in the maritime sector. It is compatible with existing ship designs, relatively easy to store and handle, and benefits from a growing bunkering infrastructure. Methanol is likely to serve as a near-term solution for liner shipping, and potentially a mid-term option for tramp shipping – the challenge is the price and availability of biomethanol. However, the availability of biodiesel for marine use may become a challenge, which could significantly impact pricing compared to today’s levels. As a result, the price gap between biodiesel and biomethanol may narrow, potentially bringing them closer to parity. For biomethanol to be available at scale by 2028, production projects should already be under construction - but that isn’t currently the case. Greater awareness in the shipping community is needed, and early commitments to term contracts for biomethanol would help pave the way for broader adoption.

Ammonia, on the other hand, holds strong promise as a cost-competitive zero-carbon fuel by the mid to late 2030s, especially when produced from green hydrogen. Its combustion produces no CO₂, making it attractive for deep decarbonisation. However, ammonia faces significant challenges related to toxicity, corrosiveness, and the need for specialised infrastructure and safety protocols. Once these hurdles are addressed and ammonia is widely tested and accepted as a bunker fuel, it could become the most dominant alternative fuel in the maritime industry.

Overall, investment security will be a critical enabler for the maritime industry as it navigates the complex transition toward alternative fuels. The development and scaling of low-carbon and zero-carbon fuel options—whether biofuels, methanol, or ammonia—require long-term commitments, regulatory clarity, and coordinated investments across the value chain. Without a stable and predictable investment environment, the risk of delayed progress or fragmented solutions increases. To ensure the timely availability of fit-for-purpose fuels, infrastructure, and bunkering capacity, the industry must foster confidence among investors, fuel producers, and shipowners alike. A secure investment landscape is essential not only for meeting upcoming regulations such as the IMO’s Global Fuel Standard but also for achieving meaningful decarbonisation in line with global climate goals.