Liquefied natural gas (LNG) has emerged as the top alternative to traditional marine fuels, a shift initially spurred by the 2020 MARPOL sulphur cap. The sector has seen significant growth, with over 600 LNG-fuelled vessels in operation, bunkering available at 222 ports, and more than USD 150 billion invested across the supply chain. However, this dominance is now facing challenges due to evolving regulations and market dynamics.
The FuelEU Maritime regulation and the proposed IMO Net-Zero Framework are altering the assessment criteria from tank-to-wake to well-to-wake accounting. Additionally, the EU Emissions Trading System now includes methane emissions on a tank-to-wake basis. These changes bring methane slip and upstream LNG supply-chain emissions into the compliance equation for LNG.
An analysis of regulatory developments, fleet investment, and infrastructure convertibility suggests that LNG still holds a compliance advantage, but this edge is shrinking. For vessels meeting the FuelEU default intensity for Otto-cycle engines, LNG costs, including policy penalties, could surpass e-fuel costs in the early-to-mid 2030s. However, this crossover is highly sensitive to factors such as vessel trading patterns, engine technology, and methane-slip performance.
The long-term role of LNG in maritime decarbonisation will also depend on how current investments in LNG infrastructure are utilized. The focus could either extend the commercial life of LNG or accelerate the transition to non-fossil alternatives like biomethane and e-methane.