According to a report recently jointly released by the Global Centre for Maritime Decarbonisation (GCMD) and Boston Consulting Group, titled Navigating the Maritime Fuel Transition, unless carbon pricing rises substantially, the shipping industry's progress in moving away from fossil fuels will remain very limited.

The report simulated 12 fuel pathways and 6 engine configurations through 2050 and concluded that the transition depends less on any single winning fuel than on carbon pricing, hydrogen costs, feedstock availability, and the engine choices shipowners make over the next decade.

In its baseline scenario, assuming an International Maritime Organization (IMO) Tier II remedy mechanism penalty of $380 per tonne of CO2 equivalent, conventional fuels would still dominate. By 2050, very low sulphur fuel oil (VLSFO) and fossil LNG would still account for 40% of fleet energy consumption, while VLSFO combined with onboard carbon capture would account for another 30%.

If carbon penalties reach $700 per tonne by 2050, the situation would change markedly. At that level, the two institutions estimate that new fuels would become broadly competitive, accounting for about 61% of shipping energy consumption, while fossil fuels would fall to about 13%.

The study also found that the economic gap between e-methanol and e-ammonia is much smaller than commonly believed. Ammonia benefits from lower production costs, but this advantage is largely offset by more expensive storage, transport, bunkering, and safety requirements. By 2050, both are modelled at a cost of about $52/GJ.

However, hydrogen is the biggest variable, accounting for 54% to 60% of the levelised cost of the two electrofuels. If renewable hydrogen falls from the baseline assumption of about $3 per kilogram to $2 per kilogram by 2050, methanol and ammonia combined could meet 36% of the global fleet's energy demand.

For methanol, the cost of biogenic carbon dioxide is another key variable. Cheap bio-methanol can serve as a bridging transition fuel, encouraging shipowners to order methanol-compatible vessels now and making it easier to switch to e-methanol later.

The shifting economics of various fuels ultimately point to the study's core conclusion: shipowners should build optionality rather than betting everything on a single fuel. This conclusion echoes a study just completed by the Society for Gas as a Marine Fuel (SGMF). The association has just completed life cycle assessments of LNG, ammonia, and methanol.

SGMF likewise did not crown any single fuel, instead arguing that the production method itself may matter as much as the fuel. Low-carbon ammonia and renewable methanol have the deepest decarbonisation potential, LNG remains the most mature near-term option, and methanol benefits from easier storage and handling.

This has major implications for newbuilding decisions. GCMD and Boston Consulting point out that more than half of the ships still in operation in 2050 will come from orders placed before 2035.

Since 2021, the shipping industry has generated about $3.1 trillion in cash, exceeding the famous supercycle of 2004 to 2008. Speaking this week at the Capital Link London Shipping and Maritime Services Forum, well-known maritime economist Martin Stopford said that about a quarter of this windfall has already been invested in new ships. But what worries him most is the timing: in 2023, he expected the industry's large-scale fleet investment wave to arrive only in the 2030s; however, strong markets and ample balance sheets have in effect brought this boom forward by about eight years.

Taken together, GCMD, SGMF, and Stopford are pointing from different angles to the same problem: the shipping industry knows it must decarbonise, but the economics of the winning pathway are still not settled.

The result is an awkward investment situation. Shipowners are now being asked to make asset decisions spanning 25 years, while carbon prices, hydrogen prices, fuel supply conditions, and technology pathways remain highly uncertain.