• At $380/tCO2e, methanol dual-fuel engines reach about 10% of fleet capacity but methanol supplies only about 2% of fleet energy by 2050
• At $700/tCO2e, new fuels including drop-ins reach 61% of consumption
• E-methanol and e-ammonia end up near cost parity once ammonia's handling costs are counted
• Liquid fuels favour today's bunkering hubs; ammonia could create production-linked and import hubs

Fitting a ship with a dual-fuel engine says little about what it will burn: under the carbon penalty currently proposed at the IMO, methanol engines would be on around 10% of the world fleet's capacity by 2050 while methanol itself supplied only about 2% of the fleet's energy, according to a new study by the Global Centre for Maritime Decarbonisation (GCMD) and Boston Consulting Group (BCG).

The report, Navigating the Maritime Fuel Transition, models 12 fuel pathways and six engine configurations to 2050, and its central finding is that dual-fuel engines let owners switch back to conventional fuel whenever it is cheaper, so fuel economics rather than engine choice decide what ships consume, GCMD said in an emailed announcement on Thursday.

In the study's base case, a Tier 2 penalty of $380/tCO2e under the IMO's Net-Zero Framework, conventional fuel oil with onboard carbon capture remains the cheapest option through mid-century, and it takes a price of $700/tCO2e by 2050 before new fuels, including drop-ins, reach 61% of fleet energy consumption.

The timing matters because the fleet renews at about 4% a year and more than half the ships in service in 2050 will come from orders placed before 2035, with GCMD chief executive Lynn Loo saying owners are making long-lived engine choices before the relative economics of future fuels are clear.

The study finds no clear cost winner between e-methanol and e-ammonia: ammonia is cheaper to produce, but crew training, exclusion zones, and specialised bunkering largely cancel that out, leaving the two near parity through 2050.

Upstream Signposts

What decides between them is upstream. Green hydrogen at $2/kg rather than $3/kg by 2050 lifts the combined methanol and ammonia share of fleet demand to 36% from 4%, while biogenic CO2 costing $150/t rather than $50/t cuts methanol's share to 14% from 23% and lifts ammonia's to 22% from 14%, the report finds.

The bio-methanol cost trajectory and the regulatory treatment of food-crop biofuels, which decides ethanol's competitiveness, are the other signposts it flags, noting that EU rules cover only around 20% of international shipping's energy demand.

Bunker Hubs

For the bunker industry, the report's view is that liquid fuels such as methanol and ethanol reinforce the established hubs because they are straightforward to move and deliver, while ammonia could produce two new kinds of port: production-linked hubs competing on cheap fuel, and import-aggregation hubs competing on scale by pooling maritime demand with industry and power.

BCG managing director and senior partner Anand Veeraraghavan said the transition is being shaped as much by policy and cost uncertainty as by technology readiness.

The report can be downloaded here, and GCMD and BCG have also published an interactive dashboard for testing different policy and cost assumptions.