Maritime decarbonization 2026: ammonia and methanol after the IMO net zero framework

MEPC 83 net zero framework: a USD 100 per tonne global carbon price on bunker fuel #

The IMO adopted the GHG net zero framework at the 83rd MEPC session in April 2025, the first sector wide, legally binding, market based measure on greenhouse gas emissions in international shipping. It amends MARPOL Annex VI, applies to all ships above 5,000 gross tonnage on international voyages, and covers roughly 85 percent of global maritime CO2 emissions per IMO Fourth GHG Study baselines. Mandatory entry into force is January 1, 2027, with the first compliance period running through calendar 2027.

Two carbon prices anchor the framework. A Global Fuel Intensity charge of USD 100 per tonne CO2 equivalent applies to well to wake emissions above the base GFI trajectory, a path declining from approximately 89.6 grams CO2e per megajoule in 2027 to 77 grams in 2030 and 17 grams in 2040. A stringent Direct Compliance trajectory triggers a Direct Compliance Unit penalty of USD 380 per tonne CO2 equivalent on the residual gap, designed to push first movers toward zero emission fuels. Operators can comply by surrendering Surplus Units, purchasing Remedial Units from the IMO Net Zero Fund, or transferring credits from compliant ships. The Net Zero Fund will recycle revenues (IMO Secretariat estimates USD 11 to USD 13 billion per year on initial volumes) into Just and Equitable Transition support for LDCs and small island developing states.

The economic translation is direct. A 14,000 TEU containership burning 80 tonnes per day of VLSFO produces 250 tonnes CO2, so at USD 100 per tonne the GFI charge adds USD 25,000 per voyage day (USD 8 to USD 9 million annualized). At USD 380 per tonne on the Direct Compliance gap, the figure scales to USD 95,000 per day, a level at which biofuels, methanol, and ammonia move into the money before EU ETS and FuelEU.

FuelEU Maritime and EU ETS extension: the European overlay #

FuelEU Maritime, Regulation (EU) 2023/1805, entered into force January 1, 2025, two years before the IMO framework. It applies to all ships above 5,000 gross tonnage calling at EU ports, covers 100 percent of intra EU voyages and 50 percent of voyages to or from third country ports, and mandates a declining greenhouse gas intensity relative to a 2020 reference of 91.16 grams CO2e per megajoule. The trajectory is 2 percent in 2025, 6 percent by 2030, 14.5 percent by 2035, 31 percent by 2040, 62 percent by 2045, and 80 percent by 2050, with a noncompliance penalty of EUR 2,400 per tonne VLSFO energy equivalent (roughly USD 60 per tonne CO2e at the 2025 starting trajectory).

FuelEU sits on top of the EU Emissions Trading System, which extended to maritime transport on January 1, 2024. EUAs covered 40 percent of in scope shipping emissions in 2024, 70 percent in 2025, and 100 percent from 2026. EUA settlement prices have traded in a EUR 65 to EUR 90 range through Q1 2026 per EEX data, equivalent to USD 70 to USD 100 per tonne CO2. Combining EU ETS at full phase in (USD 80 per tonne) with the IMO GFI charge (USD 100 per tonne) yields an effective EU water carbon cost approaching USD 180 per tonne CO2 by 2027, high enough to swing voyage routing and bunker port selection but still below the USD 300 to USD 500 per tonne CO2 abatement cost typical of green methanol pathways at current input costs.

The orderbook composition: where capital has actually committed #

The DNV Alternative Fuels Insight platform tracks the global orderbook on a vessel by vessel basis. As of the Q1 2025 update, alternative fuel capable newbuilds represent roughly 28 percent of the orderbook by gross tonnage. LNG dual fuel dominates at 17 percent, methanol dual fuel sits at 6 percent, ammonia dual fuel at 3 percent, and LPG, hydrogen, and battery hybrid configurations account for the residual 2 percent. The remaining 72 percent of orders are conventional VLSFO and HSFO with scrubbers, a share that has fallen from 92 percent in 2020 but has stabilized as shipowners wait for fuel availability and engine maturity to converge.

The asymmetry between methanol and ammonia order volumes (360 vessels versus 80) reflects engine technology readiness, not strategic preference. The MAN ES B&W ME-LGIM methanol engine has been in commercial service since 2016, with more than 100 units delivered and a refined operating profile. The B&W ME-LGIA ammonia engine completed full power factory acceptance testing in October 2024, with first commercial vessel delivery scheduled for Q3 2025 on Hyundai Heavy Industries hulls, and WinGD X-DF-A is following on a similar schedule. By contrast, the LNG dual fuel platform has been mature for over a decade. The orderbook is therefore better read as a phasing diagram than as a beauty contest: methanol orders front load 2025 to 2028 deliveries, ammonia orders concentrate in 2027 to 2030, and LNG continues as a transitional bridge through the entire window.

Maersk methanol bet versus CMA CGM hedge: the operator divergence #

Maersk has placed the most concentrated methanol bet of any major liner. The orderbook stands at 25 large dual fuel methanol containerships, 18 of 16,000 to 17,000 TEU and 7 of 9,000 TEU, built at HD Hyundai Heavy Industries and Yangzijiang. Ane Maersk, the first 16,000 TEU methanol vessel, was delivered in January 2024. Antonia Maersk followed in July 2024 on the AE7 Asia Europe service, with Astrid, Adelina, and Albert Maersk entering service through 2024 and 2025. The strategic exposure is the green methanol supply gap: the fleet at full operation requires 5 to 6 million tonnes per year, against global green methanol production of roughly 1 million tonnes in 2024 (Methanol Institute, IRENA). To close the gap, Maersk has taken equity in C2X (joint venture with APMH Invest), signed a 20 year offtake with Goldwind for 500,000 tonnes per year of e methanol from Inner Mongolia starting 2026, and contracted Orsted, European Energy, OCI Methanol, and Proman across roughly 1.6 million tonnes per year cumulative.

CMA CGM has run a diversified pathway. The orderbook splits across 12 methanol dual fuel and 25 LNG dual fuel containerships, with stated intent to migrate LNG hulls to bio LNG and synthetic methane as feedstock matures. CMA CGM Iron, the first methanol vessel, entered service in 2024, and the operator has signed an MOU with Maire Tecnimont and Engie for e methanol production in Egypt. The Japanese majors and Hyundai Glovis have committed to ammonia. MOL announced 9 ammonia dual fuel newbuilds across VLGCs, ammonia carriers, and bulkers; NYK ordered 4 ammonia dual fuel VLACs from Japan Marine United and 5 ammonia ready bulkers from Tsuneishi; Mitsui OSK Lines confirmed 4 ammonia dual fuel newbuilds with first delivery Q4 2026; and Hyundai Glovis ordered 2 ammonia dual fuel pure car and truck carriers in March 2024 from HD Hyundai Mipo for 2027 delivery.

Bunkering port readiness and engine technology maturity #

Fuel pathway commitments are bounded by bunker port availability. Singapore, the world's largest bunker port at 54.9 million tonnes lifted in 2024 (MPA Singapore), conducted the first ship to ship methanol bunkering in July 2023 (Hong Lam Marine), and the first ammonia ship to ship transfer trial in March 2025 with Fortescue and the MPA. The MPA target is 1 million tonnes of methanol and 100,000 tonnes of ammonia bunker capacity by 2027. Rotterdam, the second largest bunker port at 9.8 million tonnes in 2024, has commercial methanol bunkering through Vopak, the OCI methanol terminal at the Botlek (1.2 million tonnes per year), and the H2A ammonia import terminal in development with HES Hartel for 2026 commissioning. Houston handles US Gulf methanol bunker through Methanex and OCI terminals at Beaumont and Geismar. Yokohama, anchored by JERA Sodegaura and Negishi, is the de facto Japanese ammonia bunker hub, with first commercial bunkering scheduled for the MOL ammonia carrier in late 2026.

Engine technology has bifurcated along the same lines. MAN ES B&W ME-LGIM, the methanol variant of the 2 stroke MC engine, has been commercial since 2016, with more than 100 units delivered and a near 95 percent methanol ratio at high load. The MAN ES B&W ME-LGIA ammonia engine completed full power factory acceptance on the 6S60ME-LGIA test bed in October 2024, with NOx compliance via SCR and ammonia slip below 10 ppm. Hyundai Heavy Industries confirmed the first commercial ammonia engine delivery in Q3 2025, slated for the MOL ammonia carrier and an HD KSOE 88,000 cubic meter VLAC. WinGD's X-DF-A platform follows with 2026 deliveries. Ammonia engine readiness is therefore 12 to 18 months behind methanol, and the 2027 to 2028 window will be the first true commercial test.

The 2030 cost gap and the policy trajectory: outlook #

The fuel cost gap remains the binding constraint. Green methanol from renewable hydrogen and biogenic CO2 prices in 2025 at USD 800 to USD 1,200 per tonne on a VLSFO equivalent basis (Methanol Institute, IRENA, S&P Global Platts), with the lower bound on biomethanol from MSW gasification and the upper bound on e methanol from offshore wind paired electrolysis. VLSFO at USD 600 to USD 700 per tonne (Argus Bunker Index, Q1 2026) implies a 30 to 90 percent premium. Green ammonia prices at USD 700 to USD 1,100 per tonne on a VLSFO equivalent basis, with a similar premium plus 3 to 5 percent toxicity handling cost. The IMO GFI charge at USD 100 per tonne CO2 narrows but does not close the gap: it adds roughly USD 310 per tonne to VLSFO equivalent (a 50 percent uplift) and USD 1,180 per tonne under Direct Compliance (a 175 percent uplift), the level at which both fuels move clearly into the money.

The 2030 calculus turns on three variables. First, the supply curve: Methanol Institute projections place green methanol production at roughly 16 million tonnes by 2030 against maritime demand of 30 million tonnes if the orderbook fully converts, a 14 million tonne gap that will price the marginal molecule. Second, EU ETS and FuelEU pooling: pooling lets compliant ships transfer surpluses, monetizing zero emission fuel at a shadow price near the FuelEU penalty (USD 60 to USD 80 per tonne CO2 in 2025 to 2027). Third, IMO review cycles: the 2028 review is the first opportunity to lift the USD 100 GFI toward the USD 200 to USD 300 range that Net Zero Fund modeling identifies as consistent with 2040 checkpoints. Operators positioning today are pricing the option that policy tightens faster than fuel supply scales, a bet the April 2025 framework has materially derisked.

Sources #

• Report of the Marine Environment Protection Committee on its 83rd session, MEPC 83/WP.1, GHG Net Zero Framework adoption
• Regulation (EU) 2023/1805 of the European Parliament and of the Council on the use of renewable and low carbon fuels in maritime transport, FuelEU Maritime
• Alternative Fuels Insight platform, orderbook update Q1 2025
• Maersk takes delivery of Ane Maersk, first of 18 large methanol enabled containerships
• Antonia Maersk delivered, second large methanol enabled vessel enters Asia Europe service
• B&W ME-LGIA two stroke ammonia engine commercial readiness, factory acceptance test results
• CMA CGM Iron enters service, group fleet of low carbon vessels
• MOL announces order of nine ammonia dual fuel vessels across VLGC, bulker, and ammonia carrier segments
• Singapore conducts first ammonia ship to ship transfer trial with Fortescue Green Pioneer
• Methanol fuel for shipping, supply outlook to 2030, biomethanol and e methanol production capacity
• EU Emissions Trading System extension to maritime transport, market data Q1 2026
• Argus Marine Fuels and Bunker Index, VLSFO and alternative fuel benchmark assessments