Lloyd’s Register (LR) has provided an overview of the maritime industry’s significant strides toward decarbonisation in 2024, highlighting advancements in alternative fuels, emerging technologies, and the scaling challenges that lie ahead on the path to net-zero emissions.
According to LR, shipowners continued to invest for a future of lower emissions in 2024, with 600 vessels capable of using alternative fuels ordered (to December 13). The new orders grew the total orderbook by more than 50%, to 1,737 vessels. The in-service alternative-fuelled fleet also grew strongly, up 18% to 1,860 vessels.
Combined with current orders, the fleet will stand at 3,597 – around 4.8% of all vessels in service and on order. But with the IMO’s 2030 target on zero and near-zero emission energy use crossing the five-year horizon, orders will need to accelerate further to meet the required 5-10% of shipping’s energy consumption.
As the maritime transition towards decarbonisation advances, the next steps will require greater alignment between industry ambitions, regulatory measures and, crucially, incentives to rapidly grow global production capacity for the alternative fuels shipping will need,
… said said James Frew, Business Advisory Director at LR.
Progress with methanol, ammonia, and hydrogen fuels
Methanol-fuelled vessels led the way amongst new fuels, with 119 orders adding more than a third to the existing orderbook. Ammonia-fuelled vessel orders more than doubled compared to the previous year, to 22 vessels. In 2025 the first ammonia-fuelled marine engines will be delivered, with a further surge in orders likely as the industry gains experience with the carbon-free fuel.
Hydrogen fuel also consolidated its appeal within relevant vessel segments, with orders for 12 more vessels in 2024.
Liquefied natural gas (LNG) adoption
While vessel orders related to new fuels progressed in 2024, liquefied natural gas (LNG) also strengthened its position as shipping’s most widely adopted alternative fuel. More than 350 vessels (including LNG carriers) were ordered. The industry’s efforts to reduce the impact of methane slip on greenhouse gas emissions also evolved.
Interest grows in liquefied petroleum gas (LPG)
Another established alternative fuel, liquefied petroleum gas (LPG), also drew further orders. Currently, LPG carrier vessels are the only users of the fuel, but there remains potential for other users to take up the fuel. Market factors may make LPG pricing competitive in some regions, infrastructure and technology is mature, and efforts are being taken to scale up the production of renewable variants.
Challenges with future fuel availability
However, amid strong development across the industry, there remains deep uncertainty about when zero- or near-zero emission fuels will be available, and at what cost. The latest Zero Carbon Monitor in October 2024 listed supply and infrastructure as a priority action to improve readiness for future fuels.
The report noted: “A key factor in vessel investment decisions is confidence in future supply of fuel. To reduce uncertainties and accelerate investment decisions at the ‘ship’ stage, stakeholders across the entire value chain must work together to create supply chains for future zero (or near zero) carbon fuel uptake.”
The scaling challenge
The monitor’s ongoing assessment of readiness levels across several fuel candidates notes that significant scaling up of production capabilities and supply infrastructure is needed before these fuels can be considered fully ready. Core production elements for both biomass-derived fuels (e.g., carbon capture) and e-fuels (e.g., electrolysers) are currently only in use at isolated projects.
The monitor also identifies areas where public intervention is needed to facilitate the scaling up of alternative fuel production. In general, potential investors in alternative fuel production and supply need signals that show a stable, attractive market. One specific area is the need to reduce the risks of investing in countries with low credit ratings, because many countries are well suited to provide renewable resources.
Ensuring readiness for early movers
Coordinated action will also be needed to ensure that zero- or near-zero emissions shipping is available for early movers among cargo owners. In 2024, a tender was launched to assess the availability of shipping services using e-fuels. Responses from more than 50 shipowners and fuel suppliers indicated that predicted that commercial e-fuels deployment in the maritime sector would be feasible starting in 2027 and 2028, with limited deployment potentially as early as late 2026.
Wind-assisted propulsion gains momentum
Amid uncertainty around fuel availability, the industry also progressed the development of other emissions reduction options in 2024. Analysis of the market for wind-assisted propulsion systems (WAPS) in August found that uptake is on the verge of a tipping point, expected to pass the 100-installation milestone in the next 2-3 years. Rapidly maturing technology, successful pilot projects and growing regulatory recognition are key drivers, while challenges such as standardising fuel savings verification and scaling up technology production are already being actively addressed.
Coinciding with the retrofitting of WAPS on the world’s biggest bulk carrier in October, a paper was submitted to the Royal Institute of Naval Architects’ Wind Propulsion 2024 conference. The paper outlined experience across three retrofits on bulk carriers, and highlighted the need for early planning of compliance and integration elements to streamline retrofit projects.
Advancing nuclear propulsion
Looking further ahead, the prospect of nuclear propulsion for commercial vessels gained momentum in 2024, driven by increasing shipowner interest in the advance of small modular reactor technology. The technology could have dramatic impact on shipping, including longer ship lives and new ownership models.
Carbon transport and sequestration maturity
2024 was also notable for growing maturity in the carbon transport and sequestration market, which will be essential both for decarbonising hard-to-abate industrial sectors and providing feedstock for carbon-based e-fuels. In the year that the first dedicated liquid CO2 carrier was delivered, multiple approvals for vessel designs were issued and a landmark study was conducted on port capabilities for offloading carbon captured onboard.
Across the year, increasing investment from shipowners set the scene for a crucial year ahead for maritime’s decarbonisation drive. The first four months alone, with the introduction of FuelEU Maritime in January and the anticipated finalisation of IMO mid-term measures in April, will make 2025 a defining year for industry’s voyage towards net-zero emissions, LR concludes.
