Over 98 per cent of current world cargo fleet runs on Heavy Oil. However, signs of change are witnessed in new ships as over 26 per cent of ships on order have the capability to use alternatives fuels. This drive towards alternative fuels has been driven by International Maritime Organization’s (IMO) commitment to make maritime transport green, as Shipping is claimed to be one of the biggest pollutant means of transport. Accordingly IMO has adopted the below emission norms for ships worldwide: 

- 20% reduction in emissions by 2030

- 70% reduction in emissions by 2040

- Net zero emissions by 2050

These are highly ambitious target taking into account the fact that this has to be adopted by the entire world.  Ships generally have an operating life of 20~30 years and vessels built today need to have the cleaner fuel combustion system otherwise come 2050 and they will have to be phased out early before the end of their operating life. Hence time is running out and the maritime community has been working relentlessly to achieve these targets by preparing to phase out older tonnage burning Heavy Oil and getting in new tonnage which would burn relatively cleaner fuels. There have been few roadblocks though, as in October 2025, the IMO could not get a majority to implement some of the milestones for decarbonisation and has deferred the decision by one year. This is owing to difference in opinion between member countries on the need to set up such tough targets and also the feasibility to achieve such ambitious results in such short a time. 

This sudden change in stance of IMO members is perhaps a minor stumbling block and shipping would definitely move towards Cleaner Fuels, if not Today, Tomorrow. While this writing on the wall is clear, there is no agreement within the shipping industry as to what the preferred carbon free solution should be. Various alternatives are emerging and it will perhaps take at least a decade, when there would be clear pathway on the best fuels for ships. Possible options include:

* Conventional Fuels (e.g. HSFO, VLSFO, MGO) with Post-Combustion Carbon Capture 

* Renewable version of Existing Marine Fuels (e.g. Biodiesel, Bio-LNG, Green methanol)

* Renewable version of Emerging Marine Fuels (e.g. Green Ammonia, Green Hydrogen)

* Alternative Propulsion methods (Wind-assisted Sail Systems, Battery-Electric Power, Nuclear Propulsion) 

Of all the alternatives being worked upon, hydrogen and hydrogen-based alternatives are the best option owing to their least emission properties. If the world has to move towards net zero, only hydrogen can offer this alternative. However, even though being the safest and cleanest fuel, hydrogen is not easy to transport and store for supplies to ships. Technically, it is feasible, however, commercially it’s a huge cost which the industry cannot bear.

While pure hydrogen is a clean fuel, it is difficult to use in shipping because of it has low volumetric energy density, requiring massive tanks that reduce cargo space. A large 22,000 TEU ship burning hydrogen will have to forgo upto 5 per cent of its cargo space to built space of storing hydrogen bunker. This is a major challenge commercially, as ships are getting big and bigger to achieve scale economics and any forfeiture of cargo space is not welcome by shipowners. Further, for storing in limited space, hydrogen must be kept at -253°C, which is energy-intensive and vastly expensive. 

Hence, the only way of adapting hydrogen as fuel has to be through hydrogen-derived carriers, which are: 

* Green Ammonia (NH3) - Offers up to a 90 per cent reduction in GHG emissions compared to conventional fuels. It is carbon-free at the point of use but requires specialized handling due to toxicity.

* Green Methanol (CH3OH) - More technologically advanced with existing compatible engines. It reduces CO2 emissions but typically requires carbon capture (CCS) for full carbon neutrality.

* E-LNG / E-Diesel: Synthetic versions of existing fuels that use renewable hydrogen and captured CO2. 

The present world fleet (December 2025) consumes about 340 million tonnes of fuel each year or 14.2 Petajoules of Energy (based on 42 Gigajoules per tonne of Heavy Fuel oil). This energy mainly comes from burning Heavy Fuel oil or Marine Diesel. Based on an average price of US$ 500 per tonne, world bunkering market is worth over US$ 165 billion. For meeting the IMO timelines, Hydrogen based alternatives is likely to constitute following share of this market:

* 2030 Target: 5–10% of the energy used to come from Hydrogen-based Fuels.

* 2040 Target: 70–80% of energy to come from Hydrogen-based Fuels

* 2050 Target: 95% of energy to come from Hydrogen-based Fuels.  

This is easier said than done. Developing an entire logistics chain to supply 95 per cent of bunker fuel for the world merchant fleet is a tall order. Even supply to 5~10 per cent of the world fleet in the next four years is an impossible target. Just to meet 2030 targets, the industry needs approximately 70 million tons of hydrogen based fuel. Presently only a mere 1% of this volume is being traded today. Further, there is a huge cost differential between hydrogen- based fuel and conventional fuel. Green methanol costs about $2,000 per tonne, which is steep compared to about US$ 500~600 per tonne for Very Low Sulphur Fuel Oil (VLSFO). Is the industry prepared to pay four times higher price for bunkers to meet the emission norms. Let’s not forget bunker costs are substantial portion of operational costs of running ships and the landed costs of goods would go up substantially should the industry adapt the newer fuel.

Further, supplies of hydrogen is still at nascent stage and global standards and bunkering infrastructure for ammonia and hydrogen are still in early development compared to established LNG bunkering infrastructure. It will still take decades for setting up hydrogen- based fuel bunkering infrastructure. Firstly, it has to be analysed how such large scale of Hydrogen can be produced. This requires a process of Electrolysis and then Synthesis on a commercial scale, which is lacking as of now. 

Hence, we are all going to witness the switch to hydrogen based fuel for small segment of short sea shipping in the initial days. Before it can be scaled to fuel a larger international fleet around the world, advances in technology and infrastructure are needed to overcome the barriers described above. So while the pathway clearly laid out, the milestones are not yet finalised. It will take years and years before we see a worldwide switch and till that time, shipowners placing orders for new tonnage would continue to play it safe and go for existing fuel options which is LNG in its various forms.