Shipping’s green transition in full force: 63% of orders this year have been for alternative fuel capable units

Shipping is transitioning to new fuel configurations in record numbers, even if the actual economics of using them do not add up this year. For the first time, the majority of orders in 2022 so far – 63% in gt terms – have been for alternative fuel capable units, up from around 30% in the previous two years, according to data compiled by Clarkson Research Services. 

LNG remains the leading alternative fuel today, featuring in 59% of orders in 2022 so far where as it factored into just 28% of orders last year.  

Orders for other alternative fuelled units in the year to date have included four methanol capable boxships and a number ofLPG/ethane fuelled LPG carriers. Battery/ hybrid ships also make up a significant share of vessel numbers, with 26 orders in 2022 so far. 

“Some owners are already opting for ‘fuel optionality’ (with over 20 orders in 2022 so far for LNG capable plus ammonia/methanol ‘ready’ units for potential later conversion),” Clarksons  noted in its most recent weekly report.  

While alternatively fuelled newbuilds are now in the majority for the first time, it is debatable just how much of the existing LNG dual-fuel ships are actually burning gas as opposed to cheaper, traditional bunker fuel. 

Many dual-fuel vessels this year have switched to run on very low sulphur fuel oil as it is considerably cheaper than LNG.

High LNG prices are forcing some of the biggest early proponents of the fuel to cool their interests this year. Splash has heard one of the large European containerlines say at a closed-doors event earlier this year that all its LNG vessel investment plans are on hold, as it waits and sees whether LNG prices are going to stay elevated.