In the race to re-fuel the shipping industry with environmental alternatives to heavy fuel oil, methanol has its staunch supporters. The greener, leaner fuel also has a firm foundation to build on.

Marius Leisner, senior principal consultant in the Environmental Advisory unit at DNV, said methanol boasts a “ten-year track record as a marine fuel”, which provides a level of comfort that other alternatives, such as ammonia or hydrogen, currently lack. This equates to a robust technological foundation, with ship designs and fuel-system integration strategies having matured significantly through the recent influx of methanol-capable vessels in the global order book.

One of the primary drivers behind the mounting interest in methanol is its relative ease of handling. In a world where gaseous fuels present significant logistical and safety hurdles, methanol’s liquid state is a distinct advantage, Leisner notes.

“Being a liquid, methanol is simpler and, I would say, safer to store, transport, and bunker than gaseous fuels such as LNG, ammonia, and hydrogen.”
Furthermore, its volumetric energy intensity compares favourably to other green alternatives, being “similar to ammonia and higher than hydrogen”.

Historically, the adoption of methanol has been driven by local environmental compliance rather than global carbon reduction. Early pioneers used it to meet stringent sulphur and nitrogen oxide standards. As Leisner explained: “Methanol is sulphur-free and fully complies with MARPOL Annex VI SOx standards”.

Low-GHG methanol drive
But while it burns cleanly, generating “very little soot or particulate matter,” it is not a silver bullet for greenhouse gases in its conventional form. When produced from fossil sources, methanol’s “total well-to-wake GHG intensity is generally worse than fuel oil, Leisner said. The true promise lies in the transition to bio-methanol and e-methanol, which “can be produced from non-fossil sources with near-zero well-to-wake emissions”. However, the current landscape reveals a significant gap between capability and practice. Leisner points out that “most vessels capable of using methanol today still operate on fuel oil or fossil methanol, with only limited uptake of low-GHG methanol”.

The availability of low-GHG methanol is currently the bottleneck of the movement. While the world’s production capacity for green methanol sits at approximately 2.2 million tonnes per year—98% of which is bio-methanol—the actual bunkering volumes reported since 2023 remain “far lower” than this capacity. This suggests that while the fuel exists, the market mechanisms to put it into tanks are lagging. There is, however, cause for optimism on the horizon. If current investment decisions hold, “production capacity could increase to around 14 million tonnes by 2030, mainly driven by projects in China”, Leisner said.

Infrastructure is one area where methanol benefits from a head start. It is already one of the most widely shipped chemical commodities on the planet, with storage capacity existing in “over 115 ports worldwide”. The logistical chain is further strengthening as “dedicated methanol bunkering vessels are also emerging, with 12 currently in operation and six more on order”, Leisner said. From this perspective, the physical infrastructure is largely ready; the challenge is the price tag.

“Fundamentally, it comes down to fuel cost,” he said.

The economic gulf between fossil fuels and green alternatives remains vast. In 2025, bio-methanol prices in Rotterdam were recorded at roughly “three times the cost of marine gas oil”.

While organisations like the Methanol Institute and IRENA project that prices could fall significantly by 2050 as technology scales, the immediate future requires more than just hope for lower costs.

e-Methanol hurdles
The development of e-methanol, which utilises renewable electricity and captured carbon, faces even steeper hurdles. Currently, e-methanol accounts for only about 2% of green methanol production because it is “difficult to compete on cost today”, Leisner said. The low energy efficiency in converting green electricity into fuel remains the fundamental technical conundrum for all e-fuels. Despite this, a large portion of the future production pipeline is dedicated to e-methanol, as its ability to “approach zero GHG intensity” may justify its premium price under stricter future regulations.

To bridge this economic divide, the industry is looking toward regulators to provide the necessary “carrot” or “stick.” DNV’s modelling suggests that without strong intervention, methanol-capable ships will simply continue to burn fossil fuels to protect their bottom lines.
Leisner states that scaling will require “stronger and more sustained demand signals, such as long-term offtake agreements with defined prices and volumes, to give producers confidence to invest”.

The regulatory landscape is currently made up of two key frameworks. The FuelEU Maritime initiative provides an “important but limited demand signal”, with projected methanol use rising to between five and twelve million tonnes by 2040. In contrast, the IMO’s Net-Zero Framework represents a much more aggressive path. Under this framework, uptake is much faster, reaching 20 to 50 million tonnes. However, the recent decision to postpone the implementation of the IMO framework has left many in the industry, including DNV, feeling frustrated. Leisner admits that “a decision providing certainty would have been very helpful”.
The future of methanol in shipping is essentially a race against time and policy. The technological readiness is “largely there”, Leisner said, with major engine manufacturers like Wärtsilä and MAN already having accumulated hundreds of thousands of running hours on methanol systems. The order book is healthy, with approximately 370 methanol-capable vessels set to join the global fleet.

What remains missing is the economic bridge that allows shipowners to choose the green option without compromising their commercial viability. As Leisner concludes, the transition depends on how much of the fleet’s capacity is “actually used for low-GHG methanol rather than fossil fuels”. Until the price of carbon or the incentives for green fuel reach a tipping point, methanol will remain a promising solution waiting for the market to catch up to its potential.
Source: Baltic Exchange