Record investment in alternative fuel tonnage in 2024

Clarksons Research reports that in a year when newbuild ordering activity reached its highest level since the pre-financial crash peak of 2007, 50% of all tonnage ordered in 2024 had alternative fuel capabilities.

A fifth of all orders also had “ready” notations, signifying vessels designed with the future retrofit of an alternative fuel in mind, for instance by having space and structural support for new fuel tanks, room for fuel handling equipment, and runs reserved for new piping.

Steve Gordon, global head of Clarksons Research, said: “Across 2024, we have reported 820 vessels ordered of 62.2m GT involving alternative fuel capability (727 orders of 52.1m GT excluding LNG Carriers), a record level of investment.”

Gordon noted a resurgence in LNG fuel technology, accounting for 70% of alternative fuelled tonnage ordered excluding LNG Carriers, up from 43% in 2023. Methanol’s share of the 2024 orderbook fell to 14% in 2024 from 30% in 2023. Maersk’s decision last year to bolster its methanol-focused orderbook with LNG capability was seen as a high-profile admission that green methanol may take longer than hoped to reach the market in the volumes necessary to meet bunker demand, even if the Danish giant maintains that LNG is a not a long-term solution to reducing emissions from shipping.

“Overall, we have reported orders for vessels capable of using either LNG (390 orders, 297 excluding LNG Carriers), methanol (118 orders), ammonia (25 orders), LPG (72 orders) or Hydrogen (12 orders),” said Gordon.

Some 452 orders or 21% of the orderbook had ready notations, with methanol the most popular at 320 orders, followed by ammonia at 130

Aside from LNG carriers, gas carriers and other ships that can use cargo as a fuel, containerships over 12,000 teu and car carriers had the highest levels of alternative fuel order adoptions, with the large box ships split 71% LNG and 17% methanol, and car carriers 78% LNG and 21% methanol.

Laggard sectors in alternative fuel adoption in 2024 included ultramaxes at 4% of ordered tonnage, handysizes at 4% and MR tankers at 1%.

Despite the rising trend of alternative fuel capable vessels and efforts to increase efficiency in the existing fleet, Clarksons estimates that shipping’s global greenhouse gas emissions will have increased by ~4% y-o-y in 2024 to over 1bn tonnes of CO2e on a well-to-wake basis. The figure would mark a move to above pre-pandemic levels, driven by longer voyages to reroute around the Red Sea, speed increases in some sectors, and trade growth.