From Heavy Fuel Oil to Bio-LNG: The Next Chapter in Maritime Decarbonisation
The maritime industry is entering a new phase of its energy transition.
Earlier this month, CMA CGM reached an important milestone when its flagship vessel, the CMA CGM NOTRE DAME, completed its first bio-LNG bunkering operation in the Port of Rotterdam. While the event may have appeared to be just another bunkering operation, it represented something much bigger. It demonstrated that the LNG infrastructure being built today is already capable of supporting renewable fuels tomorrow.
For years, LNG has been viewed as a transition fuel. While it already delivers meaningful emissions reductions compared with heavy fuel oil (HFO), its greatest strength may be that it provides a direct pathway to renewable methane.
As regulations tighten and customers increasingly demand lower-carbon supply chains, the question is no longer whether shipping will decarbonise, but how.
The pressure to decarbonise shipping
International shipping transports more than 80% of global trade and is responsible for around 3% of global greenhouse gas emissions.
For decades, heavy fuel oil has been the industry’s preferred fuel because it is inexpensive, energy dense and readily available. However, it is also one of the most carbon-intensive fuels used in transportation, producing high levels of carbon dioxide, sulphur oxides (SOx), nitrogen oxides (NOx) and particulate matter.
The regulatory landscape is changing rapidly. The inclusion of maritime transport in the EU Emissions Trading System (EU ETS), the introduction of FuelEU Maritime, and increasingly ambitious corporate sustainability commitments are reshaping how shipping companies evaluate fuel choices.
Reducing emissions is no longer simply an environmental objective. It is becoming a commercial necessity.
Why LNG has become the preferred transition fuel
LNG has emerged as one of the most practical alternatives to heavy fuel oil.
Compared with HFO, LNG can reduce carbon dioxide emissions by approximately 20 to 30%, depending on engine technology and methane slip. It virtually eliminates sulphur oxide emissions, significantly reduces nitrogen oxide emissions and almost completely removes particulate matter.
These environmental improvements, combined with tightening regulations, have driven significant investment across the shipping industry.
Major shipping companies including CMA CGM, MSC and Hapag-Lloyd have committed billions of dollars to LNG-powered vessels, while ports around the world continue expanding LNG bunkering infrastructure.
The industry has already invested heavily in LNG.
The important question now is how those investments can continue creating value as decarbonisation targets become increasingly ambitious.
LNG is not the destination
The real opportunity begins after LNG.
Unlike many alternative marine fuels, renewable methane can be used in existing LNG engines because the fuel is chemically identical.
Whether the methane originates from natural gas, manure, agricultural residues, food waste or municipal organic waste, the engine sees exactly the same molecule.
That means the LNG-powered ships entering service today can generally operate on bio-LNG with little or no modification.
Instead of replacing another generation of vessels, shipowners can simply replace the fuel.
This is one of the greatest advantages of renewable methane.
Commercial vessels typically remain in operation for 25 to 30 years. Replacing fleets is expensive and time consuming. Replacing the fuel is considerably simpler.
The investments being made today in LNG engines, storage tanks and bunkering infrastructure can therefore continue supporting the industry’s decarbonisation journey for decades to come.
From lower emissions to deep decarbonisation
The difference between LNG and bio-LNG is substantial.
While fossil LNG generally delivers lifecycle greenhouse gas reductions of around 15 to 25% compared with heavy fuel oil, bio-LNG produced from sustainable waste feedstocks can reduce lifecycle greenhouse gas emissions by more than 80%.
In some production pathways, particularly when biomethane is produced from manure or organic waste streams that would otherwise emit methane directly into the atmosphere, lifecycle emissions can even become carbon negative.
This transforms LNG infrastructure from a transitional investment into a long-term decarbonisation platform.
Understanding the economics
Fuel costs remain one of the largest operating expenses for shipowners, making economics just as important as emissions.
Historically, heavy fuel oil has generally been the least expensive marine fuel. LNG prices have fluctuated depending on global natural gas markets but have become increasingly competitive in recent years as supply has expanded and infrastructure has matured.
Bio-LNG, however, remains significantly more expensive than fossil LNG.
The premium reflects today’s market fundamentals. Renewable methane production is still relatively limited, while production itself is more complex and costly. Biomethane must first be produced from sustainable feedstocks, upgraded to natural gas quality, liquefied and delivered through dedicated supply chains.
On top of the underlying LNG price, buyers must also pay for the renewable value of the biomethane itself. This “green premium” reflects the environmental value of replacing fossil methane with renewable methane and is driven by greenhouse gas savings, sustainability certification and regulatory demand. Depending on the feedstock and compliance market, this premium can add tens or even well over one hundred euros per MWh to the cost of the fuel.
As a result, bio-LNG is currently one of the more expensive marine fuel options available.
This raises an important question. If bio-LNG is more expensive, why would shipowners choose it?
The answer lies in regulation.
Measures such as FuelEU Maritime and the EU Emissions Trading System are designed to ensure that the environmental cost of fossil fuels is increasingly reflected in their economic cost. As carbon prices increase and greenhouse gas intensity limits become progressively stricter, the commercial case for renewable fuels becomes significantly stronger.
Without these regulatory frameworks, there would be little economic incentive for the market to transition towards lower-carbon fuels at the pace required to meet Europe’s climate objectives. Regulation therefore plays a crucial role, not by replacing market forces, but by ensuring that the environmental benefits of renewable fuels are properly valued.
The largest investment, however, is often not the fuel itself, but the vessel.
Building a new LNG-powered ship typically requires an additional investment of between US$10 million and US$30 million compared with a conventional vessel, depending on its size and design. Retrofitting existing ships also requires substantial investment due to cryogenic storage tanks, specialised fuel systems and associated engineering work.
Once those investments have been made, however, transitioning from fossil LNG to bio-LNG requires little or no additional modification. The vessels, engines and bunkering infrastructure are already in place.
That makes renewable methane one of the few decarbonisation pathways that builds upon existing investments rather than replacing them.
Can supply keep pace with demand?
One question naturally follows.
Can the biomethane industry produce enough renewable methane to support the growing maritime sector?
The answer is yes, but significant investment is still required.
Europe’s biomethane sector is expanding rapidly. Supported by ambitious climate targets, improved investment conditions and growing demand for renewable gas, hundreds of new production facilities are under construction or in development.
The European Biogas Association has set an ambition for Europe to produce 35 billion cubic metres (bcm) of biomethane annually by 2030, compared with approximately 7 bcm today.
This represents one of Europe’s fastest-growing renewable energy markets.
At the same time, demand continues to accelerate.
Heavy industry, manufacturing, road transport, aviation and maritime shipping are all looking towards renewable methane as one of the most practical pathways for reducing lifecycle greenhouse gas emissions.
This imbalance between rapidly growing demand and still limited supply is one of the primary reasons bio-LNG currently trades at a premium over fossil LNG.
The market is therefore increasingly shifting towards long-term supply agreements.
These agreements provide biomethane producers with the certainty needed to finance new production facilities while giving buyers confidence in future availability and pricing.
For the maritime industry, securing renewable methane supply may become just as important as investing in the vessels themselves.
The challenge is no longer proving that renewable methane works.
The challenge is scaling production quickly enough to meet future demand.
Building on existing infrastructure
One of the greatest challenges in the global energy transition is infrastructure.
Many alternative fuels require entirely new engines, storage systems, bunkering facilities and supply chains.
Bio-LNG is different.
Every LNG-powered vessel entering service today and every LNG bunkering terminal being developed increases the industry’s future ability to distribute renewable methane.
The successful bio-LNG bunkering of the CMA CGM NOTRE DAME in Rotterdam perfectly illustrates this point. The infrastructure already exists. The vessels are already operating. The technology is proven.
The next step is increasing the availability of renewable methane.
Instead of creating an entirely new fuel ecosystem, the maritime industry can continue building upon investments that have already been made.
Looking ahead
The transition from heavy fuel oil to LNG has already begun.
The next transition, from fossil LNG to bio-LNG, is now underway.
The ships are already being built.
The engines are already compatible.
The bunkering infrastructure is expanding.
Renewable methane production across Europe continues to grow.
The next phase of maritime decarbonisation will depend on connecting these pieces together through continued investment in biomethane production, stronger partnerships across the value chain and long-term agreements that provide confidence for both producers and fuel consumers.
Decarbonising shipping will not happen because renewable fuels suddenly become cheaper than fossil fuels. It will happen because technology, investment and regulation move in the same direction.
LNG has already created the infrastructure.
Biomethane is creating the renewable fuel supply.
FuelEU Maritime and the EU ETS are creating the commercial incentives needed to accelerate adoption.
Together, they offer one of the clearest and most practical pathways towards reducing emissions from one of the world’s hardest-to-abate sectors.
How Greensteps can help
As renewable methane markets continue to mature, securing reliable supply is becoming just as important as selecting the right fuel.
Greensteps works across the biomethane value chain, connecting producers, traders, fuel suppliers and end users through both long-term and spot supply agreements. We support clients with sourcing biomethane and bio-LNG, structuring commercial offtake agreements, navigating sustainability certification schemes such as ISCC and REDcert, and helping businesses comply with evolving European regulations.
Whether you are a shipowner exploring bio-LNG, an energy supplier looking to secure renewable methane volumes, or a producer seeking long-term offtake partners, Greensteps helps turn decarbonisation ambitions into practical and commercially viable solutions.
The transition to renewable methane is underway, and we are proud to help our partners navigate it.
