Chinese shipyards are dominating global orders for greener vessels, but uncertainty over global regulations and cost premiums of low-carbon fuels could leave new ships without enough clean fuel to run on, according to industry executives.
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China’s push to decarbonise its wider economy has propelled the production of low-carbon ships to transform this hard-to-abate sector, even as the international rulebook intended to steer shipping towards net zero remain stalled.
Speaking at a panel on scaling up low- and zero-carbon vessels and green fuels at sustainability conference ReThink HK 2026 early this month, the executives discussed how the industry could move from pilot projects to commercial viability.
Nearly all of shipping’s operational greenhouse gas emissions come from fuel use, making the availability of cleaner alternatives central to the industry’s transition.
The delay in adopting the International Maritime Organization (IMO)’s Net-Zero Framework (NZF) has prolonged uncertainty over the establishment of a global fuel standard and pricing mechanism continue.
In October 2025, 57 IMO member states voted to adjourn negotiations for a year, while 49 voted to continue. China, which had supported the framework in principle earlier that year, voted for the delay amid strong opposition and political pressure from the United States and Saudi Arabia.
Further negotiations on the framework are scheduled in December this year. At stake is its adoption, which includes a standard for marine fuel, as well as a pricing mechanism based on greenhouse gases emissions intensity.
Shipowners face investment decisions before those rules are finalised. Ships remain in service for decades, and those built today will help determine whether the industry meets its decarbonisation targets in 2050. The industry is therefore developing next-generation ships before the net zero rulebook is agreed.
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“The energy transition is no longer only about adding more renewables, it is about redesigning the fuels and value chains so that the hard-to-abate sector can decarbonise effectively.”
Li Fan, ESG manager, COSCO SHIPPING Ports
From rule-follower to rule-shaper
China’s energy transition is entering a new phase, said Li Fan, ESG manager at COSCO SHIPPING Ports.
For much of the past two decades, China focused on rapidly expanding its wind, solar and hydropower capacity. Attention is now shifting towards using clean electricity to power the transportation sector.
“The energy transition is no longer only about adding more renewables, it is about redesigning the fuels and value chains so that the hard-to-abate sector can decarbonise effectively,” Li said.
China is also seeking greater influence over the standards governing the vessels and fuels it increasingly supplies.
Earlier this year, authorities unveiled plans to develop Shanghai into an international green-fuel bunkering and trading centre by 2030. Part of this undertaking involves developing annual bunkering capacity of one million tonnes for methanol and biofuel, large-scale liquefied natural gas (LNG) bunkering capacity.
Shanghai is positioning itself “at the intersection of fuel supply, trading, finance and international standards”, Li said, turning green shipping “from a compliance challenge into a strategic opportunity”.
China is moving “from being a rule-follower to a co-shaper of global standards”, she added.
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“Green methanol, biofuels, ammonia, hydrogen derivatives and future e-fuels will likely coexist.”
Chester Lee, Deputy COO for Commercial, Green Fuels and Chemicals, Towngas
Green methanol viable, but LNG plugs today’s transition gap
Panellists agreed that no single fuel is likely to decarbonise the entire shipping industry.
“There is unlikely to be a single winner,” said Chester Lee, deputy chief operating officer for commercial, green fuels and chemicals at Hong Kong utility Towngas.
“Green methanol, biofuels, ammonia, hydrogen derivatives and future e-fuels will likely coexist.”
Among the green fuels available, the commercial scale-up of methanol for marine use has progressed the fastest commercially. Methanol-capable engines are already available, while the fuel can draw on existing global infrastructure across chemical production, storage and transport.
However, ships must be either built to use methanol or retrofitted with compatible engines and systems designed for the fuel.
Green methanol production is already underway in China. Towngas’s former coal-based methanol facility in Inner Mongolia has been converted into a green methanol production platform using biogenic waste and residues. Hong Kong’s first simultaneous-operations green methanol bunkering in March this year – which allowed a vessel to refuel during cargo handling – used methanol supplied by Towngas.
But technological readiness does not resolve the commercial problem.
“High production costs create a green premium over fossil fuels,” Lee said.
Bio-methanol is estimated to cost US$900 to US$1,400 per tonne and e-methanol US$1,600 to US$2,400, against roughly US$600 to US$900 for fossil LNG. Compounding the problem is methanol’s lower energy content per tonne – ships currently need twice as much methanol by weight as LNG to obtain the same energy. This further increases the fuel cost on an energy-equivalent basis.
“The ships are actually getting closer and closer to delivery,” said Mark Teng, chief financial officer of maritime investment platform SeaKapital. “More and more players are more comfortable with LNG as a transition fuel of choice, given its availability and economics,” Teng said.
LNG may be a fuel of choice in the transition, but its risks remain. Methane leakage can occur during production, transport and vessel operations, diminishing its climate advantage.
Vessels and fuels form only part of the transition equation.
As more fuel-capable ships enter service, the challenge is extending that readiness to the rest of the supply chain – from fuel production and bunkering to crews trained to handle new fuels.
Eleanor Cunningham, general manager of sustainability at The Caravel Group, highlighted the importance of crew training, safety-management systems and shore-side support.
“Fuels such as methanol and ammonia come with safety risks that must be addressed through operating manuals, emergency procedures and workforce training,” said Cunningham. “Retrofitting a vessel does not guarantee lower emissions if the crew is not trained to operate equipment correctly, or integrate the processes into standard procedures,” she added.
