A new study from the UCL Energy Institute’s Shipping and Oceans Research Group and UMAS, commissioned by the Global Maritime Forum, concludes that the International Maritime Organization’s recently agreed Net Zero Framework (NZF) sends a strong market signal favouring ammonia dual-fuel ships—particularly from the mid-2030s onward. However, ongoing uncertainties in policy design are holding back early investments in e-fuels and alternative marine fuels.

The report uses a total cost of operation (TCO) model to evaluate various fuel pathways under the new regulatory landscape set by the IMO. While the NZF offers clearer direction for shipowners weighing fuel investments, several key policy elements—such as the zero and near-zero (ZNZ) reward mechanism and surplus unit (SU) trading dynamics—remain unresolved.

“Many stakeholders were waiting for clarity from the IMO to make long-term decisions,” said Dr Tristan Smith, professor of energy and transport at the UCL Energy Institute. “While some uncertainties remain, the case for investing in ammonia dual-fuel ships is now compelling—even under conservative policy projections. In contrast, e-fuel producers still lack sufficient policy certainty to move forward at scale without additional government support or market opportunities.”

The study finds that ammonia dual-fuel vessels strike the best balance of flexibility, competitiveness, and compliance from the mid-2030s, even without considering future rewards for ZNZ fuels. When likely developments in the reward structure are factored in, e-ammonia could emerge as a cost-effective compliance option as early as 2028.

In contrast, ships relying solely on conventional fuels are now projected to be uncompetitive across both the short and mid-term, according to the TCO analysis. Not only do they face higher carbon compliance costs, but they also limit owners’ ability to capitalise on potential upside from future credits or trading mechanisms.

The report also addresses the ongoing debate around liquefied natural gas (LNG) as a transitional fuel. It finds LNG to be cost-competitive in the near term—particularly into the late 2020s. However, its long-term viability is severely constrained by its carbon intensity and lack of compatibility with the sustainability unit (SU) system without the use of onboard carbon capture.

LNG-fuelled ships would need to rely heavily on low-emission drop-in fuels such as bio-LNG or e-LNG—or else face increasing compliance penalties. The volatility in natural gas prices and the uncertain trajectory of abatement technology add further investment risk to LNG pathways.

The study underscores the pivotal role of the NZF’s regulatory tools—including the remedial unit (RU) price, surplus unit (SU) trading, and the ZNZ fuel reward mechanism. These tools will ultimately shape the competitiveness of fuels, yet their final design is still in flux.

Because of these uncertainties, the authors advocate for fuel and vessel investment decisions to be based on a range of scenario analyses, rather than static assumptions.

For ports and bunker infrastructure investors, the analysis offers a strong endorsement for prioritising ammonia-readiness. With demand for ammonia-fuelled vessels projected to rise sharply after 2030—and possibly earlier with favourable policy evolution—early infrastructure investments could yield strategic advantages.

For fuel producers, the outlook is more mixed. Conventional fuel and LNG suppliers face growing uncertainty, while biogenic fuel producers have clearer demand signals, provided they can maintain price competitiveness.