WinGD’s latest Fuel Economics Report has found that retrofitting existing ships to run on LNG offers the quickest financial return among alternative fuel options. According to Ship & Bunker, the study looked at a 16,000-TEU container ship converted to run on LNG, methanol, or ammonia in 2030, using WinGD’s dual-fuel engines.
LNG Offers Fastest Payback
WinGD concluded that LNG delivers the strongest and earliest financial return, whereas ammonia and bio-methanol offer greater emissions reductions but require longer payback periods. The study modelled all three retrofit pathways and found they outperformed continued use of very low sulphur fuel oil (VLSFO) over the vessel’s lifetime, both in terms of costs and emissions reduction. Carmelo Cartalemi, Head of Strategic Marketing at WinGD, highlighted that the commercial outcome is significantly influenced by fuel price, fuel greenhouse gas (GHG) intensity, and regulatory signals.
Financial Projections and Subsidy Requirements
The report estimates that retrofitting a ship to use LNG could provide a six-year payback period. However, reducing this payback to five years would necessitate subsidies ranging from $126 to $330 per tonne of CO2 equivalent. Cartalemi noted that policy support is crucial to strengthen the business case for retrofitting and ensure maritime decarbonisation targets are met. According to the report, a reward mechanism under the IMO’s Net Zero Framework would need to be of a similar level to the $100-380 remedial units already considered for excess emissions.
Challenges and Drawbacks of Alternative Fuels
While LNG retrofitting offers a quick financial return, other alternative fuels like ammonia and bio-methanol present challenges. These fuels provide deeper emissions reductions but require longer payback periods. Additionally, the report from Lloyd’s Register (LR) highlights that onboard carbon capture and storage (OCCS) could be a viable option for specific ships with over 10 years of trading life remaining, particularly those with access to CO2 reception facilities and sufficient onboard space.
However, OCCS systems can impose fuel consumption penalties of between 15% and 30%, and there is a lack of CO2 reception facilities at ports, which could hinder wider uptake. Ship & Bunker reports that only around 4% of the near-zero GHG fuel production capacity needed by 2030 has reached final investment decision, while alternative-fuel-capable vessel orders have fallen from 45% of contracted tonnage in 2024 to 37% in 2025.
Implications for Ship Operators
The findings have significant implications for ship operators looking to reduce emissions and comply with stricter regulations. Shipowners considering LNG retrofits will benefit from the quickest financial return, but subsidies and regulatory incentives will be essential to make this option more financially viable. For operators leaning towards ammonia and bio-methanol, deeper emissions reductions come at a higher initial cost and longer payback periods. Similarly, OCCS presents a viable option for specific vessels but requires careful consideration of space constraints, fuel penalties, and port infrastructure.
What this means for operators is that they need to carefully assess the trade-offs between financial return and emissions reduction when selecting alternative fuel pathways. While LNG retrofitting offers an attractive financial profile, operators must also consider the long-term sustainability and regulatory landscape to ensure compliance with future emissions standards.
