While the engine technology to decarbonize existing vessels is increasingly available, the remaining challenge is aligning fuel economics and regulation with targeted emissions reductions. The report models a 16,000 TEU container vessel being converted in 2030 to use alternative fuels via WinGD’s high-pressure dual-fuel engines for LNG (X-DF-HP), methanol (X-DF-M), and ammonia (X-DF-A). Core costs—including conversion investment, fuel, and carbon costs—were then modeled under a global pricing regime similar to the IMO’s Net Zero Framework as drafted.
Under the assumptions modeled, all three retrofit pathways outperform continued VLSFO operation over the vessel lifetime on costs and emissions reduction. LNG delivers the strongest and earliest financial return, while ammonia and bio-methanol deliver substantially deeper emissions reductions but require longer payback periods.
WinGD Head of Strategic Marketing Carmelo Cartalemi said: “The important finding is that retrofit technology is increasingly not the limiting factor. The commercial outcome is determined far more by fuel price, fuel GHG intensity and the regulatory signal. Shipowners and operators need visibility not only on what a retrofit costs, but on what every ton of fuel will cost and how its emissions will be treated by regulations over the vessel’s remaining life.”
As well as calculating net present value (future returns valued at today’s currency minus investment cost) the report also shows potential payback periods for a retrofit—and the level of subsidy that would allow a payback within five years. As an example, the best-performing pathway, LNG to low-GHG LNG, would pay for itself in six years.
The level of subsidy needed to deliver a five-year payback for the fuels is between $126–330 per tonne of CO2 equivalent emissions. The indication is that a reward mechanism for zero or near-zero emissions fuels under IMO’s Net Zero Framework would need to be of a similar level again to the $100–380 remedial units already considered for excess emissions.
A further finding is that retrofit CAPEX itself is not the dominant factor in the business case. Across the scenarios modeled, fuel cost and regulatory treatment have a much greater influence on lifetime economics than the difference in conversion investment.
“The valuable insight for operators is that cost-effective options for retrofitting already exist, although the case is far from settled. For regulators, the modeling shows that without strong policy, the most cost-effective options are unlikely to include the fuels that contribute most to shipping’s decarbonization trajectory,” said Carmelo Cartalemi, Head of Strategic Marketing, WinGD.
The Alternative Fuel Retrofits study is the latest in a series of Fuel Economics Reports published by WinGD. The first report showed a potential pathway to cost-effective green ammonia uptake, using real bunkering prices and lifecycle emissions analysis from fuel supplier Envision Energy. The series aims to provide ship operators with data, insight, and methodologies to evaluate decarbonization investments—and is part of WinGD’s commitment to support shipping’s energy transition whichever fuels operators choose.
