According to research by Wood Mackenzie, the LNG shipping industry is becoming polarized due to five maritime emissions frameworks that are either currently in effect or nearing formal adoption. Modern vessels equipped with ME-GI engines are achieving the lowest methane emissions and carbon compliance costs on routes to Europe. In contrast, older steam turbine and dual-fuel diesel electric (DFDE) vessels are facing increasing compliance liabilities that are beginning to overshadow their operational benefits.
This division stems from the varying calibrations of the EU Emissions Trading System (ETS), FuelEU Maritime, the IMO Net-Zero Framework, the Carbon Intensity Indicator, and the Energy Efficiency Existing Ship Index. As of January 2026, the EU ETS will cover 100% of emissions, including methane and nitrous oxide alongside CO₂. For LNG vessels with DFDE systems, methane slip has shifted from being an environmental concern to a cost factor, with EU Allowance prices averaging around $72 per tonne of CO₂ equivalent.
Itzel Torruco, a Research Analyst at Wood Mackenzie, noted that owners of DFDE vessels, who anticipated compliance through their investments, now face a challenging reality. By 2030, such vessels will incur penalties under EU regulations that could deter charterers. The combined costs of the EU ETS and FuelEU Maritime are projected to reach approximately $1,256 per tonne by 2030, significantly exceeding fuel costs alone.
As steam turbine vessels are being scrapped due to harsh penalties, DFDE vessels may follow suit if retrofitting is not pursued. The upcoming vote at MEPC 85 in December 2026 could dramatically influence the future of LNG shipping. If the IMO’s Net-Zero Framework is adopted and recognized by the EU as aligned with the Paris Agreement, it could simplify the compliance landscape. Conversely, a failure to adopt it would mean a complex operating environment remains, significantly impacting commercial viability.
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