APPEC: Regulation, not prices, key driver for alternative fuels, LNG uptake: EMF director

Global environmental regulations are the key driver of the uptake of LNG and other alternative fuels, and prices, though an important consideration, will not likely provide the principal push, Equatorial Marine Fuel Management Services Director Sheen Mao Choong said Sept. 10.

LNG is compelling because a "substantial" supply may become available over the next 10-15 years, potentially lowering prices, Choong said at the APPEC 2026 conference, hosted by S&P Global Energy in Singapore.

However, he stressed that the principal driver of alternative fuels is regulation, not price.

"Without regulation, it is difficult to conclude that high conventional-fuel prices will increase alternative-fuel uptake. They could instead lead to looser regulation if policymakers focus on cost," Choong said.

His comments come ahead of the 85th session of the International Maritime Organization's Marine Environment Protection Committee, scheduled for Nov. 30-Dec. 3, during which discussions on the IMO Net-Zero Framework are expected to continue.

The UN agency's 22nd intersessional working group on GHG concluded Sept. 4 after four days of negotiations in London, with member states continuing to debate key elements of the framework, including emissions pricing, the design of a central fund, compliance mechanisms, and how revenues should be used to support developing countries.

Choong said that Equatorial remained conservative regarding its progress.

"A year ago, much of the industry appeared certain that the IMO Net-Zero Framework would pass...This year, there should be substantive discussion, including LNG's role, but such frameworks take time to modify and build consensus around," Choong said.

"We may see progress, but there is not yet a clear direction on what Framework will be accepted," he said.

Fuel flexibility

Among alternative fuels, LNG still appears to be the preferred choice for newbuilds, Choong opined.

A dual-fuel ship gives owners the option between conventional and alternative fuels, he said.

According to the global classification society DNV, orders for alternative-fueled ships were strong in August, with 52 new vessels added globally. Of the 52 new alternative-fuel ship orders in August, 46 were for LNG-powered ships, according to DNV's Alternative Fuels Insight platform data released in September.

Many owners still view conventional fuel as the safe choice, with the alternative available if regulation requires it, Choong said. LNG can be attractive because it can be both compliant and cost-competitive, he said.

However, at today's spot prices, LNG may carry a "hefty" premium over HSFO, Choong continued, citinguncertain global geopolitics and the Middle East crisis.

High costs could even slow the transition, although the relationship is indirect, according to Choong.

"If the world enters recession or experiences inflation, uptake will also be affected because the alternative-fuel supply is difficult to scale," he added.

Singapore is the world's largest bunkering port.

Platts, part of S&P Global Energy, assessed Singapore-delivered 0.5%S marine fuel at $855/metric ton Sept. 10 and Singapore HSFO 380 CST cargo at $648.15/mt.