• Lower-emissions energy carriers for hard-to-abate sectors like shipping are available but unlikely to scale in the absence of regulations that make them cost-competitive. This has led to some criticism of potential greenhouse gas (GHG) regulations for shipping on the grounds that insufficient lower-emissions energy will be available.  

• This analysis tests whether global supply of biomethane, a well-established energy carrier that is technologically mature and compatible with existing infrastructure, could credibly scale up to meet regulated demand.  

• We specifically test this using the draft International Maritime Organization Net-Zero Framework (IMO NZF) as a benchmark. While the NZF remains under discussion, it proxies many plausible and increasingly likely regulatory pathways for shipping and other hard-to-abate sectors.  

• Biomethane could provide a sizable share of the shipping sector’s early compliance response if the right regulatory conditions are in place. Our estimated total NZF-induced unconstrained demand for low-emissions fuel in 2030 is equivalent to around 30 billion cubic meters (bcm) of biomethane. (Note that this number refers to the volume that would be needed if biomethane met the entire NZF-induced unconstrained demand. Realized uptake will be lower, bounded by the methane-capable fleet, bunkering infrastructure, and cross-sector competition.) 

• We estimate that global biomethane supply could reach around 21 bcm in a ‘base’ case and 52 bcm in a policy-driven ‘max’ case by 2030. Both figures remain far below the global technical potential reported by the International Energy Agency (IEA), which suggests the main constraints are infrastructure, certification, regulation, and access to gas and LNG value chains rather than underlying biomass feedstock scarcity.  

• Certification requirements have a crucial role to play. Without globally recognized mass balancing, shipping would likely have to rely on physically segregated biomethane supply chains, which are difficult and costly to scale. At present, however, mass-balance accounting remains a key hurdle and would require further regulatory clarity. 

• Conditional on these enabling factors, the analysis shows the scale of energy available under plausible assumptions from this energy carrier is substantial and can support abatement. However, shipping will likely be in competition with other sectors for the same molecules. Greater willingness to pay from other sectors could undermine shipping's access to this source of abatement.   

• Grid-adjacent feedstock availability is not the binding constraint before 2030. Instead, the key question is whether shipping can access this broader gas-based system through a certified mass-balancing framework.  

Some stakeholders have raised concerns about whether enough low-emissions alternative fuels will be available for ships to meet their compliance obligations if climate policy is enacted.1 For example, the draft International Maritime Organization Net-Zero Framework (IMO NZF)2 would require ships to reduce the GHG intensity of the energy they use over time.3

If these fuels are not available, ships may instead continue to use fuel oil and rely on paying penalties to comply. In this article, we share insights into the potential global availability of biomethane and the role that this fuel pathway could play in meeting the IMO’s decarbonization commitments.

We estimate that the IMO NZF could create unconstrained demand for around 26 million tonnes LSFO-equivalent of alternative fuel in 2030 (Table 1).

Notes:

* For more information on the two-tiered Global Fuel Standard and structure of the IMO NZF, please see our IMO NZF explainer.

** Source:  NavigaTE modeling of the NZF as approved in April 2025, using standard assumptions.

*** We use VLSFO values from MEPC.391 (81) Appendix 2 (pg 49).

We define next-generation fuels as a family of fuels that includes both e-fuels (e-ammonia, e-methanol) and some biofuels (such as hydrothermal liquefaction and pyrolysis bio-oils). These options are still costly and immature, but they could offer the scalability and climate performance needed for a net-zero pathway by 2050.5 While we expect at least some of these fuels to play a role in long-term decarbonization,6 their contribution around 2030 is likely to be limited by high production costs,7 renewable power constraints,8 project execution risk, infrastructure bottlenecks, and the offtake challenge.9 In the first years of IMO NZF implementation, shipping is therefore likely to rely on transition pathways that can deliver recognized emissions reductions sooner and cheaper.

Biomethane stands out in that context. This fuel can achieve low or even negative well-to-wake emissions, depending on the feedstock, production pathway, and emissions accounting system.10 11 Furthermore, since biomethane is chemically equivalent to fossil methane, it can be used in existing LNG-fueled vessels and gas infrastructure. Taken together, these features give biomethane an important potential advantage over some alternatives: it does not require shipping to wait for new fuel infrastructure to emerge before it can begin delivering abatement.

Importantly, many global bunkering regions do not have significant installed gas grid or pipeline capacity, making physical delivery of biomethane difficult and expensive. Mass balance accounting (see info box) is therefore an important enabling regulatory feature for this fuel pathway.

Our analysis starts with regional biomethane production in 2025, which totals 10.56 bcm across the regions for which data are available. From this starting point, we project regional production in 2030 under two scenarios. Each region’s aggregate 2030 biomethane estimate is split by feedstock type. This is based on IEA12 regional feedstock shares, using feedstock-specific biogas potential estimates as shown in Appendix 1.

In the ‘base’ case, 2025 production in each region is assumed to grow at a uniform 15% compound annual growth rate (CAGR) through 2030, in line with the IEA (2025) gas outlook.13 In the ‘max’ case, we apply a 38% CAGR, derived from the growth rates required in Europe to meet EU policy targets (more details in Appendix 2). In both scenarios, the respective growth rate assumption is applied across all regions. The resulting production estimates (Table 2) indicate that biomethane supply could plausibly reach meaningful scale in 2030 under both the base and max cases.

Notes: Current biomethane production and the 2030 base case scenario follow IEA (2025).21 No separate data were identified for Southeast Asia (excluding India and China), or for Africa, although the dataset captures the majority of current global biomethane production. For South America, we use Brazil as a proxy.

We have estimated that the IMO NZF, if implemented without modifications, could create around 26 Mt LSFO-equivalent unconstrained demand for low-emissions fuel in 2030 under base compliance (Table 1). This is equivalent to around 29.7 bcm of biomethane – meaning that biomethane could theoretically address around 70% of shipping’s demand for low-emissions energy in 2030 in our base case scenario (Table 2).

Realized biomethane demand and availability are likely to be lower (hence, the 29.7 bcm is not a demand forecast). We explore this in our section below on additional constraints and enablers.

If biomethane can deliver abatement at lower cost and with fewer infrastructure hurdles than many other fuel pathways, it could help the maritime industry comply with the IMO NZF and reach the 2023 IMO GHG Strategy’s indicative checkpoints for 2030.4

Figure 1 integrates the biomethane base case results from Table 2 (combined with cost estimates) into a multi-fuel pathway supply curve, building on earlier analysis.14 Briefly, we construct a supply curve of modeled abatement costs for a large sample of pre-FID (final investment decision) projects across four fuel pathways: blue ammonia, biomethanol, e-ammonia, and e-methanol. E-methane is not included in this version of the curve because it sat outside the scope of the original four-pathway project dataset sourced from Rystad Energy. Public project tracking from the e-NG Coalition,15 however, suggests that an emerging e-methane pipeline does exist (about 1.2 Mt LSFOeq of mainly pre-FID projects).

Specifically, we convert planned production volumes for the projects in the dataset into LSFO energy equivalence (LSFOeq). We then convert modeled production costs into abatement costs per tonne of CO2-equivalent emissions (CO2eq) avoided compared to LSFO: a supply curve for potential abatement. (Appendix 6 summarizes updates to our abatement cost curve methodology for this article compared to the previously published analysis).

To add biomethane to this abatement cost curve, we combine the projected production volumes in 2030 per Table 2 with modeled abatement costs based on IEA regional feedstock-specific production costs and liquefaction costs for a mass-balanced pathway (Appendix 3). Our analysis uses feedstock-specific well-to-wake emission factors, including methane losses, processing emissions, and liquefaction (Appendix 3). We exclude avoided emissions from manure because it remains unclear whether such credits would be recognized under the IMO NZF.

Importantly, this illustrative abatement cost curve does not represent the full potential fuel mix. As such, while biomethane is the most cost-competitive pathway in this modeled merit order, other pathways not considered in this analysis might be cheaper.

Notes: Estimated potential supply for biomethanol, blue ammonia, e-ammonia, e-methanol and biomethane. Biomethane potential is based on the base case scenario shown in Table 2 (i.e., 19 Mt LSFOeq biomethane). Each bar represents one fuel production project in pre-FID stages. Projects are ordered by abatement cost (bar height), with the bar width indicating the quantity of annual fuel production. Abatement cost, or cost per tonne of emissions reduced below LSFO, is shown across projects of low-emissions marine fuels. The full and non-risk weighted project-level data from Rystad Energy were combined with transport and storage costs, but we do not include rewards or Surplus Unit revenues from the IMO NZF. The projects included in this figure are taken from a broader dataset of projects filtered based on pre-FID status, with a start-up year or commercial operation date of 2030 or earlier, and production volume of over 100,000 tLSFOeq per year.

Figure 1 shows that when our 2030 base case for biomethane supply is added to the multi-fuel supply curve, biomethane enters the curve at relatively low abatement cost and at volumes large enough to matter for the first compliance years. In other words, if these volumes are available to shipping, biomethane is likely to be in demand before more expensive fuel pathways are required at scale.

Figure 2 shows that even when the pre-FID pipeline is filtered more conservatively by excluding 11.8 Mt LSFO-equivalent of projects in the earliest development stages (excluding projects in the ‘concept’ or ‘announced’ phase), the overall story remains unchanged. Biomethane still appears capable of covering a large share of NZF-induced demand in 2030 if mass balancing applies. Appendix 4 shows the abatement cost curve under the max case scenario, where biomethane is assumed to reach a 2030 production of 52 bcm (47 Mt LSFO-equivalent). A further decomposition of regional and feedstock-specific biomethane dynamics is shown in Appendix 5.

Notes: Estimated potential supply for biomethanol, blue ammonia, e-ammonia, e-methanol and biomethane. Biomethane potential is based on the base case scenario shown in Table 2 (i.e., 19 Mt LSFOeq biomethane). Each bar represents one fuel production project in pre-FID stages (excluding projects in the ‘concept’ or ‘announced’ phase). Projects are ordered by abatement cost (bar height), with the bar width indicating the quantity of annual fuel production. Abatement cost, or cost per tonne of emissions reduced below LSFO, is shown across projects of low-emissions marine fuels. The full and non-risk weighted project-level data from Rystad Energy was combined with transport and storage costs but does not include rewards or Surplus Unit revenues from the IMO NZF. The projects included in this figure are taken from a broader dataset of projects filtered based on pre-FID status, with a start-up year or commercial operation date of 2030 or earlier, and production volume of over 100,000 tonnes LSFOeq per year.

These results do not mean that biomethane is the only answer for the shipping sector. In the next section on ‘Additional constraints and enablers,’ we outline some of the caveats that complicate the picture. Nevertheless, the analysis does suggest that biomethane should be taken seriously as one of the few options that may be able to deliver recognized and scalable abatement in time for the first years of NZF implementation. While shipping will not monopolize this biomethane supply, the total pool could be large enough for shipping to claim a valuable share of early NZF compliance demand.

The main implication is straightforward: if the IMO NZF allows credible and workable mass balancing, biomethane could become one of the few scalable near-term compliance options available to shipping. If it does not, the challenges of physical biomethane transport to ships means that much of that potential may remain inaccessible within this decade.

The near-term role for biomethane identified here should be seen alongside the longer-term picture. As Table 1 illustrates, NZF-induced demand for low-emissions fuel grows substantially after 2030 (reaching around 100 Mt LSFOeq by 2035 and over 200 Mt by 2040). This demand likely exceeds what biomethane alone could sustainably supply to shipping as feedstock and cross-sector demand pressures increase. Biomethane could therefore play a valuable bridging role: absorbing a meaningful share of early compliance demand and helping to buy time for next-generation fuels to reach commercial scale. Continued development of pathways such as e-ammonia, e-methanol, and advanced biofuels will remain important to help shipping reach its goal of net-zero emissions by or around 2050.

The analysis in this article focuses on the potential scale of biomethane supply relative to regulated demand under the IMO NZF. Whether shipping can access and ultimately use these volumes by 2030 depends on how policymakers choose to address several additional factors.

• Mass balancing is a critical enabler

  If shipping has to rely only on physically segregated biomethane supply chains, biomethane’s role before 2030 will likely remain limited. Dedicated liquefaction at production sites is still scarce, and direct delivery of physically separated liquefied biomethane to marine bunkering locations is difficult to scale quickly and cost-effectively.16

  However, if the IMO allows globally harmonized mass balancing, biomethane could be injected into the existing natural gas grid, with its sustainability attributes tracked through a certified chain of custody and allocated to maritime fuel consumption. That would allow shipping to access biomethane’s abatement value through existing infrastructure, making biomethane a far more scalable compliance option before 2030.11

  Similar chain-of-custody systems are already used in aviation (ICAO),17 where they are intended to support scale-up and investment when strict physical segregation is impractical. The policy rationale in these sectors is clearly to make sustainable supply commercially accessible earlier and at a lower system cost.

  Designing an effective mass-balancing framework for biomethane as a shipping fuel raises a few additional considerations. First, certification is a necessary part of any mass-balancing system. Without a harmonized certification standard, it would be difficult for mass balancing to function within a global measure. Second, access to the natural gas grid remains limited in many regions outside the most interconnected markets, such as the EU.11 Finally, methane leakage can vary across natural gas grids and associated infrastructure.18 If biomethane is allocated to shipping through a mass-balancing framework linked to the gas system, the treatment of these fugitive emissions would need to be clearly defined. Counting fugitive emissions could affect the life-cycle emissions associated with biomethane and therefore increase its abatement cost.

• The methane-capable fleet may constrain uptake

  Biomethane can only be used by ships capable of consuming methane-based fuels, such as LNG and liquefied biomethane (LBM). Market data (including orderbook dynamics) suggests that by 2030, the global container fleet capable of burning LBM could reach around 2.3 million DWT, or around 70% of the total methane-capable dual-fuel fleet in 2030. Because of long lead times at shipyards, this 2030 number is unlikely to change substantially. Beyond the vessels themselves, the broader value chain (including bunkering infrastructure such as bunker barges and terminal capacity at key ports) would also need to scale up in parallel.

  If all of these methane-fueled container vessels were to use solely LBM, shipping’s biomethane demand could reach roughly 11 Mt LSFOeq. This estimate is based on the assumed LNG consumption of 500 m3/day for a representative 20,000 TEU container vessel. On that basis, shipping could absorb up to around 56% of the total biomethane supply projected in our 2030 base case scenario. However, the modeled demand for low-emissions fuels for IMO NZF compliance grows quickly in the decade after 2030 (Table 1). Failure to build enough vessels that can actually use biomethane could constrain the industry’s ability to leverage this fuel pathway for emissions abatement and regulatory compliance.

  This methane-capable fleet constraint is partly endogenous: if regulation creates a credible demand signal for a given fuel, fleet investment will likely respond over time. At the same time, flexibility mechanisms such as pooling under regulations like FuelEU Maritime can make biomethane more commercially attractive by allowing compliance benefits to be shared across a wider group of ships. This can strengthen incentives to use biomethane even if direct uptake remains concentrated in the methane-capable fleet.

  The IMO NZF may provide an analogous flexibility mechanism on the user side through Surplus Units (SUs). Because ships below the direct compliance target can generate transferable SUs, biomethane use on methane-fueled ships could, in principle, create compliance value that is monetized more widely across the fleet. This would not remove the need for methane-capable ships, but it could soften the practical uptake constraint by increasing the system-wide value of biomethane use.

• Other low-emissions fuel pathways may also compete for early alternative fuel demand

  Biomethane is not the only potential source of relatively low-cost abatement. Other pathways, including biodiesel and ethanol, will also likely play a role as near-term compliance options. In particular, biodiesel can be readily blended with conventional maritime energy carriers like LSFO,19 meaning that it can deliver abatement to the majority of the existing fleet using internal combustion engines.

  With that said, the long-term availability of these other pathways is likely to be shaped by feedstock constraints, rising marginal costs, and competition across sectors.20 In the EU regulatory framework, crop-based biofuels face tighter constraints and are expected to play a diminishing role over time. The availability of non-food/non-feed biomass is low, with intense competition from aviation and road transport.5 However, under current IMO rules, there is no equivalent explicit limit on first-generation biofuels.

• Cross-sectoral competition could affect shipping’s access to biomethane

  Even if shipping is willing to pay for biomethane under specific regulatory frameworks (such as the IMO NZF), stronger or overlapping regulation in other sectors21 could pull supply away from maritime use. The practical role of biomethane in shipping will therefore also depend on the wider policy environment shaping demand for the same molecules.

In this article, we have presented an analysis building up from relevant feedstock and embedding biomethane’s plausible abatement cost in a supply curve of other low-emissions energy sources. The results suggest that biomethane could cover a significant share of early NZF compliance demand if mass balancing is recognized under a robust global framework.

However, converting potential supply into realized demand hinges on several factors, including enabling regulations that support robust mass balance accounting. Moreover, cross-sector demand from other competing users and the complementary investments in methane propulsion in shipping remain uncertain. The presence of greater willingness to pay in other sectors or the absence of a sufficient installed user base for the molecule in the fleet would blunt biomethane’s value to the maritime sector.

In summary, our results support the potential for shipping to secure meaningful abatement at scale – if appropriate regulations on climate change-causing emissions are in place.

Authors: Boudewijn Pragt (MMMCZCS), Aisha Matayeva (formerly seconded to the MMMCZCS), Yuji Kosaka (Sumitomo Corporation, seconded to the MMMCZCS), and Theodore Talbot (MMMCZCS). Secondees contributed in a research capacity under the supervision and direction of the MMMCZCS.

The team is grateful for external review and suggestions from Jasper Faber (Dutch Ministry of Infrastructure and Water Management), Steve Esau (Sea-LNG), Joachim Kjendlie (Rystad Energy), Junlin Yu (Rystad Energy), Thomas Heerschap (Rystad Energy), and Nikoline Bromander (Rystad Energy).

We are also grateful for review and comments from MMMCZCS staff: Nikolaj Enevoldsen (MMMCZCS), Roberta Cenni (MMMCZCS), Francielle Carvalho (MMMCZCS), Thor Sodha (formerly MMMCZCS), and Estela Vázquez Esmerode (MMMCZCS).