Bunker fuel oil demand to peak in three years, LNG to drive future growth – Wood Mackenzie

Fuel oil demand from the shipping industry is expected to peak by 2025, while LNG will drive growth in the long-term through displacing nearly 600,000 b/d of fuel oil demand by 2030, consultancy Wood Mackenzie predicts.

CHART: LNG is forecast to grow as a share of global bunker demand. Wood Mackenzie

Global maritime trade is expected to surge by 50% by 2030 compared to 2015. Over the same period, conventional bunker fuel oil demand is expected to increase by just 20%.

Wood Mackenzie’s principal analyst Iain Mowat argues that the International Maritime Organisation's (IMO) Energy Efficiency Design Index (EEDI) could erode some fuel oil demand. The regulation mandates that newbuilds should be significantly more energy-efficient than the baseline.

Iain says the shipping industry needs to act now and rapidly switch to alternative fuels to achieve the IMO's current target of a 50% cut in emissions by 2025. Achieving a net-zero target would require an even more rapid shift towards low- and zero-emission fuels.  

Synthetic e-fuels that are derived from green hydrogen could be the ultimate shipping fuels. E-fuels will likely replace conventional bunker fuels by 2040, when they are more widely available, says Wood Mackenzie.