Report: LNG and Methanol Divert Investment from Decarbonization Pathway
LNG and methanol create path dependencies that divert investments from shipping’s long-term decarbonization pathway, a new study by UCL academics finds.
While LNG and methanol use as alternative fuels generate some knowledge spillovers and procedural regulatory learning useful for green ammonia, the main scalable zero emission shipping fuel, these benefits are likely outweighed by capital lock-in and the entrenchment of fossil fuel infrastructure, which then compete with, rather than enable the long-term solution.
The research paper, submitted to Environmental Innovation and Societal Transitions, titled "When is a stepping stone a dead-end? Insights into 'stepping stone' pathways from the maritime shipping transition," develops a new analytical framework to assess whether near-term transitional fuels such as LNG and methanol can genuinely enable a zero-emissions future system. Stepping stones build capacity-such as adaptable infrastructure or transferable skills-for a sustainable long-term solution. In contrast, dead ends may cut emissions in the short term but lock in fossil-based architectures and create stranded assets.
Dr Pinar Langer, Research Fellow at the UCL Energy Institute Shipping and Oceans Research Group, said: “There is a real danger in confusing short-term movement with long-term progress. Our findings based on interviews, documentary analysis, including patent data and econometric analysis, show that investments in LNG and methanol can easily become dead ends if they lock capital, infrastructure and expectations into pathways that do not lead to zero-emission shipping.”
The study draws on 25 semi-structured interviews with shipping industry professionals, documentary content analysis, patent data analysis, and a quantitative econometric analysis of 7,355 vessels from the Clarksons World Fleet Register to assess newbuild premium paid for dual fuel capability. Across all four dimensions examined — material and financial resources, technological knowledge, regulatory institutions, and expectations and narratives — the evidence points in the same direction: while LNG and methanol generate some knowledge spillovers and procedural regulatory learning useful for ammonia, these benefits are likely outweighed by capital lock-in and the entrenchment of fossil fuel infrastructure.
For LNG, the study finds potential for a stepping stone role, but only if more stringent policies drive deployment of genuinely “ammonia ready” ships, port infrastructure and bunkering systems that can be cost-effectively repurposed. Without such design and policy safeguards, LNG investments risk becoming stranded assets that compete with, rather than enable, green ammonia. Methanol is assessed as offering even weaker stepping stone characteristics and may divert capital and political attention away from ammonia without providing durable system benefits.
Dr Will McDowall, at the UCL Energy Institute said: “We know that we need deep decarbonization of the global shipping fleet. Near-term investments need to build a pathway to a sustainable long-term solution, not risk locking in further reliance on unsustainable fossil fuels or insufficient bioenergy. Our analysis shows the risks inherent in today’s focus on methanol and LNG as routes to clean shipping – and we show that they risk becoming dead ends.”
The study calls on policymakers to take two urgent steps. First, to build long-term credibility around emissions reduction goals so that ship investors price in the value of genuine ammonia-readiness. Second, to accelerate ammonia deployment through dedicated R&D funding, demonstration trials and the development of robust safety standards — with the goal of establishing ammonia within commercial niches this decade. The research also offers a broader contribution to the field of sustainability transitions, providing a conceptual framework applicable to other sectors weighing up transitional technologies — from hydrogen in gas networks to natural gas in electricity generation.
