Oct 1, 2025
The dispute over LNG divides Europe as the US contests the net-zero shipping agreement.
Major European maritime nations like Greece and Denmark are clashing over the future of liquefied natural gas (LNG) as a substitute for the highly polluting bunker fuel used by most tankers and container ships. The disagreement, which sees the U.S. and China on opposing sides, revolves around a Net-Zero Framework expected to be adopted by the International Maritime Organisation (IMO) in October. Starting in 2028, ship operators will incur penalties for using fuels that are excessively polluting.
The new framework will assess emissions on a full life-cycle basis, accounting for greenhouse gases emitted during the production, processing, and transportation of fuels, which diminishes the perceived advantage of using LNG. Southern European countries like Greece, Italy, Cyprus, and Malta support an IMO proposal to recognize LNG as a transitional fuel for decarbonizing the shipping sector.
If natural gas is deemed not "green" due to its emissions during production and usage, the IMO framework, tentatively agreed upon in April, would favor hydrogen and synthetic 'e-fuels' generated from renewable sources. This has created a divide between northern and southern EU ship-owning nations.
Unlike the southern maritime nations, Denmark and the Netherlands are advocating for stricter regulations to exclude LNG in favor of low-carbon methane-based fuels produced through renewable or carbon capture technologies. The disagreement has escalated into a geopolitical issue, with the U.S. aligning with southern Europe against the IMO's provisional agreement, while China backs Denmark's stricter standards. The U.S. criticized the IMO deal as a "global carbon tax on Americans."
Greek shipowners echo the U.S. call for realistic decarbonization strategies for shipping. With about 1,485 LNG-capable vessels and nearly 1,000 more on order, southern European countries argue that LNG is a practical short-term solution for emission reduction, supported by a well-established global LNG infrastructure, unlike alternatives like e-methanol or e-ammonia, which lack commercial viability.
Meanwhile, China's investments in green methanol and ammonia may position it favorably under the IMO framework, potentially making it a significant supplier for global shipping fleets transitioning to zero-emission fuels. This situation leaves the EU in a precarious position, as Brussels has committed to purchasing $750 billion worth of U.S. energy, primarily in LNG, over the next three years, while EU regulations mandate a 6% reduction in average carbon emissions from maritime fuel by 2030 and an 80% reduction by mid-century.
The new framework will assess emissions on a full life-cycle basis, accounting for greenhouse gases emitted during the production, processing, and transportation of fuels, which diminishes the perceived advantage of using LNG. Southern European countries like Greece, Italy, Cyprus, and Malta support an IMO proposal to recognize LNG as a transitional fuel for decarbonizing the shipping sector.
If natural gas is deemed not "green" due to its emissions during production and usage, the IMO framework, tentatively agreed upon in April, would favor hydrogen and synthetic 'e-fuels' generated from renewable sources. This has created a divide between northern and southern EU ship-owning nations.
Unlike the southern maritime nations, Denmark and the Netherlands are advocating for stricter regulations to exclude LNG in favor of low-carbon methane-based fuels produced through renewable or carbon capture technologies. The disagreement has escalated into a geopolitical issue, with the U.S. aligning with southern Europe against the IMO's provisional agreement, while China backs Denmark's stricter standards. The U.S. criticized the IMO deal as a "global carbon tax on Americans."
Greek shipowners echo the U.S. call for realistic decarbonization strategies for shipping. With about 1,485 LNG-capable vessels and nearly 1,000 more on order, southern European countries argue that LNG is a practical short-term solution for emission reduction, supported by a well-established global LNG infrastructure, unlike alternatives like e-methanol or e-ammonia, which lack commercial viability.
Meanwhile, China's investments in green methanol and ammonia may position it favorably under the IMO framework, potentially making it a significant supplier for global shipping fleets transitioning to zero-emission fuels. This situation leaves the EU in a precarious position, as Brussels has committed to purchasing $750 billion worth of U.S. energy, primarily in LNG, over the next three years, while EU regulations mandate a 6% reduction in average carbon emissions from maritime fuel by 2030 and an 80% reduction by mid-century.