Shipping’s decarbonisation challenge is no longer simply about identifying the fuel of the future. Increasingly, it is about managing the commercial risk of making the wrong long-term decision in an industry where regulation, infrastructure, and fuel availability remain uncertain.

Rather than moving collectively towards a single solution, the sector is becoming increasingly fragmented. While some shipowners continue to invest in alternative fuels and propulsion systems ranging from methanol and ammonia to hybrid technologies and emerging concepts such as nuclear propulsion, others are delaying major decisions altogether amid continued uncertainty around future regulation and commercial viability.

The delayed progress of the International Maritime Organization’s Net-Zero Framework (NZF) negotiations, which are still under negotiation following Marine Environment Protection Committee 84, has reinforced this caution in parts of the market, with some owners waiting for greater clarity before committing to long-term transition strategies. At the same time, conventional fuels and transitional solutions continue to retain significant support, particularly where concerns remain around fuel availability, infrastructure readiness, cost and operational practicality (this trend will also be explored further in next month’s ICS Barometer report).

This divergence is increasingly visible in vessel ordering activity. According to Clarksons Research, alternative-fuel capable vessels accounted for around 50% of all tonnage ordered in 2024, although LNG dual-fuel designs continued to dominate while methanol ordering slowed significantly, highlighting the industry’s growing preference for commercially flexible transition strategies over singular long-term bets.

For shipowners, the challenge is becoming less about selecting the “right” future fuel and more about preserving optionality in an increasingly unpredictable market. This is changing not only how vessels are designed, but how capital is allocated, how risk is assessed and how competitive advantage may ultimately be defined.

From single bets to strategic flexibility

It is against this backdrop that long-term investment decisions are becoming more complex, according to Roger Holm, President of Wärtsilä Marine and Executive Vice President at Wärtsilä, which develops technologies and lifecycle solutions for the marine and energy sectors.

“There is no one-size-fits-all to decarbonisation,” he said. “The right strategy depends on factors such as route, power demand, port infrastructure and realistic fuel access.”

That uncertainty is increasingly reshaping investment behaviour across the industry. Rather than committing to a single technology pathway, many owners are pursuing phased strategies that prioritise adaptability and risk management alongside emissions reduction goals.

“Shipowners are managing this risk by treating decarbonisation as a portfolio and phasing challenge rather than a single ‘big bet’,” said Holm.

This marks a significant shift from more traditional shipping investment cycles, where vessels were often designed around assumptions of long-term technological and fuel stability. Increasingly, owners are prioritising fuel-ready designs, dual-fuel capability and incremental investments that allow fleets to evolve alongside regulation and infrastructure development rather than ahead of it.

In practice, this means flexibility itself is becoming a commercial strategy.

Designing for uncertainty

If investment strategies are changing, vessel design is evolving alongside them. For ship designers and builders, the challenge is no longer simply integrating new technologies, but ensuring vessels can remain commercially viable across multiple possible future operating environments.

“Infrastructure is maybe the most underestimated constraint for shipping right now,” said Kjell Morten Urke, General Manager of Ship Design at VARD, a designer and builder of specialised vessels operating within the Fincantieri Group.

While a growing number of propulsion technologies may be technically viable, deployment remains heavily dependent on bunkering infrastructure, port readiness and supporting supply chains, factors often outside the control of shipowners themselves.

This is increasing pressure on yards and designers to build vessels capable of operating across multiple transition scenarios. Rather than optimising around a single future fuel, many newbuild concepts are now being designed around adaptability, allowing owners to respond as regulation, infrastructure and fuel economics continue to evolve.

“You cannot commit to one single fuel and call that future-ready, because you don’t know what the next fuel will be,” Urke said. “It means having an efficient and flexible hull design, and an energy system on board that can be upgraded.” 

The commercial implications are significant. Vessels designed around overly narrow assumptions risk becoming commercially disadvantaged if infrastructure or regulation develops differently than expected. In contrast, flexibility may increasingly determine long-term asset value.

A system under strain

As technological pathways multiply, the challenge extends beyond individual vessels to the wider maritime ecosystem. A more fragmented fleet creates additional complexity not only for shipowners, but also for regulators, classification societies, insurers, ports and fuel suppliers.

This growing complexity is also exposing the limits of regulatory systems that were largely developed around conventional fuels and established operating models.

Speaking during the ICS’ Emerging Regulatory Pathway for Nuclear Merchant Ships and Floating Nuclear Power Stations panel discussion, Tobi Menzies, Partner at HFW and Secretary at the Nuclear Energy Maritime Organization, said: “The regulatory framework is largely present, but it’s not yet fit for purpose for commercial development in the short term.”

While existing international conventions and safety standards provide a foundation, applying them consistently across emerging technologies remains a significant challenge.

As Shahen Poghosyan, Senior Nuclear Safety Officer and Technical Lead at the International Atomic Energy Agency, explained: “Certain requirements require specific interpretation, particularly at the interface between reactor safety and ship design.”

Questions around liability and insurability also remain unresolved for some emerging technologies.

“Without a viable liability corridor and a pathway to insurability, underwriting these assets will remain very difficult regardless of technical progress,” Menzies added.

For shipowners and investors, this creates a growing commercial dilemma. Even where technologies appear technically viable, uncertainty around regulation, liability and future compliance risk may ultimately determine whether projects become commercially scalable.

Preparing for a fragmented future

The emergence of a more technologically diverse fleet suggests the industry is unlikely to converge around a single dominant solution in the near term. Instead, shipping may be entering a prolonged period in which multiple fuels, propulsion systems and operational models coexist simultaneously, each with different commercial, technical and regulatory implications.

As Mark Tipping, Global Offshore P2X Director, Marine and Offshore at Lloyd’s Register, noted, “this is an evolution, not a revolution.”

For the industry, the challenge is no longer simply identifying future fuels alone. Increasingly, the competitive advantage may lie in building fleets, business models and regulatory frameworks capable of adapting as the transition itself becomes more uncertain.

In that environment, the companies best positioned for the future may not necessarily be those making the boldest technology bets today, but those preserving the greatest ability to respond as the market continues to evolve.