A new analysis from Norway-based energy research firm Rystad Energy warns that global supply of bio-liquefied natural gas (bio-LNG) is unlikely to meet projected demand from the shipping sector, raising concerns over its viability for large-scale decarbonisation.
While demand for bio-LNG in shipping is forecast to reach 16 million tonnes of fuel oil equivalent by 2028, Rystad states that most biomethane, the gaseous precursor to bio-LNG, is already locked into other sectors. Over 84% is used for electricity generation and 10% is allocated to road transport, leaving just 6% available for other uses, including maritime.
“Demand for biodiesel, if unrestricted, outstrips the total supply. The situation with bio-LNG is also constrained, with challenges for both production and allocation capacity,” said Junlin Yu, Senior Data Analyst, Shipping at Rystad Energy.
Although bio-LNG is seen as a practical drop-in fuel for LNG-fuelled ships and is generally cheaper than biodiesel, access to sufficient volumes may be difficult given competing sector demand. Its ability to be used in existing LNG bunkering and propulsion systems has added to its appeal as a short-term compliance fuel.
Rystad’s report also stresses that only biofuels with low enough lifecycle greenhouse gas emissions will qualify under the International Maritime Organization’s new greenhouse gas fuel intensity (GFI) regulations. This puts further pressure on shipowners to secure reliable, compliant supply.
“To navigate the changing regulatory landscape, shipowners must act quickly, securing dependable biofuel supplies and aligning with GFI targets,” Yu added. “In the race for cleaner shipping, success hinges not just on choosing the right fuel, but on securing it ahead of competitors.”
The report highlights a broader challenge with biofuels, which includes not only bio-LNG but methanol, ethanol and biodiesel made from hydrotreated vegetable oil. Shipping’s unconstrained demand for biodiesel alone could exceed 140 million tonnes by 2028, while sustainable production may cap out at just 40 million tonnes once risks and sustainability constraints are considered.
Studies suggest that bio-LNG could meet up to 3% of the total energy demand for shipping fuels in 2030 and up to 13% in 2050, with further potential if used as a drop-in blend with fossil LNG. These projections depend heavily on targeted policy support and the scaling of sustainable biomethane production.
One such regulatory driver is the EU’s FuelEU Maritime initiative, which comes into force this year. The regulation is designed to reduce the greenhouse gas intensity of marine fuels over time.
According to research group Wood Mackenzie, FuelEU Maritime could significantly boost bio-LNG demand, potentially reaching 12 billion cubic metres by 2050. This could translate to several million tonnes of fuel oil equivalent and form a meaningful share of future marine fuel demand if realised.
Wood Mackenzie also notes that bioenergy is emerging as the leading drop-in solution to decarbonise sectors that are hard to electrify, such as shipping and heavy transport.
However, the firm cautions that while bio-LNG can benefit from existing LNG infrastructure, it must scale quickly, reduce costs and overcome policy and supply barriers if it is to compete effectively with other low-carbon fuels.