BAKU, Azerbaijan, November 6. New international regulations aimed at decarbonizing maritime transport are creating additional market opportunities for bio-LNG, the liquefied form of biomethane, according to the International Energy Agency’s (IEA) Renewables 2026 report.
The report said the European Union’s (EU) FuelEU Maritime regulation, which came into force in 2025, could stimulate the use of bio-LNG in maritime transport.
“These regulations could create opportunities for the biomethane market to expand beyond road transport and gas grid injection to include maritime shipping,” the report said.
Under the new rules, ships with a gross tonnage (GT) of 5,000 or more calling at EU ports must reduce the greenhouse gas (GHG) intensity of the energy they use, taking into account emissions throughout the fuel’s entire lifecycle, from production to onboard consumption. The required reduction is 2% in 2025, 6% in 2030 and 80% by 2050, compared with 2020 levels.
The IEA noted that these requirements are particularly relevant to methane-based fuels, including LNG, liquefied biomethane and synthetic methane. Methane leakage during fuel combustion in ship engines can have a significant impact on their overall greenhouse gas emissions. Over a 100-year period, methane has a global warming potential 25 times greater than that of carbon dioxide.
The report also noted that, since 2024, the EU Emissions Trading System (EU ETS) has covered emissions from maritime transport. The use of certified bio-LNG could reduce shipping companies’ emissions costs through favourable accounting treatment for biogenic carbon dioxide emissions under the relevant rules.
“One of the main advantages of bio-LNG is that it can be used on existing LNG-powered and dual-fuel vessels, taking advantage of their existing infrastructure,” the report said.
This allows shipping companies to use existing facilities without investing in new fuel tanks or bunkering infrastructure, the document noted. Such vessels can operate on both LNG and conventional liquid fuels.
According to the IEA, 222 ports worldwide had LNG bunkering infrastructure in 2025, while facilities were under construction at another 62 ports. The number of LNG-powered vessels more than doubled between 2022 and 2025, reaching 853. Taking the existing order book into account, the fleet is expected to double again by 2030.
The report highlighted that LNG carriers consumed more than 12 million tonnes of boil-off gas from their cargoes as fuel in 2024. LNG consumption as a dedicated marine fuel, meanwhile, stood at approximately 2.9 million tonnes.
The use of LNG as a marine fuel is expanding particularly rapidly in the container shipping segment. LNG consumption in this sector reached 1.3 million tonnes in 2024, while the number of LNG-powered container ships, together with new vessel orders, is projected to increase 2.8-fold by 2033.
“Although LNG accounted for 6.7% of total fuel consumption across all vessel types in 2024, its share of new orders reached 8%. LNG-powered vessels currently account for 0.84% of the fleet in operation,” the report said.
The IEA believes that the expansion of the LNG-powered fleet could also create an additional market for bio-LNG. Several shipping companies are already signing agreements to secure long-term bio-LNG supplies and bunkering services in Europe, as well as in China, Singapore and the United States.
Projects designed to meet demand from the maritime sector have also been announced on the supply side. One such initiative is a liquefaction and export terminal being developed by Straits Bio-LNG in Muar, on Malaysia’s Strait of Malacca coast.
The report stressed that the new regulations could make maritime transport a more profitable sales market for biomethane producers. Biomethane produced from low-carbon-intensity feedstocks, particularly manure, is expected to have an advantage. Using such feedstocks can result in very low, and in some cases even negative, emissions during the fuel production and supply stages.
“FuelEU Maritime does not mandate the use of a specific fuel type but encourages reductions in carbon intensity across the entire fuel lifecycle. This allows bio-LNG to compete with other low-emission fuels,” the IEA report said.
Alternative low-emission fuels include biodiesel, hydrotreated vegetable oil (HVO), synthetic methane, low-emission methanol, ammonia and hydrogen.
However, the report also identified several regulatory and technical challenges to the development of the bio-LNG market. These include certificate trading, the implementation of mass-balance mechanisms, accounting for biomethane volumes produced with the support of government subsidies, and mutual recognition of certificates across different countries.
Methane leakage is another key concern. The IEA said the actual climate benefits of methane derived from renewable sources must also be demonstrated. Leakage along the production and supply chain, emissions from liquefaction and methane slip from ship engines could all undermine the fuel’s environmental benefits.
As for the market potential of bio-LNG, the IEA estimates that replacing 20% of current LNG fuel consumption, excluding LNG carriers, with bio-LNG could generate annual demand of slightly more than 28 petajoules (PJ), equivalent to approximately 0.8 billion cubic metres (bcm) of natural gas.
Taking into account the expansion of the shipping fleet through 2031, the potential market for the fuel is projected to reach approximately 2 bcm of gas equivalent annually by that year.
The report also cited higher estimates from other analysts. Under a scenario in which LNG use expands more rapidly, the bio-LNG market could reach 6 bcm of gas equivalent by 2035.
“The share of bio-LNG in maritime transport will depend on market conditions and the availability of sustainable biomethane supplies in the required volumes. FuelEU Maritime could generate significant demand for bio-LNG in Europe, but the region currently has limited production capacity for this fuel,” the report said.
