Europe's tougher emissions regulations are reshaping LNG shipping economics, widening the divide between modern and older vessel types, reports Shanghai's iMarine.

Wood Mackenzie stated that engine technology is now decisive for commercial viability. Newer LNG carriers equipped with ME-GI engines emit less methane and face lower compliance costs, while older steam turbine and dual-fuel diesel-electric (DFDE) ships are burdened with rising expenses.

The EU Emissions Trading System reached full coverage in January 2026, adding methane and nitrous oxide to its scope. Methane leakage now carries direct penalties, raising costs for DFDE vessels operating on European routes.

By 2030, DFDE carriers may struggle to secure charters as compliance costs continue to mount. Wood Mackenzie estimates that combined EU ETS and FuelEU Maritime rules could push ultra-low-sulphur fuel oil costs to about US$1,256 per ton, compared to $705 under the IMO framework.

Researcher Itzel Torruco noted that shipowners who invested in DFDE carriers as a compliance solution now face a harsher reality. Retrofits or conversions to floating storage and regasification units are emerging as alternatives to scrapping.

The next turning point will occur in December 2026 at the IMO's MEPC 85 meeting, where governments will vote on adopting a net-zero framework. If approved, LNG combined with carbon capture could be recognized as a near-zero pathway, simplifying compliance.

LNG remains the mainstream alternative marine fuel for deep-sea shipping, but its competitiveness will depend on vessel technology, regulatory outcomes, and the availability of low-carbon fuels such as bio-LNG.