Bunker fuels explained: VLSFO, MGO, LNG, methanol & ammonia

Built for the people who buy and burn the fuel: owners, operators, charterers and bunker buyers weighing cost against the sulphur cap, the EU carbon bill and the coming fuel standards. Since IMO 2020 the question of which marine bunker fuels to burn has gone from "HSFO or MGO" to a five-way choice, and the trade-offs — sulphur, price, energy density, CO₂, availability — live scattered across bunker reports and class advisories. We assembled the comparison into one place, with the numbers that feed a voyage estimate.

The rynda voyage-economics calculator allocates fuel grades by ECA zone and prices the EU carbon that fuel choice drives.

📖 See also: ECA / SECA zones reference · EU ETS & FuelEU cost reference · CII, EEXI & EEDI ratings

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Contents

• At a glance
• The fuel comparison table
• The conventional bunker fuels — HSFO, VLSFO, MGO
• The CO₂ and energy numbers that feed a voyage
• LNG
• Methanol
• Ammonia and hydrogen
• Energy density — the hidden cost
• Which fuel, and when
• For developers and modellers
• FAQ
• References

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At a glance

The short version, if you read nothing else:

• Since the IMO 2020 sulphur cap, the world fleet runs mainly on VLSFO (≤ 0.50 % sulphur) at sea, LSMGO (≤ 0.10 %) inside ECA zones, or HSFO + a scrubber (burn cheap high-sulphur fuel, clean the exhaust).
• The fuel decision now has two regulators, not one. Sulphur (ECA/global cap) decides which residual/distillate you burn; carbon (EU ETS, FuelEU, CII, and the coming IMO levy) increasingly decides whether you move to LNG, methanol or ammonia.
• The alternative fuels trade energy density for carbon. LNG carries ~48.4 MJ/kg but needs cryogenic tanks; methanol has ~half the energy of fuel oil (≈ 2–2.5× the tank volume); ammonia ≈ 3× the volume and is toxic. Less energy per tonne means more bunkers, bigger tanks, less cargo.
• "Green" only counts well-to-wake. Grey methanol from fossil gas can be ~10–15 % worse than VLSFO on a lifecycle basis; renewable methanol offers ~70–80 % reductions. LNG cuts CO₂ ~20–25 % at the funnel but methane slip erodes much of it. The colour of the fuel — not the fuel type — is what the carbon rules reward.
• Availability is the real constraint today. LNG has a real bunkering network and leads the alternative-fuel orderbook; methanol is the second-most-ordered alternative fuel and easy to handle, though its newbuild orders fell sharply in 2025; ammonia has almost no bunkering infrastructure yet.
• The MGO CO₂ myth: MGO's CO₂ factor is higher per tonne (3.206 vs 3.114), but MGO also carries more energy per tonne (~42.7 vs ~40.2 MJ/kg), so per unit of energy it's actually ~3 % lower (≈75 vs ≈77 gCO₂/MJ). Because a voyage burns a fixed amount of energy, switching to MGO in an ECA is roughly carbon-neutral — not the carbon penalty the per-tonne figure alone suggests.

This is a practical reference. Prices move daily and well-to-wake factors depend on the specific fuel pathway; confirm current bunker prices and the certified intensity of any low-carbon fuel before modelling.

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The fuel comparison table

The data asset — the five-way trade-off in one view (indicative 2025–2026 figures):

*Price bands are relative and move daily; use current bunker quotes. CO₂ factors are the EU-MRV/IMO tank-to-wake values; "well-to-wake vs VLSFO" is the lifecycle comparison the carbon rules use.

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The conventional bunker fuels — HSFO, VLSFO, MGO

The petroleum trio that still moves most of the world's cargo:

• HSFO (Heavy/High-Sulphur Fuel Oil, 3.50 %). The cheapest, dirtiest residual. Legal only with a scrubber (exhaust-gas cleaning system) that removes the SOx — the "burn cheap, clean the exhaust" play. Widely bunkered (Rotterdam is the largest HSFO hub).
• VLSFO (Very-Low-Sulphur Fuel Oil, 0.50 %). The post-2020 mainstream at sea outside ECAs. A blended residual meeting the global cap.
• LSMGO / MGO (Marine Gas Oil, 0.10 %). A lighter distillate used inside ECA zones and increasingly at berth. Cleaner on sulphur and more expensive. Its CO₂ factor is higher per tonne (3.206 vs 3.114) but it also carries more energy per tonne, so per unit of energy it's marginally lower — the ECA switch is roughly carbon-neutral, not the penalty the per-tonne number implies.

Most ships carry VLSFO as the main fuel plus LSMGO for ECA legs; scrubber ships carry HSFO and switch strategy entirely.

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The CO₂ and energy numbers that feed a voyage

These are the values a voyage model actually uses (EU-MRV / IMO defaults):

Tank-to-wake CO₂ — tonnes CO₂ per tonne of fuel:

Lower heating value — MJ per tonne (how much energy a tonne carries):

The key insight from the second table: methanol and ammonia carry less than half the energy of fuel oil per tonne, so replacing fuel oil means bunkering two to three times the mass for the same voyage — which drives the tank-size and cargo trade-off below.

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LNG

• Liquefied natural gas, carried cryogenically (i.e. deep-refrigerated to a liquid) at −162 °C. Near-zero sulphur and particulate matter (PM — the soot/smoke fraction of exhaust), and ~20–25 % lower CO₂ at the funnel than VLSFO.
• The catch is methane slip: unburned methane escaping the engine and supply chain is a potent greenhouse gas that erodes much of the well-to-wake benefit — and from 2026 methane enters EU ETS, so slip becomes a paid emission.
• Mature bunkering. LNG has a real, growing bunker network at major hubs, which is why it leads alternative-fuel newbuild orders. Requires dual-fuel engines (able to burn either gas or conventional oil) or dedicated gas engines, plus insulated tanks.

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Methanol

• A liquid at ambient temperature — the big operational advantage: it bunkers and stores much like conventional fuel, no cryogenics.
• Energy density ~half of fuel oil, so ~2–2.5× the tank volume for the same range.
• Carbon depends entirely on the source. Grey methanol (from fossil natural gas) can be ~10–15 % worse than VLSFO well-to-wake; bio- and e-methanol deliver ~70–80 % reductions. The carbon rules reward only the green versions.
• The second-most-ordered alternative after LNG dual-fuel, because it's the easiest low-carbon-capable fuel to handle — though methanol newbuild orders cooled sharply in 2025 (down roughly 60 % on the 2023–2024 surge) as owners waited on green-methanol supply and price.

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Ammonia and hydrogen

• Ammonia (NH₃) carries no carbon, so it emits zero CO₂ at the funnel — and if made from green hydrogen, near-zero well-to-wake. But it is toxic, needs careful handling, carries ~3× the tank volume of fuel oil, and has almost no bunkering infrastructure today. First engines are only now entering service; it's a late-decade fuel.
• Hydrogen has the best emissions but the worst volumetric density (~4–5× the tank volume even liquefied at −253 °C) — realistic only for short-sea/specialised use for the foreseeable future.

Both are "future fuels": zero-carbon on paper, but constrained by safety, cost and — above all — the lack of a bunkering network.

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Energy density — the hidden cost

The trade-off newcomers miss: a fuel with less energy per tonne means you must carry more of it, in bigger tanks, leaving less room for cargo. Roughly, to match the energy of one tank of VLSFO:

So the fuel choice isn't only $/tonne and $/tonne-CO₂ — it's also lost cargo capacity and range. A methanol or ammonia conversion sacrifices deadweight or endurance, which has to be priced into the whole business case, not just the bunker bill.

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Which fuel, and when

• Trading spot, no carbon exposure, cost-first: VLSFO + LSMGO for ECAs, or HSFO + scrubber if the spread justifies the capex.
• Heavy EU trading: the EU ETS/FuelEU bill rewards lower-intensity energy — bio-blends, LNG or methanol start to pay.
• Newbuild / long-term: the fuel decision is a 20-year bet against the coming IMO carbon levy and tightening CII. Methanol and LNG dual-fuel dominate today's low-carbon orders; ammonia is the later play.
• Always model well-to-wake, not the label. "LNG" or "methanol" tells you nothing about the carbon bill until you know the pathway — fossil, bio or e-fuel.

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For developers and modellers

• Allocate grades by zone, price the carbon: the voyage-economics calculator assigns LSMGO/VLSFO by ECA segment, rolls the compliant-fuel premium into TCE (Time Charter Equivalent — the voyage's net daily earnings), and prices the EU ETS/FuelEU/CII the fuel choice drives.
• The two number sets you need are the tank-to-wake CO₂ factors (3.114 fuel oil, 3.206 MGO, 2.75 LNG…) and the LHV energy contents (≈40 200 / 42 700 / 48 400 MJ/t) above — one gives the carbon bill, the other converts a fuel mass into the energy that drives GFI/FuelEU intensity.
• Keep low-carbon-fuel intensities as inputs: a methanol or LNG line means nothing without the certified well-to-wake gCO₂eq/MJ of the specific batch — model it as a variable, not a constant.

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FAQ and common confusions

Q: What is a bunker fuel?
A: "Bunker fuel" is the marine fuel a ship burns for propulsion and power — the term comes from the coal "bunkers" of steamship days. Today marine bunker fuels are mainly the residual and distillate oils HSFO, VLSFO and MGO, plus the alternative fuels LNG, methanol and ammonia. "Bunkering" is the act of taking fuel on board.

Q: What's the difference between VLSFO and MGO?
A: VLSFO is a very-low-sulphur (≤ 0.50 %) blended residual — the mainstream fuel at sea. LSMGO/MGO is a lighter distillate at ≤ 0.10 % sulphur, used inside ECA zones and at berth. MGO is cleaner on sulphur, costlier, and slightly higher CO₂ per tonne.

Q: Is LNG a "green" fuel?
A: Only partly. LNG cuts funnel CO₂ ~20–25 % vs VLSFO and virtually eliminates sulphur, but methane slip erodes much of the well-to-wake benefit — and from 2026 that methane is priced under EU ETS. Fossil LNG is a transition fuel, not a zero-carbon one.

Q: Does switching to MGO in an ECA raise my CO₂ bill?
A: Barely — and it's a common myth. MGO's factor is higher per tonne (3.206 vs 3.114 for heavy fuel), but MGO also carries more energy per tonne (~42.7 vs ~40.2 MJ/kg). Since a voyage burns a fixed amount of energy, you burn fewer tonnes of MGO, and per MJ the CO₂ is actually ~3 % lower (≈75 vs ≈77 gCO₂/MJ). The switch is roughly carbon-neutral. The "MGO is dirtier on carbon" claim comes from reading the per-tonne factor in isolation — the same reason MGO doesn't worsen CII or FuelEU intensity.

Q: Methanol or ammonia — which is more ready?
A: Methanol, by far. It's a liquid at ambient temperature, handles like conventional fuel, and is the second-most-ordered alternative fuel after LNG (even though its newbuild orders cooled in 2025). Ammonia is zero-carbon but toxic and has almost no bunkering network yet — a late-decade fuel.

Q: How much extra tank space do alternative fuels need?
A: Roughly 1.8× for LNG, 2.2–2.5× for methanol, 3× for ammonia versus VLSFO for the same energy — which costs cargo capacity or range. Energy density, not just price, drives the business case.

Q: What is a scrubber and does it help with carbon?
A: A scrubber (exhaust-gas cleaning system) removes sulphur from the exhaust so a ship can legally burn cheap HSFO. It does nothing for CO₂ — it's a sulphur tool only, useless against the carbon rules.

Q: What does "well-to-wake" mean and why does it matter?
A: It counts emissions from producing and transporting the fuel plus burning it — the true lifecycle carbon. It's what FuelEU and the coming IMO standard measure, and it's why grey methanol can be worse than VLSFO while green methanol is far better. The pathway, not the fuel name, decides.

Q: Which fuel should a newbuild pick?
A: A 20-year bet. Today's low-carbon orders are dominated by LNG and methanol dual-fuel; ammonia is the later, zero-carbon option once engines and bunkering mature. The right answer depends on trade, carbon exposure and fuel availability — model the whole-life cost, not the sticker price.

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References

• IMO — MARPOL Annex VI (sulphur cap, IMO 2020) and the EEXI/CII and Net-Zero Framework fuel-intensity measures.
• EU MRV / IMO DCS — the tank-to-wake CO₂ factors and LHV default values.
• DNV, Lloyd's Register, SEA-LNG, the Methanol Institute and bunker-market reports — fuel properties, well-to-wake figures and availability.
• rynda voyage-economics calculator and the ECA / SECA reference.

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Document version

• 2026-07 — first public version. The five-way fuel comparison with the CO₂/energy numbers that feed a voyage estimate. Prices move daily and low-carbon well-to-wake factors depend on the fuel pathway; confirm current data before modelling.