Engine retrofit report
Two headlines tell us what 2025 meant for the emerging alternative fuel engine retrofit market. The first is also arguably the story of the maritime year: the adjournment of the International Maritime Organization (IMO) Marine Environment Protection Committee’s vote on adopting of the Net Zero Framework (NZF).
Doubt over a global framework that would incentivise ship operators to adopt zero- or near-zero emissions (ZNZ) fuels and energy sources will have complex and wide-ranging impacts on the engine retrofit market. But one fact is clear: the longer new vessels are built to run on conventional fuels, the more of those vessels will eventually need to be retrofitted for ZNZ fuels to meet the IMO’s ambition of reaching net-zero greenhouse gas (GHG) emissions from international shipping by or around 2050.
The second headline shows how, even during regulatory turmoil, shipowners and technology providers deliver the decarbonisation solutions that will eventually be required to meet that 2050 ambition. In October 2025, the world’s biggest designer of two-stroke marine engines, Everllence (previously MAN Energy Solutions), announced successful sea trials following one of the first ever retrofits of a two-stroke vessel for methanol fuel, on container vessel COSCO Shipping Libra.
The milestone marks a crucial shift for the retrofit market, from technical feasibility to scalability. As LR reported in last year’s update to its Engine Retrofit Report, first published in 2023, technology providers and yards are building capability and capacity in anticipation of a significant market. Everllence predicts around 300 target candidates for its methanol retrofit in one engine size (90cm bore) alone.
As this update shows, those preparations continued in 2025, even as uncertainty around global policy and market conditions meant that new retrofit project announcements were scarce. Major engine technology providers including Everllence, Wärtsilä and WinGD all announced new retrofit offerings covering methanol and LNG fuels.
Advances were also made, with onboard pilots and engine developments around ethanol. While its decarbonisation potential can vary significantly depending on feedstock, production process and (crucially) regulatory acceptance, low-cost ethanol could support a more financially viable route to lower emissions. For some operators already using methanol-fuelled engines, ethanol requires a relatively minor engine retrofit.
If 2025 did not deliver a mass conversion wave, it did add to the scaffolding industry stakeholders build to support a future retrofit market. But, as noted last year, sharper signals are still needed from regulators before shipowners feel compelled to switch their existing fleets to ZNZ fuel operation.
Engine retrofit regulatory context
The delay in the vote on adoption of the draft IMO NZF in October 2025 created doubt over how quickly global maritime regulation will begin to price emissions and reward ZNZ fuel uptake. At this stage there is uncertainty whether a global regulatory framework for GHG emissions from ships, with a financial penalty where compliance targets are not met, will be agreed in the near future. Should a global framework not be adopted, there is the risk of increasing fragmentation of decarbonisation measures through unilateral regulation at regional and national levels. While fragmented, penalties from the various measures may nevertheless create a need for retrofitting, depending upon the specific nature of the ship and its operation.
For shipowners, this uncertainty has a significant impact on appetite for retrofit investments. Faced with conversion projects requiring large upfront CAPEX, extended dry dock periods, and long-lead equipment procurement, owners will hesitate to make such commitments unless there is confidence in a compliance payoff.
However, the NZF delay is unlikely to remove retrofit demand permanently. The longer the global framework remains unresolved, the more likely a significant portion of conversion demand will be pushed into a narrower future time window once incentives sharpen. As conventionally-fuelled vessels continue to be built, more of them will need retrofits to enable reduced emissions and net-zero operation by or around 2050.
This dynamic has important implications for shipyards and OEMs. A delayed regulatory trigger gives time to prepare developing and standardising engine retrofit packages, qualifying suppliers, training delivery teams and building repeatable integration templates. But it also increases the probability that demand becomes compressed, driving higher prices, longer lead times and greater execution risk for late movers.
Read the rest of this article in the latest issue of DryDock magazine