End‑Game Maritime Fuels: Why Electricity and Hybrids Win Coastal Routes

The core finding is arithmetic: comparing fuels on a crank‑equivalent (shaft‑delivered energy) basis shows industrial electricity at many US and Chinese rates undercuts combustion pathways for coastal and short‑sea markets, while fossil fuels become markedly more expensive once refinery throughput contracts and carbon levies are applied. Using the same energy delivery basis makes the comparison transparent: one ton of VLSFO provides roughly 5.4 MWh of shaft work while an electrical pathway needs about 5.85 MWh after system losses, and at typical US/China industrial rates those electricity costs sit well below post‑carbon fossil equivalents.

This economic advantage is reinforced by recent market and engineering developments in battery systems. Large BESS tender clearing prices have dropped into the low double‑digits per kWh and containerized battery modules now pack multi‑MWh into 20‑foot units, reducing capital barriers and simplifying shipboard integration. Pack‑level gravimetric performance and safer, modular chemistries have improved versus many prior studies’ assumptions, lowering mass and safety penalties and expanding the envelope of vessel types—ferries, many inland craft and a growing share of short‑sea feeders—that can practicably operate in battery‑dominant or plug‑assisted hybrid modes.

Scale effects in the fuel and refining system also matter: as road transport electrifies and refinery throughput shrinks, fixed refinery costs lift an end‑state floor for fossil VLSFO (assumed here near $650/ton), making non‑electrified options comparatively less attractive even before carbon pricing. Adding carbon charges further widens that gap: the analysis shows effective fossil crank costs rising sharply under $200–$300/tCO2 scenarios, whereas electricity at competitive industrial tariffs remains lower in many coastal contexts.

Practical vessel economics illustrate the stakes: short‑sea feeders and large liners both face sharply higher fuel bills as fossil prices rise and as biofuels remain comparatively expensive in the midcases studied. Hybridization that shifts a modest share of annual shaft energy to electricity—particularly during ECAs, port approaches and berth stays—yields clear operating‑cost savings and fast paybacks under realistic tariff and carbon settings.

For long‑haul deep‑sea legs, however, onboard energy density and mass still constrain pure battery solutions: routes measured in hundreds of MWh to GWh per leg remain beyond feasible onboard storage without unacceptable mass or draft penalties, so hybrids paired with biofuels or synthetic fuels are the practical pathway for ocean crossings. Biofuels face feedstock and scale constraints that keep their mid‑case crank costs above fossil unless carbon prices reach the roughly $320–$385/tCO2 range; synthetic fuels, even with optimistic green hydrogen costs, remain a costly backstop.

These technical and economic realities make ports and procurement policy pivotal. Ports’ electrical capacity, buffering strategies (including shore‑buffered swap pools or shore‑to‑ship DC links) and tariff structures determine whether the improved battery economics translate into fleet‑level adoption. Similarly, federal procurement and industrial policies that do not treat shore power readiness and integrated low‑carbon systems as baseline build requirements risk producing vessels that are harder and costlier to decarbonize in major trading regions.

Policy levers that matter most are therefore concrete and fast‑acting: reducing industrial electricity tariffs for maritime loads, accelerating shore power roll‑out, tying procurement to measurable energy‑performance metrics, and supporting domestic supply chains for maritime power electronics and containerized BESS will accelerate coastal electrification more quickly than incremental carbon fee increases alone. Where carbon pricing remains the primary tool, it must rise substantially or be paired with mandates and targeted subsidies to pull biofuels and synthetics into mainstream use for long‑haul segments.

Operators should adopt a segmented strategy: prioritize full electrification where route profiles and port access permit, deploy hybrid systems to capture localized arbitrage around ECAs and port calls, and treat biofuels/synthetics as compliance and deep‑decarbonization instruments for ocean legs. Aligning procurement, port investment and grid planning will both expand the technical feasibility of battery systems and reduce total lifecycle costs for a wide set of vessel types.

In short, the combination of crank‑equivalent accounting, updated battery market realities, refinery scale effects, and realistic carbon scenarios reframes maritime planning: coastal shipping economics now tip toward electricity and hybrids in many regions, while long‑haul decarbonization will depend on policy choices that alter fuel demand, mandate low‑carbon fuels, or materially change relative prices.