“The momentum for green fuel is building and we are pleased to have strong partnerships across the industry as we continue our joint efforts to successfully decarbonise shipping.” – Vincent Clerc, CEO of AP Moller – Maersk (COP28)
As the shipping industry strives to reduce carbon emissions and comply with strict regulatory requirements, methanol stands out as a game-changing alternative fuel. Industry pioneers and experts advocate the adoption of methanol and emphasize its transformative potential for sustainable shipping.
To dive deeper into methanol’s central role in moving the industry toward a greener future, we’ve gathered some unique insights from leading companies committed to CH?OH.
Another bridge or the road?
Jon Loken, director of Quarks Asia, a small Singapore-based consultancy focused on energy transition, stresses the strategic importance of methanol in the maritime sector: “LNG was the first non-conventional fuel to be used. I am now sensing whether methanol will become an intermediate fuel or whether it is destined for long-haul. Although the number of ships on order that can burn methanol is an impressive 270, many ship owners are undecided and are waiting to see which technology to invest in.”
Methanol has many advantages.
“Operationally, switching to methanol is relatively easy for crew to manage and does not require much additional training,” explains Loken. “For safety reasons, this is important. Politically, there is a problem with the EU Emissions Trading Scheme (EU ETS), which requires shipping companies to monitor, report and verify their CO2 emissions and then gradually surrender allowances for a portion of those emissions. We can expect other regions such as Australia and China to adopt similar practices, accelerating the use of low-carbon fuels.”
Loken says methanol’s established infrastructure, cost-effectiveness and safety make it a viable option for companies seeking to comply with strict environmental regulations, particularly along green corridors. These routes, such as the Trans-Pacific, Europe-Asia, Australia-Japan and North and Baltic Sea corridors, promote decarbonization through dual-fuel engines running on both alternative and conventional fuels, as well as the development of the infrastructure needed to bunker low-carbon fuels.
“Compared to other alternative fuels,” Loken emphasizes, “methanol’s liquid state at ambient temperature and pressure simplifies storage and handling. This reduces conversion costs and utilizes existing infrastructure, making the transition smoother. Methanol can be produced from various feedstocks such as agricultural and municipal waste, natural gas, coal and even captured carbon dioxide, allowing for flexible production. This adaptability makes methanol attractive to different regions and markets and facilitates its integration into the global energy landscape.”
The Methanol Institute
Gregory Dolan, CEO of the Methanol Institute, has been at the helm for 28 years, helping to position the industry for the use of methanol.
“Methanol is very well positioned right now,” he says. “The last figures I saw from Clarkson are around 270 vessels, including newbuilds and conversions, outperforming LNG. The cost of converting a vessel to dual-fuel methanol operation is lower than LNG, which gives methanol even more advantages. MAN Energy Solutions and Wärtsilä each have over 180 engines on their order books. We are seeing heavy investment from original equipment manufacturers such as MAN, Wärtsilä, Caterpillar, WinGD, Hyundai Heavy Industries, China Shipbuilding and Rolls Royce MTU.”
One of the big news about methanol as a marine fuel is that ship owners can now purchase an engine and a ship that runs on methanol.
“Alfa Laval has sold 100 methanol fuel systems for ships,” says Dolan. “Unlike some future fuels, methanol is available now. We have seen a lot since the first methanol-powered ship, the Stena Germanica, which was retrofitted in 2015. Then Methanex and Waterfront Shipping introduced a fleet of chemical tankers with MAN two-stroke engines, which have now completed over 500,000 hours of operation on methanol. Thanks to this experience, the technology has matured so that methanol engines are available in almost any bore size.”
Ammonia, another potential fuel of the future, is still a long way off.
“We may see the first ammonia-fuelled engines on ships next year, but these will only be initial demonstrations,” adds Dolan. “We also need IMO guidelines on the safe use of ammonia. For methanol, we started the process in 2014 and completed our interim guidelines under the IGF Code in December 2020. This was a turning point for the use of methanol as a marine fuel. Three months later, Maersk announced that the first carbon-neutral container ship would be powered by methanol. Methanol probably has a five or six year head start on ammonia. However, to decarbonise shipping and overcome the annual dependence on 300 million tonnes of diesel fuel, several alternative fuels will be required, including methanol, LNG, ammonia and hydrogen.”
The global demand for methanol currently stands at 90 million tonnes, making it one of the five most frequently shipped chemical raw materials. There is storage capacity for methanol in 120 ports worldwide, with additional bunker vessels and special bunker vessels constantly being deployed in the major ports.
In addition, there is a growing pipeline of renewable methanol production projects and a supply of over 23 million tonnes of biomethanol and e-methanol is forecast by 2029.
However, methanol is not without challenges, especially because it has half the energy density of diesel and therefore requires twice the volume.
Dolan is unimpressed: “Because methanol is liquid at ambient temperature and pressure, you have flexibility in where you place the tanks. You can even use the double-walled hull for containment. This means you don’t lose as much cargo capacity as with cryogenic fuels like LNG, ammonia or hydrogen. By comparison, new Maersk ships can travel around the world on one tank of methanol.”
Economic viability of methanol
The current spot market price for methanol is around $325 per tonne in ports such as Houston, Rotterdam or Singapore. Since methanol has only half the energy content of diesel fuel, twice as much is required for the same production.
“Even so,” says Dolan, “at $325 per ton, it’s still price competitive with current diesel fuel. Producing renewable methanol, such as biomethanol or e-methanol, is more expensive. But as Maersk has pointed out many times, even if they paid twice as much for renewable methanol (on a $50 pair of sneakers), the cost of shipping a pair of sneakers from Shanghai to LA would only increase by five cents. Large customers are now willing to pay more for green transportation certification.”
Another aspect, particularly in the context of the FuelEU Maritime Initiative and the EU ETS, is that the costs of compliance and continued use of diesel bunkers are increasing.
“These costs will rise from $300/MT next year to over $2,000/MT by 2050,” Dolan explains. “So when you look at using bio, e- or conventional fuel with a methanol blend and compare the cost of compliance to diesel, there will be a real economic incentive.”
He adds: “Looking at FuelEU’s maritime pooling mechanism – under which ships can pool their compliance balance with one or more other ships, with the pool having to meet greenhouse gas intensity limits on average – a recent report from AATI Climate shows that one e-methanol ship reduces emissions so much that 70 heavy fuel oil-fuelled ships combined could comply. In contrast, one LNG ship could offset just five heavy fuel oil-fuelled ships.”
A CO2-neutral fuel
Dolan explains why methanol can be called carbon neutral.
“If you look at the methanol molecule CH?OH,” he explains, “there is always a carbon atom in the molecule. Considering that methanol is a liquid fuel with the highest hydrogen-carbon ratio and there is only a single carbon atom, we don’t have a big carbon problem. We can also look at that carbon as a resource. When you produce renewable methanol from biogenic sources like biogas/biomass, you don’t emit any additional CO2 into the atmosphere; instead, we now see a 60 to 95 percent reduction in greenhouse gases (GHG). In some cases, depending on the feedstock, such as using biogas from cow manure, there is even a negative carbon intensity. So we can now look at methanol as part of the solution. This facilitates the transition to low-carbon and net-carbon neutral fuels.”
Dolan concludes: “In the future, if we look at technologies around direct air capture, CO2 is taken out of the atmosphere and then combined with green hydrogen to create e-methanol. Again, the carbon intensity is negative. I would also point to the new technologies we’re seeing, like onboard carbon capture. If you have a carbon and a methanol molecule, you can collect it from the ship’s smokestack, take the carbon out, put it in the hold, bring it to shore as liquefied carbon, and then use that liquid carbon to make more methanol. We can see a whole circular economy around methanol with carbon capture, especially for renewable fuels. That’s incredibly exciting.”
Methanol offers several important advantages as an alternative fuel for shipping. It can reduce greenhouse gas emissions, is biodegradable and is less harmful in the event of a leak, making it safer for the environment.
Furthermore, its established infrastructure and availability, its cost-effectiveness compared to traditional fuels and its versatility in production from different feedstocks make it a viable option for complying with strict environmental regulations.
But is that enough to secure methanol as a leading investment on the path to carbon-neutral shipping? – MarEx
Sean Holt is a regular contributor to the magazine.
The opinions expressed herein are those of the author and not necessarily those of The Maritime Executive.
