Frontrunner: Maersk’s first methanol-enabled container vessel is pictured departing South Korea. The container giant, along with others in the shipping industry, move consumer goods for companies including Apple, Nike, Adidas and Walmart. — Reuters
SINGAPORE: Container shippers are ordering vessels powered by methanol to reduce greenhouse gas emissions, but it will take years for renewable methanol output to meet demand and for costs to fall, industry executives say.
The first green methanol-fuelled container ship, owned by A.P. Moller-Maersk, sailed from South Korea in July. The number of such vessels is expected to exceed 200 by 2028, up from 30 this year, consultancy DNV forecasts.
Container giants such as A.P. Moller-Maersk, CMA CGM and XpressFeeders dominate the order books.
They ship consumer goods for companies including Apple, Nike, Adidas and Walmart and are betting on methanol, as well as exploring other less developed options such as ammonia, to meet their own and their clients’ emission reduction targets.
Maersk said methanol-powered ships with dual-fuel options cost about 10% to 12% more than conventional ships, but the price difference should become insignificant in the long run once developers achieve economies of scale.
The challenges of delivering enough fuel, however, are considerable, and emissions will not be entirely eliminated.
“The real cost challenge remains on the fuel supply side and the need to rapidly build production globally and at scale, and the associated fuel infrastructure,” Emma Mazhari, Maersk’s head of energy markets, told Reuters.
Conventional methanol emits up to 80% less nitrogen oxides and cuts nearly 99% of sulphur oxide emissions compared to fuel oil, but it still emits planet-warming carbon dioxide.
Using methanol, produced either from biomass or captured carbon and hydrogen from renewable power, can reduce carbon dioxide emissions from container ships by 60% to 95% compared with conventional fuels, the Methanol Institute said.
But green methanol, produced from biomass or captured carbon and hydrogen from renewable power, is scarce and costs at least twice as much as conventional methanol, produced from fossil fuels, industry insiders said.
The renewable fuel’s production is also far from bunkering hubs, where ships refuel, meaning additional costs in terms of money and emissions for transportation, they added.
“It still has a ‘C’ (carbon) in its formula, so the fuel that remains is not zero-carbon,” said Rashpal Singh Bhatti, BHP’s vice-president for maritime and supply chain excellence, referring to conventional methanol.
He added that using methanol produced from fossil fuels was pointless in terms of reducing emissions.
“Ultimately, we’re trying to find a ubiquitous source that has good decarbonisation potential,” he said.
Global demand for methanol, typically used in construction and manufacturing, stands at 100 million tonnes per year (tpy), while a 16,000-twenty-foot equivalent unit container ship consumes 30,000 to 40,000 tpy, the Methanol Institute said.
Methanol demand could grow by a further six to eight million tonnes per year in 2028, based on Reuters calculations and the vessels on order.
However, bio-methanol provides less than 1% of global production, at between 300,000 and 400,000 tonnes as of last year, according to the Methanol Institute, which means ships for now must rely mainly on more conventional fuels.
“The main issue with methanol at this stage is increasing access and the scale of green production,” Peter Lye, global head of shipping at Anglo American, said.
He said the company was monitoring progress but had yet to place an order for such ships.
Shippers hope that their investments in methanol-fuelled ships will spur production of the renewable fuel and lower costs in the long run.
The Netherlands-based OCI, which supplied green methanol to Maersk’s first ship, can produce up to 200,000 tpy of the renewable fuel. — Reuters
