Methanol: A Strong Candidate for Green Marine Fuel of the Future?

In its latest weekly report, shipbroker Gibson said that “the past couple of years have marked an increase in orders of methanol-fueled vessels, particularly in the container segment. AP Moller Maersk is a clear pioneer and a front runner, having ordered 19 container vessels capable of running on methanol, whilst over 30 vessels have been ordered by other prominent container lines. Although the focus has been on box ships, the tanker industry is certainly not a newcomer. There are 24 MR sized tankers (including chemicals) currently in operation, with most involved both in methanol and clean products trade, whilst another 2 are on order. These vessels are almost entirely under control of companies with significant methanol trading capabilities. There is also emerging interest in methanol from dry bulk segment. Cargill partnered with Mitsui & Co to order two methanol-fueled Kamsarmax bulkers, whilst Vale has issued a request recently for proposals from shipping companies for contracts of affreightment for a new generation of methanol-fueled Guaibamax very large ore carriers. Furthermore, there is also a growing trend across a number of shipping segments to order vessels that are methanol-ready”.

According to Gibson, “methanol as a fuel has several advantages over other alternative fuels. Regulations, rules and requirements for using methanol as a bunker fuel are already available, making it possible for owners to make newbuilding plans. Another key advantage of methanol engines is that it has relatively simple design requirements and hence lower CAPEX compared to LNG and other more “exotic” alternative fuels. Furthermore, as methanol is liquid at ambient temperatures, it does not require refrigeration and expensive materials for tanks and pipes. Methanol is one of the top chemical commodities traded around the world and hence there is already a significant number of methanol terminals around the world which could potentially be used for bunkering. When demand grows, it also will be more straightforward to augment the existing facilities, instead of building brand new infrastructure systems”.

“Nonetheless, the commodity has its disadvantages as well. It needs additional space on board due to lower calorific value. According to DNV, it requires fuel tanks approximately 2.5 times the size of HFO for the same energy content and 1.3 times larger than LNG. Availability of green methanol and hence the cost of sustainably produced methanol is another major concern. Brown methanol produced from coal and grey methanol produced from gas are both in abundant supply, but they do not offer significant reduction in well-to-wake carbon dioxide emissions. In contrast, blue methanol, produced by using blue hydrogen together with carbon capture and storage (CCS), offers a sizable reduction in emissions; whilst green and e-methanol are carbon neutral, as they are produced from biomaterial or green hydrogen, captured CO2 and renewable energy”, the shipbroker added.

“The availability of blue and green methanol is scarce (estimated at less than 0.5 mln t/y in 2022), whilst production costs are high. Perhaps with this in mind, AP Moller Maersk has been actively securing green methanol supply from across the world and making investments in methanol producing companies. Yet, there is strong potential for production growth, considering rising government subsidies and private sector interest. According to a count of existing and planned projects by Methanol institute, renewable methanol production could increase to over 8 mln t/y by 2027. Overall, despite its disadvantages and current limitations, methanol has strong potential as a future fuel for shipping as it offers shipowners a viable and practical path to achieving environmental targets, especially in comparison to ammonia and hydrogen. Yet, for large-scale uptake, the industry needs to see increases in availability of sustainable methanol. One can only hope that this will also come with major gains in cost efficiency”, Gibson concluded.
Nikos Roussanoglou, Hellenic Shipping News Worldwide