The shipping giant banking on a greener fuel

Right now, there are about 50,000 merchant ships at sea or docked at a dock somewhere.

Their work usually keeps the entire global economy moving, but it’s been a very turbulent few days for the shipping market. The Russian invasion of Ukraine is causing major disruption to the industry, with many ships stuck in ports and freight costs skyrocketing.

In the wake of the sanctions, shipping giant Maersk temporarily suspended container shipping to and from Russia (except for food, medical and humanitarian supplies).

These ships that cross multiple trade routes around the world generate a staggering 3% of the world’s carbon dioxide emissions, roughly the same volume as Germany.

The European Union is working hard to reduce those CO2 emissions with various schemes designed to make the use of fossil fuels more expensive.

But the problem for shipping companies is that alternative or ‘greener’ fuels are still produced in small quantities compared to traditional marine fuel.

However, Maersk has made the decision to order 12 oceangoing ships that run on methanol. Each costs $175m (£130m) and is capable of carrying 16,000 containers.

Jacob Sterling, director of innovation and decarbonization business development at Maersk. he hopes those vessels will boost the market for methanol-powered shipping, which is potentially a greener fuel source for the industry.

“We’ve had this chicken-and-egg dilemma,” says Mr. Sterling. “We think this will unlock the scale that needs to happen.”

Maersk acknowledges that it will be a challenge to get enough green methanol to keep the ships running.

“We believe that only 30,000 tons of fuel are being produced in the world right now. [every year]says Mr. Sterling.

At least 15 times as much is likely to be needed to power Maersk’s new ships alone.

With a fleet of almost 700 vessels, Maersk is one of the major players in shipping. “We emit a lot of CO2. We need to do something about it,” says Mr. Sterling.

As part of this strategy, a smaller container ship, the first of its kind, will be launched in the Baltic Sea next year.

Maersk estimates that these new smaller ships could save 1.5 million tonnes of CO2 per year, or 4.5% of its fleet’s emissions.

This may seem like a drop in the ocean, but Mr. Sterling adds: “This is exactly why we need to start now.”

The new vessels are designed to operate on dirtier marine fuel as well, however that is just a backup and the plan is to operate on green methanol from the start.

Methanol is part of the alcohol family of chemicals used in paints, plastics, clothing fabrics and pharmaceuticals, and as fuel for vehicles.

Unlike hydrogen, which is also promoted as a green fuel, methanol does not need to be stored under pressure or in extreme cold, and many ports already have the infrastructure in place to handle it.

“We think this is the good solution to start with,” says Mr. Sterling. “It’s relatively easy to operate on ships, and ship technology is well known.”

Currently, most methanol is derived from natural gas. Green methanol is not dependent on fossil fuels and can be produced in a variety of ways.

Biomethanol is produced from biomass, such as agricultural waste. The heat, steam, and oxygen are used to convert biomass into useful fuels, including methanol.

There is also e-methanol. Here, renewable electricity splits water into oxygen and hydrogen, which combines with carbon dioxide.

“Methanol is a hydrocarbon fuel. Burning it creates emissions from the ship’s stack,” says Xiaoli Mao of the International Council on Clean Transportation (ICCT).

But, to its credit, green methanol has a low carbon footprint, if you look at the entire production process.

This is because the methanol has been derived from CO2 in the air, or CO2 captured by plants, which roughly offsets the CO2 released when methanol is burned as fuel.

“You have to have a sustainable source of carbon,” explains Ms. Mao.

However, he notes that both CO2 capture technologies are “very nascent and very expensive.”

Accurate measurement of emissions over the life cycle is also complex. “[It] it requires a lot of measurement and certification throughout the production and supply chain,” says Dr. Tristan Smith, an expert in low-carbon shipping at University College London (UCL).

“In practice, the production process, even of biomass-derived methanol, is very energy intensive and usually has a carbon footprint,” he says.

The Danish company, European Energy, is among the few producers of green methanol. It is scheduled to supply 10,000 tonnes of e-methanol for Maersk’s first vessel. Although at the end of this year the construction of a commercial-scale plant will begin near Aabenraa, in the south of Denmark. Operations begin in 2023.

Once fully operational, the site is expected to produce at least 30,000 tons of methanol per year.

The plant will harness solar energy and carbon dioxide from biogas production, which uses manure.

“We take CO2 captured by plants or crops from the atmosphere,” says Soeren Kaer, chief technology officer of the company’s Power to X division.

“Plants used as animal feed have a very short rotation cycle. So it’s really a circular process. In terms of greenhouse gas impact, it’s very low,” explains Mr Kaer.

Scaling is one of the biggest challenges for green methanol production, “but that would be the same for any new fuel,” he says.

Compared to conventional marine fuel, green methanol is twice as expensive and new ships are 10-15% more expensive to build.

However, even if that means higher costs passed on to customers, Maersk’s Jacob Sterling says customers are on board. “We see customers who are willing to pay a premium for carbon-neutral transportation.”

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The company has the deep pockets necessary for investment and has recently seen profits soar.

Maersk has also invested in other start-ups developing sustainable alternative fuels.

Dr. Smith says the switch to green methanol is a welcome step. “These ships have the potential to achieve much lower greenhouse gas emissions than ships operating today.”

However, he thinks another fuel, ammonia, is a better long-term solution. But this technology is also still under development.

“I think the end game for shipping is not going to be one fuel,” says Mr. Sterling. “It will probably be a mosaic of technologies and fuel types.”

“We opt for methanol now because we can and because we think it’s a good solution. But we will continue to innovate.”