Shipping needs cheaper green methanol for its route to net zero

Higher costs and undersupply remain the biggest concerns for shipping companies seeking to reduce their greenhouse gas emissions by switching to green methanol. 

Danish logistics company Maersk has ordered 25 vessels that can run on sustainably produced e-methanol. Its first large methanol container ship, Ane Maersk, arrived at Jebel Ali port in Dubai last week.

Maersk says the ship can save up to 280 tonnes of carbon dioxide per trip.

“When we look at the expansion of the order book for the global fleet – Maersk vessels plus the rest of the industry — it seems to be the fuel source of choice,” said Christopher Cook, regional head of Maersk. 

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However, current supply levels are struggling to meet the demand from ships that are ready to sail on renewable methanol today – let alone the expected increase.

Green methanol output capacity is projected to reach 19.5 million metric tonnes a year by 2028 but much of this will be absorbed by current demand, according to the Methanol Institute.

“The production capacity is expanding but it is taking time. The producers needed to see the demand was there. That’s now starting to come through,” Cook added. 

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Green methanol is also more expensive than traditional fossil fuels. The switch to sustainably produced methanol would raise bunker costs by 340 percent, according to shipping consultancy Drewry. These additional costs for logistics companies will end up being passed on to consumers, it said.

According to Cook, the immediate solution to this problem is a greenhouse gas tax so there is a “level playing field” for the shipping industry. 

“It’s not necessarily subsiding [sustainable fuels]. It’s at least ensuring there is equal cost comparison that truly looks from well to wake,” he said. 

Earlier this week, DP World announced a partnership with freight mobility company Einride to electrify inter-terminal container transport at Jebel Ali. Electric vehicles will support 1,600 container movements a day by the end of this year, the company said. 

Once at full capacity, the project is expected to save up to 14,600 tonnes of carbon dioxide equivalent and 158 tonnes of nitrogen oxide each year.

Watch the video to find out more about methanol fuel projects in the UAE and further afield