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This is the third article of a series of articles describing the issues with the current way that the maritime shipping industry is fuelled, and further exploring how the following four alternative fuel types may help to reduce pollution and safeguard marine biodiversity: hydrogen, methanol, LNG and ammonia. 

Up until now, in “Navigating the future” we have mainly discussed the use of fossil fuels in the maritime shipping sector. First through a discussion on why Heavy Fuel Oil (HFO) must be replaced, and second on how Liquefied Natural Gas (LNG) might shape the sector. This article will delve into a more sustainable potential source of fuel: methanol.

What does the current methanol market look like?

Methanol is a simple alcohol synthesised from syngas, a combination of carbon monoxide and hydrogen. The two main methods used to produce methanol involve steam reforming of natural gas and coal gasification, accounting for respectively 55-65% and 30-35% of total methanol production. In current industries methanol is mainly used as a source to produce other materials such as plastics, chemicals, textiles & resins (In the forms of Formaldehyde & Acetic Acid). Only about 10-15% is used for fuel applications. Either directly as a fuel or blended with gasoline to create a cleaner-burning fuel. Also MTBE is produced from methanol, used as a gasoline additive to improve combustion efficiency. Finally, it also serves as a solvent in various industrial processes and as feedstock for the production of dimethyl ether (DME), a clean alternative to propane.

​​The global methanol market size was valued at USD 31.26 billion in 2023 and is projected to grow from USD 32.70 billion in 2024 to USD 46.32 billion by 2032, of which only 2% (USD 610.2 million) was dedicated to renewable methanol in 2023. However, green methanol is poised to be growing at a much higher annual rate of 5.8% over 2024-2030. For comparison: the heavy fuel oil market was valued at USD 82.4 billion in 2023, and is still anticipated to grow at an annual rate of 3% from 2024 to 2029.

The dependency on natural gas and coal in the traditional production of methanol raises sustainability concerns. Carbon emissions during methanol production can vary depending on the feedstock quality and sourcing. However, two main variants of methanol are being considered as potential alternatives to HFO: bio-methanol and e-methanol, collectively known as green methanol. 

To support the journey towards a zero carbon supply chain, major industry players, like A.P. Moller – Maersk are stepping up their green methanol game. Earlier this year, in may 2024, the world’s first large green methanol-enabled vessel by A.P. Moller – Maersk, made her first call in Dubai. The ship was outfitted with dual-fuel engines and auxiliaries developed by MAN Energy Solutions that permit it to operate on green methanol as well as traditional marine fuels. Further, Maersk has invested into 19 vessels with a dual-fuel engine, able to operate on green methanol, and contributed to the launch of a new company, C2X, to produce green methanol. Also other major players such as China’s COSCO and France’s CMA CGM, have also begun exploring methanol. With large containerships demonstrating the feasibility of dual-fuel engines, greenhouse gas reduction can start this decade.

Green methanol production and biofuel categorisation

Compared to conventional fuels, green methanol can reduce carbon dioxide emissions by 60-95%, reduce nitrogen oxide emissions by 60-80%, and almost completely eliminate sulphur oxide and particulate matter emissions, according to the Methanol Institute. Green methanol can be produced using biomass (Bio-Methanol) or using renewable energy and captures CO2 (E-methanol).

Bio-methanol is produced from biomass waste, diverting materials from landfills and creating a closed-loop system. However, biofuels like bio-methanol are categorised into four different generations, each with distinct sustainability properties:

• First-Generation Biofuels use food crops, leading to the food vs. fuel dilemma. This refers to farmland that is diverted from food production to biofuels, risking food supply and exacerbating issues like biodiversity loss, water scarcity, and water contamination from fertiliser use.
• Second-Generation Biofuels are created from non-food crops and waste biomass, greatly reducing the food vs. fuel dilemma.
• Third-Generation Biofuels are derived from microalgae and other aquatic biomass. Aquatic biomass eliminates the need for arable land. Algae can be cultivated in open or closed systems. Open systems face higher sustainability risks as they are more prone to contamination and evaporation. Closed systems have fewer sustainability risks but are more expensive to construct and may still suffer from leakages and spills.
• Fourth-Generation Biofuels are still in early development. These biofuels are derived from specially engineered crops with higher biomass yield or easier breakdown. Differently from second-generation biofuels, CO2 generated during the conversion to fuel is captured. The resulting fuel is not only renewable, but also carbon-negative.

E-methanol is a synthetic fuel that utilises renewable electricity to create hydrogen, which is then combined with captured CO2. There are various ways to source the hydrogen and carbon, used to produce green methanol. It can be seen both CO2 from biomass and CCU are competitive in costs. Both e-methanol and bio-methanol can significantly reduce lifecycle emissions compared to conventional fuels. However, biofuels like bio-methanol pose greater sustainability issues and are thus regarded by some as transitional fuels.

Easily adaptable to existing infrastructure

A key advantage of green methanol options is their compatibility with existing infrastructure. Ships can be adapted to use methanol with fewer modifications compared to other alternatives like ammonia or hydrogen. Another aspect that facilitates the quick adaptation to methanol is its simplicity in storing and handling, as the fuel does not require extreme pressurisation or cryogenic temperatures that are needed for other options such as LNG or hydrogen. This simplicity translates to lower upfront costs for shipowners considering a switch. Another advantage that is often overlooked is that methanol is highly soluble and readily biodegradable. Meaning that in the event of a spill, the fuel will rapidly dissolve in seawater.

Challenges to Implementation

Despite its advantages, methanol has hurdles to overcome. Its lower energy density compared to traditional fuels means ships will require more storage space – around double the fuel tank capacity compared to diesel. This will impact cargo capacity on long voyages, decreasing cost efficiency. However, the energy density of methanol is broadly similar to ammonia and even higher than hydrogen. Also, similarly to other renewable fuels, the cost of green methanol production is currently higher than conventional fuels. However, as production scales up and regulations tighten, this gap is expected to narrow; specifically the price of e-methanol is expected to decline a great deal. Incentives and carbon pricing mechanisms could further accelerate the adoption of bio-methanol and e-methanol. 

Although green methanol is a sustainable fuel, some consider other alternatives such as ammonia to be a better option. Unlike methanol, which requires CO2 extraction for production, ammonia can be produced from nitrogen and hydrogen without the need for CO2, potentially making it a more cost-effective and scalable solution.

A final practical challenge that could be considered is the investments in dual-fuel engines. Future application will show whether these vessels will mainly use green methanol, or choose the cheaper HFO option for their voyages.

A Promising Path Forward

While challenges remain, methanol presents a realistic and achievable pathway for cleaner shipping. Its compatibility with existing infrastructure, lower emissions profile with renewable variants, and growing industry support make it a frontrunner in the race for sustainable maritime fuels. Maersk’s significant influence in the industry could drive substantial adoption of methanol. Other major shipping companies following, indicates a broader industry shift towards green methanol. As technology advances, costs decrease, and infrastructure expands, methanol has the potential to be a game-changer in the quest to decarbonise global shipping.

In our next edition of “Navigating the future”, we will analyse the hydrogen-carrying fuel ammonia.

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