Companies in the shipping industry are accelerating efforts to jettison fossil fuels and switch to cleaner alternatives.
This week, container shipping giants CMA CGM and A.P. Moller Maersk joined hands to develop greener fuels such as methanol, derived from natural gas or renewable sources, in a bid to slash carbon emissions in a sector that accounts for 3% of global greenhouse gas emissions.
Both companies will jointly explore research and development capabilities to hasten the shift towards greener fuels in what will also include the production of alternative fuels such as ammonia.
The drive towards a sustainable future in shipping has been gaining momentum in recent years, reflecting not only in government legislation but also in the order books of shipping companies. Beginning this year, ships are required to collect and report on emissions data under new International Maritime Organization (IMO) regulations. Next year, ships will be rated based on this data, with poorly performing vessels required to improve or risk being side-lined.
In recent months, a growing number of shipowners have opted to order ships that can run on methanol. The number of methanol-capable vessels on order reached 185 as of 6 September, up from 135 as of the end of May, S&P Global said in a report, citing shipbroker Braemar’s estimates.
Those ships generally have a dual-fuel design, S&P Global said. Dual fuel engines can operate on both conventional fuel sources and more sustainable forms of energy such as liquefied natural gas (LNG), preparing carriers for the transition from traditional fossil fuels.
Danish company Maersk has been ordering vessels that can be operated on bio/e-methanol, a type of methanol fuel produced from renewable sources, while French firm CMA CGM has been buying LNG-propelled vessels and those that can run on bio/e-methanol.
“These two fuel streams appear now as the most mature among existing solutions. Both companies expect the future fuel mix of shipping will include other streams that should be developed in the coming years,” the companies said in a release.
Green and digital shipping corridor
On Wednesday, the Maritime and Port Authority of Singapore (MPA), the Port of Rotterdam, and 20 others in the Green and Digital Shipping Corridor grouping vowed to decrease international shipping emissions by up to 30% by 2030.
The Green and Digital Shipping Corridor, which was set up in August 2022, works towards achieving zero or near-zero emissions on the 15,000 km Rotterdam-Singapore sea route.
The Maersk Mc-Kinney Moller Center for Zero-Carbon Shipping is exploring alternative fuels, including variants of methanol, ammonia, and LNG, apart from hydrogen, in a bid to bridge the demand-supply gap for sustainable fuels.
“Low carbon fuels will likely be more expensive than existing fuels and a separate working group has been formed with the support of the Global Maritime Forum, the Centre for Maritime Studies of the National University of Singapore, University of Oxford, and Citi, to address gaps in regulation and financing,” MPA and the Port of Rotterdam said in a joint statement.
Last week, the world’s first methanol-enabled container vessel was christened Laura Maersk at a ceremony in the Port of Copenhagen.
The Laura Maersk began its maiden voyage from South Korea, where it was built by shipbuilder Hyundai Mipo Dockyard, before arriving in Copenhagen for the naming ceremony. The vessel is named after the first steamship owned by Peter Maersk Moller, the founder of Maersk.
Maersk has an ambitious 2040 target of net zero greenhouse gas emissions and aims to transport a minimum of 25% of ocean cargo using green fuels by 2030. The 2,100 twenty-foot-equivalent (TEU) feeder vessel is an important step toward the long-term objective of gradually renewing the entire Maersk fleet to operate solely on green fuels.
Maersk has 24 additional methanol vessels on order for delivery between 2024 and 2027, and a policy to only order new, owned vessels that come with a green fuel option.
Despite its newfound popularity, methanol’s adoption as the main maritime fuel might be stifled due to its high costs and restricted availability, S&P Global said, citing some classification societies.
Classification societies develop and apply technical standards for the design, construction and survey of ships and carry out inspections on board ships.
“Long-term projections for methanol are on average lower compared to ammonia and bio-methane due to concerns about the cost of sustainably sourced carbon, which would curb future ordering of methanol-fueled ships,” the report said, citing Lloyd’s Register data.
In India, meanwhile, the government may offer incentives to companies willing to convert diesel-run marine vessels into ships powered by methanol, The Economic Times reported in May.
Citing internal estimates by government think tank NITI Aayog, the report said the development cost for a 100% methanol engine would be ₹20-50 crore while the conversion cost per vehicle will be ₹30-40 lakh, with the entire process taking about one-and-a-half years.
The economic viability of methanol is underscored by a recent study, which found it to be substantially more affordable compared to ethanol and petrol on an energy equivalent basis, priced at a modest ₹37.6, or $0.45, per litre. The production of methanol from coal emerges as the most cost-effective strategy, with prospective large-scale manufacturing forecasted to further reduce prices to around ₹19 per litre.
India’s fleet strength stood at 1,520 vessels with a cumulative gross tonnage (GT) of 13.69 million at the end of last year, shipping ministry data showed. This was an improvement on the 2021 year-end figures of 1,491 vessels and 12.99 million GT.
In its annual report for FY23, government-run Shipping Corp. of India, which runs and manages vessels on national and global routes, said it is weighing the use of biofuels and blended fuel to reduce emissions.
Adani Ports and Special Economic Zone Ltd, India’s biggest port operator by cargo handled, said in its latest annual report that it is taking emission reduction steps, including switching to electric internal transfer vehicles across sites and increasing the proportion of clean energy in the total energy mix, to align with India’s larger climate change commitments.
The Indian government has set specific goals aimed at enhancing safety and promoting sustainability at its ports under its Maritime India Vision 2030 document. The initiative seeks to transform Indian ports into green and eco-friendly hubs through the augmented use of renewable energy sources such as methanol, solar, and wind power.
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