Torben Nørgaard, vice president and head of partnerships and offtake in power-to-X at European Energy. Image Credit: European Energy

• As demand for green fuels grows across transport and industry, European Energy's Torben Nørgaard sees an opportunity for shipping to tap into a much larger and more mature market
• Kassø e-methanol plant sells every droplet it can produce, with German land transport now driving demand
• Shipping has been "overtaken" on e-fuels after missed opportunities but has potential to regain momentum under EU and global regulation
• From sail to coal to diesel to LNG, shipping has always run on fuels other industries made available

Shipping is not well structured to create the markets for the green fuels it needs to achieve its goal to decarbonize, but is in a perfect position to play in them once others have built them, according to Torben Nørgaard, vice president and head of partnerships and offtake in power-to-X at European Energy.

"They are structurally challenged to create the markets, but they're in a perfect place to play in the markets, because actually they benefit from being very flexible in the approach to how they choose fuels," he told Ship & Bunker in an interview this week.

Nørgaard has seen the question from both sides. Before joining the Danish renewables developer he spent five years as chief technology officer of the Maersk Mc-Kinney Møller Center for Zero Carbon Shipping (MMMCZCS), following a career building methanol, ammonia, and hydrogen plants with Topsøe and 15 years in oil and gas.

Overtaken at Its Own Game

Nørgaard's view carries particular weight because of where he now sits. European Energy operates Kassø in southern Denmark, the world's first commercial-scale e-methanol plant.

The 52 MW facility has a nameplate capacity of 42,000 mt/year, has been producing for around one and a half years, and counts Maersk, Novo Nordisk, and LEGO as its founding offtakers.

"The plant is running at full capacity, and we sell every droplet we can produce," Nørgaard said.

"Demand currently exceeds the volumes we are able to produce. At Kassø, we are capacity constrained rather than customer constrained."

Kassø demonstrates that the market for e-methanol is no longer hypothetical. The question is increasingly how quickly supply can scale as regulation spurs uptake across multiple sectors.

Demand is increasingly broadening beyond shipping, with regulation now creating new markets for renewable fuels of non-biological origin (RFNBO) in European road transport and industry, thanks to drivers that include Germany's adoption of a 0.1% blending mandate for RFNBO fuels in gasoline from January 1 this year.

Meeting that mandate for Germany alone requires around 150,000 mt/year of RFNBO-compliant methanol, Nørgaard said, with RFNBO non-compliance penalties equivalent to roughly €2,400 per tonne of methanol to be added to the regular emission compliance, setting an effective price point in an undersupplied market.

The blending level is set to rise towards 5-10% over the next decade, he said, with the mandate spreading to other European countries and to industries such as steel.

In contrast, Nørgaard sees Shipping having lost the leading position on green fuel regulation it held only a few years ago.

Indeed, Shipping was set to become the first industry with a global, legally binding net-zero framework, only for agreement on the proposed scheme to collapse at last October's extraordinary MEPC session.

"Shipping was among the first sectors to create regulatory momentum around green fuels. Other sectors are now moving quickly as well, which can ultimately help build the scale and liquidity that shipping needs," he said.

A proposed auctioning mechanism for RFNBO-compliant fuel under FuelEU Maritime "could be a bit of a game-changer, subject to how it's implemented," he added.

Why Shipping is Challenged to Be the Market Maker

For Nørgaard, the industry's familiar "chicken and egg" framing, where owners wait for fuel supply certainty while producers wait for demand certainty, misses the real problem.

A functioning market needs traded volumes, liquidity, and depth, he argues, and a new one needs a market maker prepared to stand behind it for five to ten years.

"Creating a new global fuel market requires long-term commitments, liquidity and substantial investment across the value chain. That is difficult for any fragmented global industry to deliver on its own," he said.

"That is why regulation and demand from several sectors are so important. They allow producers to scale supply while giving shipping greater flexibility over how and when it adopts new fuels." Energy systems, he says, are built by nation states and regions to serve many industries at once, almost never by a single sector acting alone.

The Way It Has Always Worked

If that sounds like a demotion for shipping, Nørgaard's point is that running on energy systems built by others is exactly what the industry has done throughout its history.

"The wind didn't start blowing because the shipping industry built wind-propulsion ships," he quipped.

"They didn't shift to coal because someone invented a coal ship and thereby created demand for coal; they went there because the coal industry was developed by other sectors and was made available on a spot basis. Same story on diesel."

LNG followed the same pattern, he said. Its supply chain was built to give power generators in Japan and Korea security of energy supply, and ships operating on those routes simply tapped into it.

On that view, heavy fuel oil is the historical exception rather than the rule, a leftover product few other industries wanted.

Room for Everything

That flexibility is also why Nørgaard is relaxed about the prospect of surplus bioethanol entering the marine fuel market as electric vehicles eat into road demand, a shift that could free up 5-10 million mt for other uses including shipping.

Bioethanol delivers anywhere from close to none to 70% carbon reductions depending on how it is produced, he said, placing it in a different category from e-methanol's deep emission reduction potential rather than in direct competition with it.

"I think we should embrace and welcome bioethanol to the marketplace," he said. "Different fuels will play different roles. E-methanol offers a pathway to very deep emissions reductions and can be produced at scale using renewable electricity and biogenic CO₂."

As for where European Energy builds next, the fundamentals are access to biogenic CO₂, low-cost renewable electricity, land and, increasingly, access to markets created by regulation.

"Kassø has given us practical experience of what it takes to develop, build and operate e-methanol production at commercial scale. For future projects, the fundamentals are clear to us," he said, while stressing the company has nothing public to announce.

And despite the missed opportunities related to shipping regulation, Nørgaard believes the industry's orderbook shows it is instinctively returning to what it does best: keeping its options open.

"They're doing the right thing, if you ask me," he said.

"Shipping is building optionality into the fleet and positioning itself to use the fuels that become available at scale. The next step is creating regulatory frameworks that allow shipping to compete with road transport and industry for low-emission fuels. If we get that right, demand from multiple sectors can help bring the scale that ultimately makes these fuels more accessible to everyone."