• IMO delay is postponing investment in green fuels
• Negotiations over offtake agreements are ongoing with three shipping companies
• Power costs will be key to determining where to set up production
• Shipping needs to prepare to compete with other industries over green methanol

The company is in the process of setting up a pilot plant. Image Credit: PuriFire Energy

While the IMO's decision to delay a vote on global maritime decarbonisation measures has slowed investment in green fuel production, UK methanol start-up PuriFire Energy sees new demand for alternative bunker fuels still emerging.

Cambridge-based PuriFire was established in 2019 with the aim of commercialising hydrothermal processing applications to scale up the production of green fuels and biofuels. The company is in the process of setting up a pilot plant producing 0.5 mt/day of green methanol, which will then be used to demonstrate the potential for establishing a commercial plant.

The IMO delay has slowed investment in the company and similar firms as potential backers remain uncertain over prospects for alternative bunker fuels with no global maritime decarbonisation deal in place, Neel Shah, the company's co-founder, said in an interview with Ship & Bunker. In October the IMO's Marine Environment Protection Committee opted to delay a vote on its net-zero framework by a year after significant opposition emerged, leaving the future prospects of global regulation in this area highly uncertain.

"We've had two investors step out or defer the decision whether or not to invest in PuriFire," Shah said.

"It is a regulatory headwind that we're facing instead of a regulatory tailwind.

"This has also delayed partnerships or offtake agreements."

But the firm believes shipping remains firmly committed to a decarbonisation pathway despite slow progress on global regulation, with regional regulations like those from the EU helping to support that.

"If we're talking to the right people within the right organisations, then there is the demand, there is the willingness to want to go out there and actually decarbonise and actually be ahead of the penalties that are going to come around from the EU," Shah said.

Potential Offtake Agreements

The company is in negotiations with several shipping firms about potentially securing offtake from PuriFire once it establishes production facilities.

"We have active conversations ongoing with three shipping companies at this point in time, and it's really dependent on how much we can produce and how quickly we can produce that methanol," Shah said.

"They're looking at diversifying their sources of methanol, but they're also looking at diversifying their energy vectors that they want to pursue.

"We're quite excited about the interest that they've shown."

Production Facility

The firm has yet to decide where to establish commercial methanol production, with power costs as a key consideration.

"The short answer is we're open and flexible," Shah said.

"We're a UK company, Cambridge-headquartered, and we want to try and prioritise production facilities locally.

"However, I think it's also important to understand pockets of demand from the shipping companies, and where that fuel needs to be made available.

"And then the other inputs which we are always looking at are the key inputs required for our process: feedstock, engineering capabilities, the skills that are available and the cost of power.

"Most green fuels today are energy-intensive processes, and the cost of power actually ends up driving what the end price of that fuel is."

Competition With Other Methanol Consumers

The shipping industry needs to prepare to compete with a range of other industries as it seeks to secure supply of the new green fuels.

PuriFire is looking both at the shipping industry and the chemicals industry as potential customers for its green methanol.

"We're looking at the marine application of it as fuel, and then the chemical application of it as a feedstock to then displace the 110 million mt/year of methanol that's currently produced and consumed," Shah said.

The chemicals industry is further along within its decarbonisation plans than shipping, and the market should be prepared for new competitors to emerge seeking to secure green methanol supply, Shah added.

"I think the marine and maritime industry is under that pressure to decarbonise," he said.

"However, we believe that the chemical industry will also shortly be hit with various kinds of penalties, so it is also under pressure."