• MSC sees methanol retrofits as likely option for existing fleet
• Supports LNG as a transition fuel
• Believes biofuels could be used more effectively in aviation
MSC, the world's largest shipping company, is starting to set out in more detail how it will handle the energy transition over the next few decades.
The firm overtook AP Moller-Maersk as the world's largest container line by capacity last year, but despite rapid recent growth in its fleet it has been slower than some of its rivals in the boxship segment to order zero-carbon ships.
That looks set to change within a relatively short space of time. The firm is likely to be taking on alternatives beyond LNG and biofuels within the next two or three years, CEO Soren Toft told Ship & Bunker on the sidelines of the IBIA Mediterranean Shipping and Energy Conference in Genoa on Thursday,
"I think there are three or four of these fuels, but I think for a company like us, we will likely end up with a variety of these things; I don't think we will get only one," he said.
"I'm sure within two or three years, we'll have two or three green fuel types in our own mix."
Fuel Supply Challenge
The main challenge at the moment is to make sure supply of the new fuels can be secured, he said.
"The people who need to invest many hundreds of millions or even billions of dollars, they're saying, 'When can I rely on a company like MSC to order ships?'" Toft said.
"And vice versa, the shipping companies, they're saying, 'Until we have a supplier, we cannot take the risk fully on.'
"And, by the way, that's why all the ships you are seeing being ordered today, they're dual-fuelled.
"We call them methanol or LNG-fuelled, but they're all dual-fuelled, just in case."
MSC backs the idea of LNG playing a role in maritime decarbonisation, if it can be steadily replaced with greener alternative gases.
"We have LNG, which is an immediate and very effective transition fuel," Toft said.
"The question is how we can make that transition fuel, while it's based on fossil, into a green fuel, either initially by adding biomethane and liquefying it or later on, of course, by potentially developing synthetic LNG."
Assessing the Alternatives
The company is open-minded about most of the future fuels on offer, Toft said, but has less confidence in biofuels as a long-term solution for shipping.
"Right now, we are thinking a lot about LNG, because you can mix LNG with the biomethane and thereby make it minus 20% on CO2 emissions, or minus 30% or 40%," he said.
"We also, of course, have biofuels right now that we're selling to our clients, so before you have a sustainable solution, that's happening.
"But the biofuels are not the real solution, because in fact there's not enough of it.
"In my opinion the biofuels should go to the aeroplanes, not the ships, because we get a much better climate impact from that.
Methanol and Ammonia
In methanol the company's plans are already at an advanced stage.
"We are looking into methanol, and looking into retrofitting ships; we are retrofitting a few ships right now that will be able to burn methanol," Toft said.
"That's probably the next fuel that we will look at.
"And then of course on ammonia, the big question is really the toxicity.
"I don't know, but I believe that this will be solved eventually.
"I cannot tell you which will be the winner; I actually believe that we will end up running ships on all three fuel types [bio-LNG, methanol and ammonia] in the future."
The Nuclear Option
MSC also sees nuclear propulsion as an option if politicians move to facilitate it in future, Toft added.
"We think about it, but we also know the political obstacles that are there," he said.
"In my opinion nuclear is very clean, and if it can be managed and contained -- and why should it not -- it could be an option.
"But I think before we as a private company start talking about that, we need politicians and regulators to talk about it first."
Plans for the Existing Fleet
MSC currently has significant tonnage on order that is designed to run solely on conventional fuels. But given the current regulatory pressures, these ships are unlikely to be allowed to run on fossil bunkers for their entire commercial lives.
Methanol retrofits currently look like the leading choice for what to do with these ships to allow them to run for a full 25 years or so, Toft said.
"It's difficult to say, but as it looks right now, I believe a retrofit to methanol is a more viable option," he said.
"It's simply the least complicated of all the complicated conversions you could make to either LNG, ammonia or methanol.
"I believe methanol will be one of the preeminent retrofit options."