INTERVIEW: Container Giant Maersk Discusses Ramping Up Methanol Supply

Maersk would need as much as 20 million mt/year of methanol to use it as the main fuel for its entire fleet. File Image / Pixabay

Shipping giant AP Moller-Maersk has secured its first supply of methanol, in an early step that may represent just 0.0005% of the green energy the firm needs in the daunting challenge of decarbonising its fleet.

On Thursday the company announced a deal for it to buy 10,000 mt/year of green methanol from an as-yet-unbuilt plant in Denmark to meet the fuel requirements of its first zero-carbon ship, a 2,100 TEU feeder vessel due for delivery in mid-2023.

The company would need around 20 million mt/year were its entire fleet to be running on the alternative fuel. That compares with the 10.3 million mt of conventional bunkers it consumed last year, with the difference in quantities explained by methanol's lower energy density.

Global methanol production -- almost none of it green methanol -- is currently around 100 million mt/year.

Berit Hinnemann, head of decarbonisation business development at Maersk, explained the company's thinking around scaling up its methanol supply in the coming years in an interview with Ship & Bunker on Thursday.

"We are of course in dialogue with many project developers around the world, and we will need large amounts of fuel," she said.

"We are working on many different forms, but we also needed to see what was realistic for 2023."

Lowering Costs

The company expects initially to pay about twice as much per tonne for green methanol as for conventional bunkers -- meaning somewhere in the vicinity of $1,000/mt -- but because of methanol's lower energy density, in VLSFO equivalent terms this will work out to somewhere closer to $2,000/mt. The firm also reportedly sees newbuilds running on green methanol as costing 10-15% more than conventional ones, according to news agency Reuters.

But these fuel costs may come down over time, Hinnemann said.

"A key element is to bring down costs for e-fuels, because that's one of the key parameters for the upscaling," she said.

"What we see is that this can be done through strong collaboration and partnership to really see what elements we can do to bring down costs as much as possible.

"We clearly see opportunities out there.

"That's usually how it goes when upscaling production and when introducing technologies that need to be ramped up."

(Mostly) Green Methanol

The renewable power needed for electrolysis to produce the green hydrogen that will go into the methanol production at the Danish plant will come from a local solar facility. But there is a small caveat -- on days when Northern Europe's skies are overcast and little solar power is produced, the power will come from Denmark's national grid, in which fossil fuels took a 20% share in 2019.

"For part of it we will have to use electricity from the grid," Hinnemann said.

"We'll use the electricity from the solar park as much as possible."

Scaling Up

When it comes to scaling up green methanol production, Maersk sees its deal with REIntegrate and European Energy to set up the Danish plant as a possible model for the deals it will have to strike around the world as it sets up a global fuel supply chain for its ships.

"This could be a kind of blueprint for doing these kinds of partnerships," Hinnemann said.

"To work together to get to production on a larger scale, close to relevant locations, close to bunker hubs, also considering where cheap feedstocks are available."

The firm is looking into whether government subsidies from the Danish government or the EU may be available for its facility, but this is not part of the business case yet.

Other Fuels Under Consideration

While methanol is the company's current focus in alternative fuels -- the firm is rumoured to be on the verge of ordering 12 more 15,000 TEU methanol-fuelled ships -- other fuels are not off the radar entirely, Hinnemann said.

"We see methanol as an option that is available today and also available for scale-up today," she said.

"That's really important because the recent IPCC report has really highlighted the urgency of the climate crisis, so we really need to start acting in this decade.

"Ammonia is an interesting option, but it's not an option for us today because technical safety issues and engine development need to be resolved.

"And we are already using biofuels in our fleet, and we are also looking to develop that, but we think that scalability is an issue here.

"There's no silver bullet, so we are working on different actions and fuels and trying to do this as fast as we can."