World shipping sector’s green fuel adoption puts cart before horse as supply struggles to keep pace
- Some 251 new-build methanol-fuelled vessels are either in the water or in the order book, according to a joint study by GENA Solutions and Methanol Institute
- Global supply capacity of low carbon methanol is less than 1 million tonnes a year, which can only serve the needs of 25 such container ships
The global shipping industry may have put the cart before the horse as green fuel supplies have lagged the furious pace of worldwide fleet expansions with vessels capable of burning low carbon fuels.
A heightened interest in methanol-fuelled vessels has been driven by the shipping industry’s plans to cut carbon emissions by using cleaner fuels. Some 251 new-build methanol-fuelled vessels are either in the water or in the order book, according to a joint research published in March by Finland-based chemicals research provider GENA Solutions and industry body Methanol Institute.
“Technology is not an issue, we already can deliver engines capable of combusting both methanol and ammonia,” Roger Holm, a senior official at marine and energy equipment maker Wartsila, told the Post in an interview. “The key challenge is the extremely low availability of green fuels … Many green fuel project developers still have not invested, and we need financial incentives and emissions penalties to drive it.”
A 16,000 TEU (twenty-foot equivalent unit) container ship can consume up to 40,000 tonnes of methanol a year. Currently, low carbon methanol supply capacity is less than 1 million tonnes a year, which can only serve the needs of 25 such container ships.
But there are plans to raise capacity, which could potentially surge to 24 million tonnes by 2028 if all the identified projects are financed and completed.
Holm, who is president at Wartsila Marine, a unit of Wartsila Corporation, said that while it is still early days for the sector to cut carbon intensity, technology is already available for shipowners to carry out retrofit projects and make their new-build vessels ready for low carbon fuel.
Hydrogen, methanol and ammonia are emerging as low carbon alternatives to fossil bunker fuels, as they emit little or no carbon dioxide during combustion. However, as they are primarily produced from fossil fuels, their supply chains have large carbon footprints.
Ammonia, a colourless and poisonous gas, is one of the most emissions-intensive commodities, according to the International Energy Agency. Just over 70 per cent of ammonia – used mostly as fertiliser – is produced from natural gas, and most of the rest from coal.
Green or low-carbon hydrogen, methanol and ammonia can be produced with current technology, but they are expensive and require financial incentives to support production scale expansion and lower costs. Imposing stiffer penalties on emissions is another way to tip the balance in favour of adoption.
Among the three green shipping fuels, methanol and ammonia are poised to beat hydrogen, since liquid hydrogen is too bulky to carry on vessels due to its lower energy density.
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“The reason why we don’t think hydrogen will play a big role is that it requires tanks with 20 times as much capacity as those for existing bunker fuel, which is not feasible since you also need space for cargo and passengers,” Holm said. “The ratio for methanol at 1.7 times, and ammonia at 3.9 times, do not require as big a compromise on space.”
China, which has the world’s largest shipbuilding industry, is one of the most important markets for Wartsila, which announced a major Chinese order earlier this month.
The company will supply five auxiliary engines for each of 12 vessels under construction – five owned by Cosco Shipping Lines and seven by Orient Overseas Container Line. They are dual-fuel engines that can combust both conventional bunker fuel and methanol.
The vessels are scheduled for delivery from 2026, and the engines will be sent to shipyards when needed.
“It is the biggest single-order for engines for methanol-powered vessels in China,” Holm said, adding that some 60 per cent of all new container vessels ordered globally since the start of last year are set to run on methanol.
Many shipowners are opting for engines that can burn low-emission fuels when building new vessels, which typically have a lifespan of 25 years, amid pressure from international regulations to achieve net zero emissions by 2050 and customers’ growing needs for green shipping.
Since the start of this year, ships with gross tonnage of 5,000 and above entering European Union ports have been subjected to emissions cap-and-trade quotas. Initially, free quotas are allocated, which will decline annually thereafter until they reach zero in 2034.
“Ships operating in the EU will see fuel costs double by 2030,” Holm said. “We estimate that by 2035, cap-and-trade will level the playing field between fossil and green shipping fuels.”
