Register with us today

and in less than 60 seconds continue your access to:Latest news headlinesAnalytical topics and featuresCommodities videos, podcast & blogsSample market prices & dataSpecial reportsSubscriber notes & daily commodity email alerts

Already have an account?

Log in to register

Forgot Password

Please Note: Platts Market Center subscribers can only reset passwords via the Platts Market Center

Enter your Email ID below and we will send you an email with your password.


  • Email Address* Please enter email address.

If you are a premium subscriber, we are unable to send you your password for security reasons. Please contact the Client Services team.

If you are a Platts Market Center subscriber, to reset your password go to the Platts Market Center to reset your password.

In this list
Oil | Petrochemicals | Shipping

Feature: Methanol industry seeks slice of bunker demand on emission cuts

Emissions | Renewables | LNG | Natural Gas | Oil | Crude Oil | Refined Products | Metals | Steel | Raw Materials

Market Movers Europe, Dec 9-13: Leaders meet in Paris to try to break Ukraine gas transit impasse

Shipping | Marine Fuels

Platts Bunkerworld

Oil | Refined Products | Fuel Oil | Shipping | Dry Freight | Marine Fuels | Tankers

Middle East Bunker Fuel Conference

Bunker Fuel | Oil | Crude Oil | Shipping | Marine Fuels

Spotlight: Sweet-sour crude differentials widen as HSFO cracks collapse Global Oil

Feature: Methanol industry seeks slice of bunker demand on emission cuts

Highlights

Shipping industry seeks alternative fuels after IMO 2020

Methanol comes with lower delivery cost than LNG

Renewable methanol may be one answer to IMO GHG strategy

London — As the shipping industry prepares for a wave of emissions regulation hitting it over the coming years, methanol suppliers are looking to take advantage of the situation to take a share of the 300 million mt/year global bunker market.

Shipping companies face a significant rise in costs when the International Maritime Organization's global 0.5% bunker sulfur cap comes into effect next year, with 0.5% sulfur bunker prices currently at a premium of about $230/mtto high sulfur fuel oil at Rotterdam. Delegates at the European Methanol Summit in Dusseldorf this week saw the upcoming changes for shipping as an opportunity for methanol to gain traction as an alternative bunker fuel.

"Methanol demand may grow at a reduced rate over the next two years because of the global slowdown," Hanna Sukhu-Maharaj, commercial manager of Trinidad-based methanol supplier MHTL, said at the conference. "But I think in the medium to long term, the substitution of conventional bunker fuels offers great potential for methanol."

Methanol produces negligible sulfur, nitrogen and particulate matter emissions when burned, and has reduced carbon dioxide emissions compared with conventional bunker fuels.

Methanol barge prices at Rotterdam have been $228/mt lower than 0.5% sulfur marine fuel barges over the past month. But given methanol's lower energy density, methanol prices by energy content worked out marginally higher, at $10.43/GJ for methanol versus $10.05/GJ for 0.5% sulfur bunkers.

Ships can be retrofitted to run on methanol; conference delegates estimated the conversion of the cruise vesselStena Germanica in 2015-16 was completed at a cost of a few million dollars. But shipping companies are also ordering new ships capable of running on methanol -- since 2016 Waterfront Shipping has been operating seven methanol-fueled tankers, and in 2018 in conjunction with MarInvest, NYK and Mitsui it agreed to charter four more.

MHTL's sister company Proman Shipping last month announced a joint venture with Sweden's Stena Bulk to jointly own and operate two new methanol carriers that are also methanol-fueled. The ships will each consume about 13,000 mt/year of methanol, MHTL's Sukhu-Maharaj said Wednesday.

Within the alternative bunker fuel market, methanol's main competitor at the moment is LNG, which has seen exponential growth as a marine fuel in recent years, albeit from a very low level.

S&P Global Platts Analytics forecasts LNG bunker demand may grow to as much as 15 million mt/year over the nextdecade.

Delegates at the methanol conference stressed that both the delivery infrastructure and the alterations needed on board ships were much cheaper for methanol than for LNG. But they pointed out the much greater size of the LNG industry gave it more marketing and lobbying power to promote its use in shipping.

One supplier also said the current focus on scrubbers in shipping -- emissions-cleaning equipment that allows aship to continue burning dirtier fuels -- was holding back the market for alternative bunker fuels.

"Scrubbers are killing this market for us," the supplier said.

Beyond 2020, the next challenge for the whole of the bunker market will be to determine what energy sources canbe used to comply with the IMO's initial strategy for the reduction of greenhouse gases (GHGs). Last year, the IMO adopted a strategy of cutting carbon dioxide emissions per ship by at least 40% from 2008's levels by 2030, while cutting the shipping industry's total GHG emissions by at least 50% by 2050.

Using conventional methanol derived from natural gas as a bunker fuel, in conjunction with measures to maximizefuel efficiency, may be enough to meet the 2030 target, but will be insufficient for the IMO's 2050 goals.

But renewable methanol, derived from biomass or carbon dioxide combined with hydrogen, could be an energy source with low enough net GHG emissions. This would be likely to be much more expensive than conventional bunker fuels, but that would also be the case for any solution in line with the IMO's 2050 strategy.

Remko Detz, a scientist in the energy transitional studies unit of Dutch research organization TNO, said pricesfor renewable methanol should come down sharply towards 2050, and could be competitive with conventional methanol by2035 or before. This estimate is based on significant additions in renewable power capacity worldwide, as electricity is needed to create the hydrogen needed to make the fuel.

The fight to become the dominant low-GHG marine fuel is likely to become increasingly heated over the next decade, with aggressive lobbying from all sides. But as the methanol market worldwide is currently just around 100 million mt/year, taking only a small share of bunker supply would amount to a large boost to demand.

-- Jack Jordan, jack.jordan@spglobal.com

-- Edited by James Leech, james.leech@spglobal.com