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Methanol’s growing traction as alternative shipping fuel

Maersk signs deal on construction of first carbon-neutral vessel

Highlights

Container will have 2,100 TEU capacity, delivery by mid-2023

Feeder vessel will be able to run on methanol or VLSFO

Maritime sector taking more steps to decarbonize

A.P. Moller-Maersk -- the largest shipping company in the world -- has signed an agreement with South Korea's Hyundai Mipo Dockyards to a build a feeder vessel capable of sailing either on methanol or very low sulfur fuel oil (VLSFO), it said July 1.

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The project is part of the company's plans to operate the world's first carbon-neutral vessel by 2023.

The vessel, which will be powered by carbon-neutral methanol, is expected to be delivered to Maersk by mid-2023, the statement added. It will have a capacity of 2,100 twenty-foot equivalent units (TEU) and will be deployed on the Baltic shipping route and fly the Danish flag.

"Developing this vessel is a significant challenge, but we have already come a long way in our work with the yard and the makers to reach this milestone," said Ole Graa Jakobsen, Head of Fleet Technology at A.P. Moller-Maersk.

"While we are pioneering these solutions for our industry, we are working with well-proven technologies and the cost potential from further scaling is becoming very clear to us," he added.

Net zero strategy

Maersk is running a pilot initiative into a scalable carbon-neutral product for customers and fuel suppliers, but the company hopes it can operate more methanol-fueled vessels in the future.

The company said it is also ensuring that all of its newbuild vessels will have dual-fuel technology installed, enabling either carbon neutral operations or operation on standard very low sulfur fuel oil, or VLSFO.

Maersk is targeting a 60% relative CO2 reduction from shipping by 2030 and hopes to achieve net-zero CO2 emissions by 2050.

In a recent interview with S&P Global Platts, Morten Bo Christiansen, head of decarbonization at A.P. Moller-Maersk, said that container shipping, with its direct exposure to retailers and consumers, should lead the maritime industry's journey to a zero-carbon future.

"We are just emitting way too much CO2 and we need to do something about that, for the sake of the planet, but actually for the sake of our customers," Christiansen said on March 10.

Being one of the largest shipping companies in the world, Maersk is also one of the biggest consumers of oil derived bunker fuel.

The group consumed 10.37 million mt of bunker fuels last year, according to its 2020 sustainability report. This includes fuel oil, heavy fuel, marine diesel and marine gasoil.

Carbon neutral fuels

Methanol and ammonia have emerged as the most feasible future marine fuels, according to Maersk.

Methanol has a ready-established infrastructure, and can be produced as a biofuel, or synthetically, reducing CO2 emissions by up to 15% compared with conventional marine fuels, according to industry estimates.

But methanol's price competitiveness is prone to fluctuations and its low energy density makes it slightly unappealing, according to some industry sources.

Meanwhile, ammonia is viewed as an ideal replacement from a net-zero carbon perspective, but the technology for upscaling the fuel is still at a nascent stage.

Some participants in the industry also view LNG as a viable alternative to the current crop of marine fuels.

The shipping sector -- representing around 3% of total EU greenhouse gas emissions -- has come under increased pressure to decarbonize.

But the various maritime sectors like containers, oil tankers and dry bulk vessels are at different stages of the adoption curve of decarbonization because they cater to different customer segments.