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Methanol industry expects use as marine fuel to grow but hurdles remain

Using methanol as a replacement for marine fuel may grow to a 5 million-15 million mt/year market over the next decade, John Livorness, senior manager for methanol at Saudi Basic Industries Corp., said at the India Methanol Economy International Seminar in New Delhi, India.

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Its viability, however, will depend on demonstrated technical feasibility, all-in costs including conversion of ship engines, and refueling infrastructure, he added.

The reduction of pollution associated with global shipping could be a key driver for the adoption of methanol as marine fuel, industry participants said.

"Global shipping provides 90% of the world's transportation needs by tonnage while emitting a modest 15% of carbon dioxide emissions, but it emits 42% of the world's nitrogen oxide and 73% of the sulfur oxide," said Bengt Ramne, CEO of ScandiNAOS. Methanol is cleaner, emitting much less nitrogen and sulfur oxides.

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Industry sources said at the conference that perhaps methanol producers should be the first to switch their ships' fuel.

Methanex is building seven ships that can run on methanol as well as traditional bunker fuel, marine diesel or gasoil. It launched three ships in April, and expects to launch the remaining four in October, the company said.

For the rest of the shipping industry, cost remained the main hurdle, Ramne said.

"The shipping industry is a simple, cost-based business and right now, methanol is not competitive against fuel oil if oil prices remain low," he said.

Niche markets, such as inland waterways, may be where methanol fuel may find traction. It is typically near urban centers where emission controls are desirable or even mandated by the government, Ramne added.

Recently, the Indian government issued the National Waterways Act of 2016, which requires developing inland waterways transportation that is fuel efficient, cost effective and environment friendly, a potential catalyst for the promotion of methanol as fuel, industry participants said.

--Yi-Jeng Huang, yi.jeng.huang@spglobal.com
--Edited by E Shailaja Nair, shailaja.nair@spglobal.com