A step forward for “green” methanol and its potential to deliver deep GHG reductions in maritime shipping
The shipping industry is under increasing pressure from regulators and consumers to cut greenhouse gas (GHG) emissions. Of note, then, is A.P. Moller – Maersk’s recent announcement that it will launch a feeder ship in 2023 that will run on “green” methanol. Green methanol is a low-carbon fuel that can be made from either biomass gasification or renewable electricity and captured carbon dioxide (CO2). This is an exciting step, as the announcement could help to scale up climate-friendly methanol technology.
From an infrastructure standpoint, methanol is advantageous for shipping. Right now, the leading alternative fuel is liquefied natural gas (LNG), which requires new insulated tanks capable of maintaining an extremely cold temperature to preserve its liquefied state. Methanol, meanwhile, is liquid at ambient temperature and pressure and thus enables the continued use of conventional fuel storage and bunkering with just a few modifications. This makes a transition to methanol relatively easier and more affordable. Eighty-eight out of the top 100 international ports already have the bunkering infrastructure in place to support methanol fuel.
Ships capable of using alternative fuels such as methanol will likely use dual fuel engines, and that’s what Maersk’s new vessel is equipped with. Maersk intends to solely use “green” methanol, but the ship will also be capable of utilizing conventional fuels like very low sulfur fuel oil (VLSFO) and marine gas oil (MGO), and perhaps even LNG. However, Maersk does not intend to run any of its ships on LNG, and the company’s head of decarbonization said in a recent interview, “I think it is borderline greenwashing to call LNG a transition fuel towards the decarbonization of shipping.”
Indeed, not all alternative fuels make a ship more climate friendly. To determine a fuel’s climate impact, the GHG emissions from its entire life cycle should be evaluated. In the marine industry, this is referred to as well-to-wake (WtWa) and it considers emissions associated with both fuel production (well-to-tank, or WtT) and fuel combustion (tank-to-wake, or TtWa). We used the GREET 2020 model to calculate WtWa emissions for four methanol pathways, and the results are shown in Figure 1 below.
It’s important to note that most methanol produced today is derived from fossil fuels, primarily natural gas. The four primary kinds of methanol are: grey methanol derived from natural gas; blue methanol derived from natural gas combined with carbon capture and storage (CCS); bio-methanol derived from biomass feedstocks; and e-methanol derived from renewable electricity and captured CO2. The latter two fuels can be considered “green.” Figure 1 shows the WtWa GHG impact of methanol fuels generated from the four different feedstocks compared to the GHG emissions of conventional MGO. We see a wide range in GHG emissions. As the emissions from the combustion of methanol, or TtWa emissions, are the same for all four pathways, we know that methanol’s GHG emissions are heavily dependent on the feedstock and conversion process used to create it.
We estimate that grey methanol generated from natural gas has slightly more GHG emissions than MGO. Blue methanol offers a slight reduction in GHG emissions relative to MGO assuming a generous 90% carbon capture rate. It is possible, though, that blue methanol’s GHG emissions are higher than shown in Figure 1; that’s because the emission factors for natural gas production may underestimate methane leakage in the natural gas supply chain. Both green methanol fuels have low GHG emissions because the CO2 emitted during combustion was previously sequestered in the WtT phase of their life cycle. E-methanol has the lowest GHG emissions of the four.
Currently, the shipping industry’s biggest obstacle with green methanol isn’t operating on it but sourcing it. Commercialization of e-methanol’s two inputs, carbon from direct air or point source capture and hydrogen from renewable energy powered electrolysis, is nascent, and there is a limited supply of sustainable biomass for cellulosic bio-methanol. The green methanol industry is currently small and there are only a handful of commercial producers worldwide. Consequently, green methanol costs more than conventional fuels. While a 2021 report from the American Bureau of Shipping estimated the cost of green methanol at $643/tonne or $0.032/MJ and grey methanol at $417/tonne or $0.021/MJ, MGO costs, on average, $600/tonne or $0.014/MJ. This economic barrier can be overcome with incentivizes for growth, though. Regulators could incentivize this growth by using policy tools like fossil fuel taxes, alternative fuel mandates, and investment in research and development for “green” fuels.
The value of such incentives is clear from the difference in carbon intensity between grey and green methanol illustrated in Figure 1. There is wide potential variation in WtWa emissions between the same finished fuel. Green methanol can provide deep GHG reductions, but not all methanol is advantageous from a GHG perspective.
To ensure that methanol is delivering meaningful GHG reductions to the marine sector, marine climate policies should incorporate full life-cycle accounting of fuels. This would allow only the most sustainable fuel pathways to qualify for the policy support needed for them to scale up in the long term. If, instead, there is narrow focus on combustion emissions, we run the risk of incentivizing fuels that offer minimal GHG reductions and might jeopardize our chances of decarbonizing the maritime shipping sector.