Collaboration crucial to boost maritime green fuel production
Why industry partnerships will play a key role in ramping up alternative fuel supplies
26 July 2023
As increasing numbers of shipowners seek to move ahead with plans to decarbonise their vessels by using alternative fuels, a major hurdle is securing its share of a currently limited global fuel production capacity.
One factor is that green fuel producers are not getting the levels of demand they need themselves to boost production – at least not from maritime. This is indicated by Mikkel Kiil, CEO of Danish biogas producer Green2x, which transforms biomass waste to bioenergy. It is currently developing major projects both in Denmark and internationally.
Kiil observes that while there is currently a large demand for biomethane, shipping’s demand forms “quite a small part”. He adds: “These molecules could be turned into biomethanol for shipping, however currently we see bigger demand from other industries. If shipping wants the green gas for biomethanol it needs to speed up signing off take agreements.”
Proman calculates shipping’s demand for methanol as around one million tonnes by the end of 2024, with this figure expected to jump to almost 6 million tonnes by 2025.
Proman executive director marketing and logistics Anita Gajadhar says this only represents a fraction of overall methanol demand globally, which is around 100 million tonnes. Half of this current demand is going to the chemicals industry, while roughly 20% goes to the methanol-to-olefins process in China.
She says: “Those sectors are going to continue to need methanol even as the maritime demand increases, so we will see production ramping up.”
Proman recently joined other fuel producers and OEMs in signing the Environmental Defense Fund’s call for the shipping industry to fully decarbonise by 2050.
International authorities’ and governments’ investment and regulatory policies are also going to be key to growing green fuel production. An example is the Danish Government initiative PtX, which Kiil said will “enable more green fuels in general, especially if there is a way of co-locating biofuel and efuel production”.
Different players within shipping view cross sector collaboration as the obvious way to boost production, but long term commitments are required.
Speaking at the Singapore International Bunkering Conference and Exhibition, CMA CGM Vice President (Bunkering and Energy Transition) Farid Trad said: “I think the key factor in success, as we have already seen with LNG, is to involve everybody in the value chain, from the supplier to the port authority, to the barge operator, to the shipper and to the end-consumer.”
Hapag-Lloyd Senior Director Global Fuel Purchasing Jan Christensen adds: “Green fuels project developers require long term offtake commitments to raise financing for developing the projects. This means the shipping sector and its customers need to test new business models with a long-term mindset to make decarbonisation of maritime logistics a viable business case.”
He says that collaboration among shipping companies within bunkering infrastructure and sourcing is a “key to reducing the offtake risks which come along with the long-term commitments”.
Lars Ravens, managing director of E-Cap Marine GmbH (emission-free power generation systems’ solution provider), sums up: “Achieving these [shipping decarbonisation] targets is crucially contingent upon cross-sector collaboration, technological innovation, supportive as well as regulative policies from international authorities and national governments, to create opportunities for zero-emissions fuels and technologies to thrive and quickly achieve scale.”