The world’s second-largest shipping company can’t wait for ships fuelled by ammonia, hydrogen or batteries – it’s putting its chips on green methanol.
Copenhagen | In mid-September, a new ship belonging to Denmark’s multinational cargo giant Maersk will arrive at the Copenhagen docks, completing a 21,500 kilometre maiden voyage from a South Korean shipyard.
So far, so normal. After all, every year Maersk replaces about 5 per cent of the 300 vessels it directly owns. But this particular 2100 TEU (20-foot equivalent unit) feeder vessel is the first of its kind – and its voyage is a revolutionary moment for the global shipping giant.
Maersk, the world’s second-largest shipper of container freight, is making a big bet on the future of green shipping. As it tries to speedily jettison fossil fuels, the initial choice it has made is not ammonia, hydrogen, batteries or sails, but green methanol.
For Australia, whose government and exporters cannot hope to reach net zero without a massive shift to green shipping – and where debate still rages about the best way to pull this off – Maersk’s punt will be worth watching.
But while methanol ships may be the most ready-to-hand solution, it is not all plain sailing. For Maersk and its peers there is still a big headwind: how and where they will lay their hands on a fuel that almost nobody is yet producing.
Despite this, Maersk is cranking up fast. From a standing start, it is trying to decarbonise at least a quarter of its shipping fleet by 2030, as it goes full steam ahead towards a science-based 2040 net-zero target.
“It’s quite staggering: three years ago, there were zero of these ships on order. Not a single one,” says Morten Bo Christiansen, head of energy transition at Maersk HQ in Copenhagen.
“Two years ago, there was one – the one that is coming to Copenhagen in September, sailing on green methanol. One year ago, there were around 30 ships on order. Now, there are more than 100.”
The cargo freight industry is responsible for about 11 per cent of global emissions, and the sector’s net-zero pathway looks daunting.
There are plenty of technologies for decarbonising shipping: ships might run on ammonia, on hydrogen or be battery powered. But these innovations are still largely on the drawing board. The only option that is ready to go is green methanol – so Maersk has clambered on board.
“We could see that there were several promising pathways. The reason that we went for this methanol pathway is very, very simple: we know it works, and it can work now. Plain and simple. And none of the others can,” Christiansen says.
“If we can find a better pathway in the future, we’ll go for that as well. It’s really this desire to just do something now, and not sit and wait for something that may or may not work in the future.”
The design of methanol-powered ship engines is not radically different to today’s standard engines – Christiansen reckons you’d have to be a mechanical engineer to spot the difference.
The similarity means that existing ships can be retrofitted with methanol engines. Last month, Maersk announced that the first retrofit of a methanol dual-fuel engine would take place in mid-2024.
“That is just great news, because that means you don’t have any stranded assets,” Christiansen says. “Of course it comes at a cost – nothing is for free. But the engine actually is very similar to a conventional diesel engine, so you basically recycle most of the engine.”
The brand-new ships look a little different: the bridge and accommodation are at the front, like a truck, and the smokestack is off to one side, to allow more containers.
Because the fuel tank isn’t quite the same shape, the design has been tweaked – even though there is less cargo space, the engineers have found a way to load 16,000 to 17,000 TEU on what used to be a 14,000 TEU capacity vessel.
Still, because methanol has only half the energy density of oil, the ship needs to carry about 10 to 12 per cent more fuel. “That is a manageable cost. And I think honestly, it’s a reasonable cost to future-proof your assets,” Christiansen says.
Methanol also has other advantages. Because it is an alcohol, it is easy to handle.
“It burns pretty well, and the safety issues on board are manageable,” he says. “From an environmental perspective, it is quite good, because even if you have a spill it’s biodegradable, and it will actually evaporate as alcohols do.”
Plenty of shipyards are ready to start building methanol-powered vessels, and Maersk has ships on order from yards in both Korea and China.
The catch: where’s the fuel?
But there’s a catch. And it’s a big one. The vessels can run on any kind of methanol, but to be a net-zero ship it needs to be green – produced from biomass or renewable energy. Right now, though, the supply of green methanol is next to non-existent.
This used to be one of the energy transition’s chicken-and-egg problems: there were no vessels, so there was no demand. And that meant no incentive to start making green methanol.
“It’s not a chicken-and-egg situation anymore, it is a supply problem. There is demand, and we have an identifiable problem: produce the fuels,” Christiansen says.
Maersk has knocked on the door of the big oil companies, but come away empty-handed. Smaller companies may be willing to take a punt, but banks are still shy about funding projects in an untested, non-commoditised market – they want to see 100 per cent offtake agreements.
So Maersk is using its own balance sheet to help kickstart the industry, signing offtake agreements that will help producers raise debt, pushing down prices.
“We are a company of a size that can do that. I think that’s what is going to get the market started. Eventually it will be a liquid market, but it’s going to take a while.”
The other rocket booster that’s needed is a carbon tax. There are some customers willing to pay a premium for green product, but for the rest, they need a price signal.
“You don’t hear companies begging to be taxed very often, but this is an example. We need a carbon tax plain and simple. Because you need to level up. It’s just a flaw of the market that you’re not paying for the damage that you do.”
Another way to crack the nut is subsidies. Christiansen describes the Biden administration’s Inflation Reduction Act as “a complete game-changer”. “It is very good for green fuels, it will shave hundreds of dollars off the price of green methanol.”
Economics is not the only obstacle to unlocking green methanol. There is also a technical barrier: finding enough feedstock.
“The big challenge with the methanol pathway is that it is more difficult to produce than ammonia, for example. Because you need a carbon molecule,” Christiansen says.
That molecule needs to come from a green source: and for now, that means biomass, such as agricultural waste.
“There’s a lot of biomass out there that is not being utilised, that we can utilise. Biomass where the emissions right now just go up into the air, because the waste is burned. Or even worse, it rots and becomes methane,” Christiansen says.
“It is a solvable problem, it’s a matter of cost. And what we’re seeing is a lot of innovation, because now this has become a business.”
Eventually, demand for biomass could outstrip the sustainable supply. As a feedstock, it can probably meet only 10 per cent of the world’s energy needs.
‘No magic bullet’
But by the time the biomass capacity peaks, other technologies may be ready – ammonia, for one.
“Ammonia has a lot of potential. But there are just a lot of problems that still need solving. We think we will solve these problems. It’ll just take a while,” Christiansen says.
“And when you look at just the engine roadmap from the engine manufacturers, it’ll be 2029 or 2030 before we can get a big ship on the waters. And that means you will lose this decade. There’s just no time for that.”
He also expects electrification to take off, and he foresees a role for direct air capture of CO₂ on board ships, recycling the small amount of carbon that is required even for fuel cells.
He refuses to proffer a crystal ball on which technology will ultimately prevail, but says it’s not a competition – just as today there are five types of fossil fuel in shipping, the green future will have a diversity of fuels too.
“The variety will only get bigger as we go forward, because we need everything and anything that can solve this problem,” he says.
“You don’t have to look for the perfect solution. Because there are not going to be any magic bullets in this game. There are just not.
“What’s important is that we have solutions that work. And what we get done this decade, we get done this decade.”
Viewed from the starting line, the carbon challenge facing the shipping industry looks almost overwhelming. But Christiansen says the economic and technical barriers are perhaps not as daunting as the psychological one.
“Probably the most difficult part is to convince your company and the decision makers to actually have the courage to go with these things,” he says.
“I admire the courage of our leadership and our board. But then again, as I always keep telling them, the biggest risk is to do nothing. Then you’re certain to fail.”