December-April Green Fuel Review

Methanol strikes back and 2023 reflections

The strain of the semester meant I missed two bi-monthly updates, so I’m going to try to get five months(!) in this one. I am also introducing a new section - commentary - where I will provide a bit more structured discussion of high-importance issues related to decarbonization.

Overall, from the end of 2023 to now, very little clarity has emerged in the green fuels world. Methanol (where do you get the Carbon?), ammonia (will it kill you? How much N2O does it produce?), Hydrogen (it will really kill you, and how do you store it?), LNG (false prophet? Can it really be made green?) all remain in the mix. Production also remains unclear, with rising interest rates setting back offshore wind power, e-Fuels continue to look like a heavy lift. Splash 24/7 notes that 95% of future e-Fuel production projects are still pre-FID, though Infinium’s plant is now open. Bio-fuels are more encouraging, but can they scale without disrupting agriculture? Carbon capture is quietly advancing - and may get its own section in this update soon, but it is not clear that capture alone will be a magic bullet. While ammonia made headlines towards the end of 2023, methanol is posting numbers where it counts and has at least one large vessel in service today. Perhaps by the end of 2024, we will be able to see the future direction more clearly.

First, a summary of the numbers overall - in 2023, Clarksons reports 539 alternative fuel newbuilds, with LNG still leading the way and the first four ammonia vessels also ordered. The fleet+orderbook has 322 ammonia “ready” vessels, though one suspects that “ready” for most of those is going to involve a trip to the shipyard. DNV’s AFI reports a lower number - roughly 300 alternative fuel newbuilds but is in closer agreement on the methanol vessel numbers. Methanol is now outpacing LNG.

Major Reports, Studies, and Regulatory Advances

COP28 happened, and many countries and companies (re)announced initiatives, but little in the way of new marine-specific collaboration came to the front. Overall, Denmark may have had the most active quarter. At COP28, the US and Denmark (MMMCZCS) announced they are continuing their work on helping Global South nations set up green corridors, and Fortescue brought a ship to highlight the roadblocks for ammonia’s use a fuel. Denmark also announced an alliance with India for green fuel production.

Several green corridors have been announced as well, including one with real money attached:

• Canada announced CAD $127 million for port infrastructure and CAD $22.5 million for vessel improvements to their St. Lawerence Seaway/Great Lakes Green Corridor, as well as East/West coast ports (basically everywhere) over a five year horizon.

• Germany, Sweden, and TT-Line also announced a green corridor as well, between Lübeck-Travemünde and Trelleborg.

• The Blue Sky Maritime Coalition established a Houston – Antwerp/Bruges Green Shipping Corridor, along with wider cooperation on green fuels.

A busy period for reports overall - the MMMCZCS issued a Significant report looking at the impact of the U.S. Inflation Reduction Act and EU FuelEU/ETS on marine decarbonization - the takeaway is that in the Atlantic basin, parity between LSFO and alternative fuels could be reached by 2030. EMSA explored wind technology, including extensive HAZID for three vessel types in the latest of their alternative fuel reports. The IEA also produced a study on the role of e-fuels in transport more generally, including shipping in a scenario where 10% of the fuel in use by 2030 would include e-fuels. UMAS sees up to 50% increase in trans-pac FEU rates with green fuels. The ICCT examined wind and liquid hydrogen in a recent report on Great Lakes shipping, finding general feasibility (if LH2 doesn’t work on the Great Lakes, I am not sure where it would work for larger vessels). LR produced a not-very-optimistic report on methanol for passenger vessels. A (german only) report on Ammonia as an energy carrier was also published- my German isn’t good enough to do it justice.

The industry has also been busy with policy proposals, though the fate of any of these is far from clear. The World Shipping Council has proposed a price balance mechanism to help with the uptake of green fuels. Additionally, a group of major liner operators has further called for an end date for ships only capable of running on fossil fuel, while re-iterating the need for pricing mechanisms. Europe’s exclusion of crop-based biofuels from beneficial FuelEU status is also being legally challenged. In business deals, Euronav is taking over CMB.Tech, which has pioneered many alternative fuel projects.

Methanol

Technology

Methanol equipment is increasingly mature, with more engines available with methanol capability. Some highlights include:

• Four new medium speed engines from Wärtsilä, at this point most Wärtsilä cylinder sizes have a methanol option. Availability will start in 2025.

• Alfa Laval is supporting Maersk’s methanol retrofits with fuel supply systems.

Maersk invested in Blue World Technologies methanol fuel cell concept. Interestingly, this company is also looking at local carbon capture from the methanol deconstruction, which may open the door to grey methanol usage. However, what is done with the captured carbon is still an open question.

Supply

Antwerp’s 8,000 t.p.a e-Methanol plant is no longer going forward. While certainly very small, it’s a disappointing cancellation. A joint Australian-German solar-thermal plant for green fuel production in Port Augusta received $A40 million in funding pledges. Scatec and the Suez Canal economic zone are targeting 100,000 t.p.a production for bunkering in East Port Said. A $3.2 billion blue methanol facility in Lake Charles LA was announced, though the final investment decision has not been made, joining Splash’s 95% of such projects as discussed in the intro.

In bunkering, several developments to report. Singapore is looking for vendors to supply methanol to the port from 2025. Maersk is reported to have purchase 500,000 tonnes of methanol from a to-be-completed facility in China (unclear if this is the facility in question). Mabanaf will supply methanol to TUI cruises in Europe, though details are scarce. Yangshan Port reported the first successful methanol bunkering in their port in March.

Ships

As always, paying for a Clarksons/DNV AFI subscription is going to be much better than what I catch with automated press release searches. The major news in this space is the increase in retrofits, which I will now track separately, as well as the number of multi-system vessels, that are ready for methanol but also feature wind propulsion, batteries, or even solar.

New Ships

• ONE ordered 12 methanol dual-fueled containerships, 13,000 TEU split between two Chinese yards. Interestingly, at least one vessel will also experiment with air lubrication to further reduce drag.

• Continuing in the multi-technology approach, Shandong Shipping is building four VLOC fitted for methanol dual-fuel, along with wind propulsion and shore power provisions.

• Fujian Guohang Ocean Shipping Group has ordered up to 10 82,000 DWT bulkers at Wuhu Shipyard. Like the orders above, methanol capability is only part of the story—here, shore power, shaft generators, batteries, and solar (!) are all reportedly in the designs.

• Nantong Xiangyu received an order for 8 64,000 DWT “methanol ready” Ultramaxes.

• K-Line ordered three post-panamax bulk carriers that are methanol ready.

• Foremost is building up to four 82,000 DWT methanol-ready Kamsarmax designs at Chengxi Shipyard in China.

• Wallenius ordered 4 more methanol-capable-on-delivery Shaper class PCTC. They also have the ability to be retrofitted for ammonia.

• Euronav announced 2 bitumen carriers, methanol-capable-on-delivery, retrofittable for ammonia. China Merchants will be yard.

• Smyril Line is building two methanol-ready 190m truck RoRos from CIMC Raffles.

• Eidesvik Offshore is building a 99.9m construction support vessel with methanol dual-fuel engines.

• 2 CSOVs of similar size and methanol capability have been order at Fincantieri for Windward Offshore.

• Diana Shipping ordered two methanol-ready 81,200 DWT Kamsarmax designs from China’s Zhoushan

• Cosco ordered six methanol duel-fueled or methanol-ready tankers.

• A methanol-powered barge to provide in-harbor ships with power has also appeared as a design. A nice way to reduce CII for those with long port stays.

Retrofits

A big question with all these retrofits is what is happening beyond the main engine? Are fuel systems being updated? Are tanks retrofitted for methanol with cofferdams? Or are the protected bunker locations proving good enough for some ships?

• Hapag-Lloyd and Seaspan are converting 5 10,100 TEU ships to Methanol. Not clear if this includes bunker tank work, the MAN S90 engines were not dual-fueled on install. Price is $24 million/vessel.

• MAN will also upgrade OSG’s Alaska Class to be methanol-ready as part of an overall upgrade package.

• CMA CGM is converting an existing containership to methanol.

• COSCO is converting 4 boxships to methanol, between 13,800-20,000 TEU with an option for another 9.

Ammonia

Technology

NYK has received development funding for a nitrous oxide removal reactor, likely a key technology for 2-stroke ammonia engines, as any nitrous oxide produced has a global warming potential about 273 times that of CO2. Given the setback of methane slip with LNG engines, if combustion-based ammonia usage is to be a success, nitrous oxide needs to be handled correctly from the outset.

Wärtsilä announced it is supplying the ammonia fuel systems for Exmar’s ammonia-powered LPG carriers. Mitsubishi Shipbuilding announced a similar system is in development, while MAN announced two AIPs for a similar system. IACS is standardizing ammonia exposure limitations, in line with existing U.S. NIOSH limits, which is essential to designing ventilation and safeguards for bunkering.

There is not much on the 2-stroke front. MAN announced it is delivering prototype ammonia engines this year, but wider sales will wait until 2027.

Onboard cracking of ammonia to hydrogen continues to receive extensive interest, bypassing the problems of burning ammonia in an engine. The EU GAMMA project is looking to demonstrate onboard cracking of ammonia for fuel cell use in an at-sea demo. Onboard cracking is also under exploration in a different EU project. Amogy announced a strategic partnership with Mitsubishi to develop and market Amogy’s cracking tech, as well as an LR technology verification certificate. H2SITE demonstrated a cracker operating in open ocean sailing on a refitted supply vessel.

Supply

Fresh from her COP28 stunt, Fortescue Green Pioneer bunkered 3 tonnes of ammonia in Singapore as a proof-of-concept, using primarily existing facilities and technology. Yara announced regulatory approval for the first ammonia bunkering station, to be located in Florø, Norway. An earlier-stage study for U.S. West Coast bunkering was also announced, focusing on the San Francisco Bay area. Yara also announced a 100,000 t.p.a. takeoff agreement with Acme Cleantech of India for low-CO2 ammonia. Fortescue received 200 million euros for its 225,000 t.p.a. Holmaneset Project for green ammonia, and selected Tecnimont to help with the ammonia production equipment.

Ships

Conversions have not hit the ammonia world yet, with all the dual-fueled engines built to date there is certainly the potential for more conversions in the future. Overall, this section shows the distance between ammonia and methanol in terms of mature applications.

• NYK signed a contract for 40,000 m3 ammonia carrier that will be ammonia fueled with Japanese-made engines. Delivery is set for late 2026. More details.

• Norway is helping Heogh take two Aurora Class PCTC from “ammonia ready” to ready for ammonia, by funding ammonia tanks and associated fuel systems. In related news, a bunkering study project for supporting these vessels was also announced.

• Berge Bulk ordered two 210,000 DWT ammonia dual-fueled Newcastlemaxs from Qingdao Beihai Shipbuilding Heavy Industry

• Eastern Pacific is now up to 10 Newcastlemaxs, which are ammonia dual-fuel, similar to the vessels above.

• CMB.Tech is reportedly ordering container feederships with ammonia fuel options for Yara - possibly these vessels.

• ONE is at the AIP stage for a 3,600 TEU dual-fuel vessel. More here.

• Euronav added another ammonia dual-fueled VLCC to their orderbook.

• Naftomar announced 4 93,000 cu meter ammonia carriers at Hanwha Ocean with dual-fuel engines capable of running on ammonia.

• HAV is working on the design of an ammonia-powered fish farm support well boat. This continues to show Norway’s interest in ammonia as a coastal fuel.

Everything Else

Batteries and Carbon Capture

The range limitation of batteries is still real. However, offshore wind farm work is certainly an area where plentiful power exists, and DAMEN announced an all-electric charge-at-sea concept for wind service vessels. A 117m battery-powered Norweigan RoRo ferry with a one-hour journey time was launched in Turkey. A series of 5,350 DWT coasters with hybrid propulsion, using a 1 MWh battery pack are now entering service for the Baltic. A 11,000 DWT limestone carrier with hybrid propulsion was also announced by the CSL Group.

Seabound announced a successful trial of at-sea carbon capture, using the exhaust gas flow from an auxiliary engine in service at sea over two months. Carbotreat announced success in a similar trial. For both systems, the raw volume of carbon captured during the trial was low, though >80% recovery seems plausible.

Hydrogen

Yanmar received an AIP from ClassNK for a new line of 300 kW fuel cells. CMB.Tech’s refitted hydrogen tugboat, burning hydrogen in ICE, not using fuel cells, entered service. Hydrogen storage capacity is reported at 405 Kg. Another CMB.Tech vessel, the windfarm CTV Hydrocat 55 entered service as well with a hydrogen storage capacity of 207 Kg, again using combustion engines. H2 Barge 2 joined the aptly-name H2 Barge 1 in FPS’ growing fleet of hydrogen vessels. The hydrogen plant looks very similar between the two vessels. Vinssen’s hydrogen fuel cells will be retrofitted into the 387 DWT landing craft Pengiun Tenancity, which wins the ship name of the newsletter award. The trial period is reportedly for one year. Estonia announced a call-for-tender for a new hydrogen-powered ferry. Clarkson is reportedly helping with a study of LOHC to improve the transport of H2 in large quantities.

Wind, Nuclear, Biofuels

Wind continues its growth, Norsepower and Oldendorff are trialing 3 rotor sails on a bulker, perhaps soon such sails will be standard kit for newly delivered bulk carriers. Deck area concerns make containerships harder to retrofit, though Hapag Lloyd is looking a 4,500 TEU vessel with up to six sails. Cargill also released some more detailed information from the Pyxis Ocean trial, stating they achieved their prediction of an average saving of 3 tonnes per day. Such numbers would certainly justify using wind to address CII measures. Louis Dreyfus Armateurs ships for Airbus were also ordered in January, after being initially reported last October. They each feature 6 rotor sails.

Nuclear continues to develop slowly in the background. A consortium of Zodiac Marine, LR, HD KSOE, and KEPCO E&C are exploring nuclear power for bulk carriers and containerships. CSSC Jiangnan Shipbuilding also proposed a 24,000 TEU molten-salt reactor-powered containership.

Commentary

What does being “ready” for an alternative fuel in ship design or production mean? Many owners are announcing ships that are “ready” or “duel-fuel capable”, yet it isn’t clear what they’ve really bought other than a promise that a given engine could be made to run something other than LSFO. This is especially true for ammonia, which has extensive tankage and safety concerns - it’s hard to say what exactly will be required to go from being “dual fuel” capable to running on ammonia. This is getting even more confusing as some owners have announced tri-fuel capable ships - LSFO, methanol, or ammonia. While class societies have begun to issue notations to certify certain readiness levels, these have mainly been at the individual society level and thus may not always be comparable across different societies. A simple, four-tiered system might be sufficient to capture most of the major differences:

• Engine-Only: The owner has purchased an engine that can be upgraded to run on more than one type of fuel. No allowance for future support systems or tankage has been made to date; a future conversion would need to address these issues.

• Planned Conversion: In addition to a multi-fuel engine, the ship design includes engineering analysis showing the ability to remove and reconfigure spaces to support a different fuel type. This can come at the cost of removing support for the current fuel type and would require a major overhaul in a shipyard.

• For but Not With: In addition to a multi-fuel engine, the ship design includes empty space for future fuel processing systems, tanks, and similar supporting systems for at least one future fuel. Difficult-to-refit piping and cableways may also be included. A shipyard retrofit is needed, but not as deep as a planned conversion, as rip-out would be minimal.

• Dual Fuel: The ship can change fuel types in service without visiting a shipyard. A few technicians may be required to visit the ship to help the crew with the switchover, but time out of service would be less than 48 hours.