August-September Green Fuel Review
Is Methanol the new LNG?
Another busy month in the green fuels world; the pace of announcements appears to be accelerating. The biggest question that seems to be emerging is whether methanol’s impressive start fades quickly with a strong move to ammonia? This month, ammonia continued to build on its impressive July-August showing. Nuclear and wind propulsion also continue to work at the edges of the discussion and will take heart from continuing concerns around the scalability of e-fuel production.
Regulations, Studies, and Marketplace Developments
Three major class societies came out with significant studies on future fuel mixes. L.R. released a report highlighting two potential fuel scenarios: a hydrogen e-fuel scenario where ammonia becomes a leading fuel and a bio-led approach where biomethane becomes more dominant. Notably, neither of these scenarios has a particular fuel taking a large majority, and both predict some fossil fuel in use in 2050 (“by about” coming into play already, it seems…). The L.R. report notes an “abundance of renewable energy sources” in making these forecasts, but DNV struck a much more cautious note in its revised forecast to 2050, noting the marine industry (at < 3% global emissions) may need to lock in 30%-40% of the projected zero-carbon fuel supply by 2030. This concern certainly occurs beyond the marine world, where looking at total transport energy demand and the current electrical power supply makes an e-fuel transition a sobering prospect. The relative instability of these long-term forecast reports is also notable, along with two disappointing offshore wind auctions that resulted in either no or limited leases. We can’t pretend there is an e-fuel future in 2030 if we are not serious about zero-carbon power now.
The third report is ABS’ 5th “Outlook” report, one of the most impressive reports that I have seen in this space. Rather than only forecasting possible transition routes directly, this report tries to project the inner workings of three key “value chains” - carbon capture, transport and storage, ammonia, and hydrogen. Each chain addressed technical, regulatory, and ship design aspects. While methanol was not considered a value chain of its own, ABS still had a significant place for methanol in at least the near-term fleet mix. Even with carbon capture, ABS is also projecting 40%+ reductions in oil and coal trades, with significant fleet impacts, moving forward. It’s an interesting and recommended read.
Against this background, ports, governments, and shippers continue to try to position themselves. Amazon has a deal for 20,000 FEUs to be transported by green fuel, and Amazon is a member of a new group, the Zero Emission Maritime Buyers Alliance, now calling for net-zero by 2040. Several smaller announcements also occurred, including the continued growth of the Silk Alliance, a vision from India to become a major green-fuel producer for maritime trade, Bloomberg had a nice summary of E.U. port developments, and Norway announced small-scale grants for environmentally-friendly short-sea shipping (paywall only that I can find).
Methanol
The number of public new ship announcements continues to grow; this month, I am switching to a simple table-inspired summary to capture what is happening. As always, this data is based only on public announcements and won’t be as complete as the periodic reports from a class society or Clarksons etc.
Ship Type Owner Fuel Type DTW(# or status) Link
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VLCC CMES Duel-Fuel Not listed(1) Splash
MR/Product JP Morgan Duel-Fuel 50,000 (2 new) OE
Tug Svitzer Fuel cell Not listed(study) ML
Feeder Container X-Press Duel-Fuel 1250 TEU(launch) MT
16000 TEU Cont Shipyard Duel-Fuel 1600 TEU(study) MI
General Cargo COSCO Duel-Fuel 68,000 (delivery) FM
Oil/Chem Sirius M. Ready 15,000 (2) Splash
Chem Tanker Hafnia Duel-Fuel 49,800 (4) Owner
Ore carrier WIG Duel-Fuel 325,000 (2) Splash
10300 TEU Cont MSC Tri-Fuel(LNG) 10300 TEU (11) MI
RORO WW Tri-Fuel 9,350 ceu (12) Splash
Chemical OceanPal M. Ready 6,600 (2) SASNotably different this month is the growing number of bulk trades investing in methanol. Most shipowners are continuing to hedge bets; only one of the announced vessels (and just a design study at the moment) is methanol-only. Two owners have introduced “tri-fuel” into the discussion, noting that the main engines can be reconfigured for either methanol or ammonia in the future - obviously, the rest of the fuel storage/supply systems will differ greatly for such upgrades - but this shows the continued wariness of the owners to commit to one fuel path.
Maersk’s methanol feeder containership was finally christened Laura Maersk on 14 September, having reached Rotterdam early in this reporting period while completing yet another bio-methanol bunkering. The plan is still to switch to e-methanol, at least in Europe, eventually. Still, for now, another bio-methanol supply deal was inked between Maersk and Equinor as a bridge fuel until the e-Methanol variant comes online. Perhaps not an unexpected hiccup in being an early mover toward methanol.
Outside Laura Maersk, much discussion over the supply of low-GHG methanol dominated the reporting period. Hellenic Shipping News gave a nice summary of announced fuel supply deals by both operator and port. Origin Materials signed a supply deal, while an R&D project for more efficient production in Europe was announced, along with a solar methanol plant in South Australia with an initial target production of 7,500 tonnes/year and a study announcement for another plant in Portland, Australia. The ability to scale up e-methanol, compared to bio-methanol, or to accept the diversion of organic material into bio-methanols will be key trends to watch. The L.R. report discussed in the introduction has bio-methanols winning out, but there are broader concerns about the pressure this will place on food crops and other organic resources.
Beyond fuel production, a few other notable methanol-related stories appeared. Aura Marine reported orders for its methanol fuel supply systems, while e1 marine published a commissioned study on the environmental performance of their strategy of cracking methanol onboard to generate H2 for fuel cells. The study highlights that given the variable power profile of an inland towboat, methanol can positively impact net emissions even if it is not sourced purely from renewable sources. The study assumed a fuel cell efficiency of 45%, which they note is conservative. Unfortunately, the efficiency of the onboard cracking process was not discussed in detail, which is one of the novel aspects of e1’s approach. So far, orders for fuel-cell powering approaches have mainly focused on workboats with variable propulsion loads and mainly as prototypes. Which vessels and applications will benefit from methanol/fuel cells compared to an internal combustion engine running on methanol is still an open question.
Ammonia
One would think with Laura Maersk displacing water and moving boxes, for August-September ammonia would be left in methanol’s shadow. However, ammonia had no intention of slowing its growth and generated far more unique headlines. Perhaps most impressive was Fortescue’s Andrew Hoare commenting that most dual-fuel methanol ships will only ever run on diesel and continuing their firm commitment to ammonia as the future fuel. Ship announcements continue, though not quite as many at methanol.
Ship Type Owner Fuel Type DTW(# or status) Link
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Open-Hatch Bulker GMG NH3 Ready 82000(2 options) OE
VLAC CG and EPS DF, Maybe NH3 88000 cu m (4) Splash
VLAC Study Samsung N/A-SHI NH3 200000 cu m (AIP) Splash
Bulk carrier EPS NH3 Ready 210000 (3+3) OE
Bulk carrier PGT NH3->H2 63000 (LoI 6) OSM
NH3 Bunkering Vsl. N/A-ClassNK N/A MOU OE
NH3 Bunkering Vsl. N/A-HMD N/A 10000 cu m (AIP) HSN
In addition, Eastern Pacific Shipping has signed a contract for two 93,000 cu m ammonia carriers at Jiangnan Shipbuilding. However, the announcement did not specify any details on the propulsion type. Notable is the almost complete focus on bulk trades, though studies of containership are ongoing, with a noteworthy webinar in a few weeks. Also notable is the continuing work on the up to 6 63000 DWT bulk carriers using ammonia as a hydrogen carrier for fuel cell propulsion. Fuel cells becoming practical with ammonia would represent a potential end of the 2-stroke engine monopoly on commercial ship propulsion. The cracking onboard approach is far from proven but absolutely worth watching. I see future ship noise regulations as a potential dark horse, which might give a non-combustion engine solution a leg up.
Engine developments also continued apace in the last month, which is necessary given that the engines to power the ammonia-fueled ships in the table above don’t exist yet. MAN announced 3 MOUs related to the development of the engines for these ships, while WinGD and Samsung Heavy Industries announced a similar MOU. Morweek’sails about the single-cylinder pure ammonia combustion success also appeared in MotorShip. While the U.S. Navy hasn’t recently continued the green fuels leadership role it initially performed under Maybus’ “Great Green Fleet” initiative, Fairbanks Morse signed an MOU with Oak Ridge National Lab to look at updating naval engines for fossil-free fuel sources.
This month also saw extensive news on approvals and developments for components of ammonia fuel systems. ABS announced an AIP for post-combustion SCR treatment of NOx and other support functions from Korean shipyards. (Edited 9/21 - the announcement doesn’t specify if it also works on N2O - N2O has > 250 the global warming potential of CO2, effective exhaust gas treatment will be critical to avoid another revision like LNG’s methane slip setback). Babcock received an AIP from L.R. for a modification of its LPG fuel system to allow it to handle ammonia. In contrast, Samsung Heavy Industries received an AIP from Class N.K. for similar systems. China Classification Society similarly gave approval, type not specified, to a system from COSCO Weihai. Mitsubishi also gave an update on ongoing tests with their fueling systems. Like engines, it’s clear the ship orders have preceded the complete development of the fueling technology, but companies are convinced this is worth investing in, and progress seems rapid.
Ammonia supply continues to receive attention as well. German energy company EnBW took a 10% stake in the 100,000 tonne/annum green ammonia plant Skipavika in Gulen, Norway. A green ammonia and hydrogen plant feasibility study for a 245-acre parcel of the Port of Victoria, Texas, USA was also announced. A similar study of thyssenkrupp Uhde’s power-to-Ammonia process was announced as part of the Australia-Korea Han-Ho H2 Hub project, looking to use renewable energy from Australia to provide green fuels for Korea.
Finally, some interesting economic studies on ammonia also appeared. As part of the NoGAPS project, the Copenhagen-based Global Maritime Forum presented a detailed economic case study of building and operating an ammonia-fueled gas carrier trading between the U.S. and Europe. The complete report is available here, and interesting (but very different) media takes are here, here, and here. Overall, the report showed the (edited 9/21 -annualised TCO estimate CAPEX) increased by 50%-130%, but a potential for profitability by 2026-2030, depending on the amount and locations of incentives for green fuel. Notably, the U.S. Inflation Reduction Act makes bunkering with green or blue ammonia in the U.S. significantly better than bunkering in Europe. Reflecting on the report, I wonder if government incentives will cause significant regional disparities in fuel costs, which may further strain the size of bunker tanks on these vessels if infrequent refueling on cost-optimal locations becomes an important operational consideration. Additionally, an update from Norway’s Green Shipping Programme presented the result of a study of an ammonia retrofit solution on a 50,000 DWT bulk carrier. While technically feasible, the retrofit cost was roughly 50% of the vessel’s value, again showing the difficulty for first movers toward ammonia at the current time.
Everything Else
Wind, nuclear, and even batteries saw significant activity this month as well. Given that any green fuel is likely to represent a significant price premium over fossil-origin LNG/HFO, reducing fuel consumption is likely to become an ever-more important challenge for all aspects of ship design. ABS suggested targeting a 15% reduction in fuel consumption from 2023 levels in their “Outlook” report reviewed in the first section. WindWings, from BAR Technologies, made headlines with the first voyage of Pyxis Ocean, a 80,000 DWT bulker fitted with two WindWings rigid sails, on the vessel’s current routing fuel savings of ~20% may be achieved. Oceanbird, the Wallenius/Alfa Laval joint company, also received an AiP from DNV for their rigid sails. The renderings show RoRos with multiple sails overall the speed and stability issues moving from a Bulker to a RoRo application would seem to suggest that Oceanbird’s path may be more challenging. Core Power was also in the headlines pushing both SMR for vessel applications at London International Shipping Week and and announcing $100 million in cumulative funding and efforts to get the first floating prototypes in the water by the early 2030s. The demand for vastly more zero-carbon electricity is clear under almost any fuel mix moving forward, but whether nuclear is a per-vessel solution, or a centralized solution is not yet clear. ABS has also announced a forum on “The Role of Advanced Nuclear Technologies in the Maritime Energy Transition” at the end of September. There is no remote option for attendance, unfortunately.
Hydrogen continues to show strength in the shorter shipping markets, with a second inland vessel selected for fuel cell conversion by Future Proof Shipping and Torghatten Nord announcing supply arrangements for their upcoming hydrogen-powered ferries. An interesting order for 6+10 7400 DWT inland vessels with modular electric propulsion, designed to support future upgrades to different fuel sources, was also announced. Another successful B30 biofuel trial was also reported; at this point, supply is probably the limiting factor for biofuels which, with their drop-in capability, do represent a good near-term option. Finally, in a development I did not expect, the new size record in battery-powered vessels is going to be a 130m long aluminum high-speed catamaran ROPAX, with a whopping 40 MWh of batteries onboard. As most of these vessels are mainly empty void spaces below decks, there is certainly room for the batteries, but the weight implications must be something shocking.