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Singapore: Industry expert clarifies rising misconception of methanol bunker fuel carbon intensity

Several industry stakeholders have expressed difficulties in meeting the stated carbon intensity of 90 gCO2e / MJ outlined by the Maritime and Port Authority of Singapore.

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RESIZED AND ADJUSTED Chris Chatterton (1)

A misconception by parties keen on supplying methanol as a bunker fuel at Singapore port is rising and needs to be addressed, observed methanol industry expert Chris Chatterton.

The Maritime and Port Authority of Singapore (MPA) on December 2023 issued the Expression of Interest (EOI) for the supply of methanol as a marine bunker fuel in the port of Singapore document to the bunkering sector.

In it stated: “The Participant shall propose methanol product(s) with a carbon intensity (CI) not greater than 90 gCO2e / MJ (well-to-wake) for bunkering in Singapore”.

Several industry stakeholders have expressed to Chatterton difficulties in meeting the stated CI of 90 gCO2e / MJ due to conventional grey methanol produced using current modern methods having a CI of between 90 to 95 gCO2e / MJ, or even higher in some cases, on a life cycle assessment basis.

Further, the parties were concerned of significant higher costs when considering the premium between fuel oil (HFO and LSFO) and more expensive green [carbon neutral] methanol.

“Guys, don’t sweat the premium! When we talk about green methanol in premiums, we are referring to 100% green methanol here and nobody is going to burn this product in commercial operations due to costs unless it is economically viable under prevailing policy or they are able to transfer these costs to cargo owners,” he exclaimed.

“Questions persist on how to meet the CI specification and some players are wondering if the methanol can be blended or needs to come direct unchanged from the manufacturing complex. This needs to be addressed but is technically very simple to do.”

Chatterton recommends the bunkering industry to utilise the Mass Balance Approach – a concept familiar with the chemical industry – which traces the flow of materials through a supply chain as a compliant method to lower the specific CI content of methanol for use as marine fuel (combusted).

Source: International Sustainability & Carbon Certification (ISCC)

Source: International Sustainability & Carbon Certification (ISCC)

“Not all methanol production plants are created equal and when you purchase methanol you are going to get a CI certificate stating the carbon dioxide (CO2) equivalent per Megajoule (MJ) from well-to-plant gate basis,” he informed.

“And just by blending the certified grade with a portion of green carbon neutral methanol you can effectively lower the CI value of conventional conventional methanol to meet the 90 gCO2e / MJ specification required by MPA.

“Singapore is an ideal hub to receive and trade varying specifications of certified grey, blue and green methanol from not only China, Middle East, but from any corner of the world, efficiently and cost-effectively."

Availability of green carbon neutral methanol from China

Globally, “pilot” production projects are expected to produce over 6 million metric tonnes (mt) of green methanol in 2025, with up to 4 million mt coming from China, stated Chatterton who added a large portion of China’s green methanol will be derived from wind power, which is arguably the lowest cost wind resource with the highest capacity factor globally.

“Northeast China has a very high onshore wind capacity factor at above 95% which is amongst the best in the world and enough to provide baseload power rivalling utility scale gas fired powerplants,” he explained.

“China is also a world leader in renewable power production, whether solar or wind by a factor of two and has more than twice the renewable power capacity than USA.

“Further, China is the largest producer of renewable power equipment of any kind in the world and by far also the cheapest because they produce at scale; whether it’s wind towers, rotor blades, turbines, or solar panels - China is the outright leader in production capacity and has been so for many years.”

Most of China’s pilot scale projects set to produce green methanol are already in the final investment phase. To date, pilot projects in operation could only produce between 100,000 to 200,000 mt of green methanol per annum, and low volumes have resulted in higher prices for the green material.

However, once scaled up, these pilot projects will be able to produce 2-3 times more product to eventually lead to a softening of market pricing for green methanol, noted Chatterton.

Future prices and procurement of green methanol

“Therefore, there is no need to be too worried about the current methanol premium over HFO. There are certainly organisations able to provide methanol at more flexible terms, but these term contracts typically are for a longer duration,” he continued.

“A similar development took place for shipping’s transition to IMO 2020, when all majors instructed bunker suppliers needed to enter into long term contracts for at least a year to secure 0.50% sulphur limit VLSFO.”

Moving forward, Chatterton believes the combined factors of increased availability of green methanol, more efficient renewable power and power equipment cost structures, resulting in economies of scale will mean more affordable methanol from 2025 onwards – particularly from China.

“The green methanol producers in China are mainly pursuing ISCC EU certification which means it is compliant for use in Europe. With FuelEU kicking in, it will be even more ideal for shipowners to switch to using lower carbon and carbon neutral methanol as a sustainable marine fuel,” he ends.

Related: MPA receives 50 submissions for EOI to supply methanol bunker fuel in Singapore
Related: MPA issues EOI seeking for methanol bunker fuel suppliers in Singapore

 

Published: 20 May 2024

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Methanol

Methanol Institute: Advancements in methanol bunkering and alternative fuel infrastructure (Week 44, 28 Oct to 3 Nov 2024)

This week, the maritime industry saw advancements in methanol as a marine fuel including upcoming newbuild methanol-fuelled vessels and South Korea’s methanol bunkering milestone.

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The Methanol Institute, provides an exclusive weekly commentary on developments related to the adoption of methanol as a bunker fuel, including significant related events recorded during the week, for the readers of bunkering publication Manifold Times:

One of the key enablers identified by the Methanol Institute as key to the wider uptake of green fuels is bunkering infrastructure to reflect the growing orders for new ships designed to use methanol now and in the future. The further growth in methanol-fuelled orders reported below is exceeded only by the growth in green fuel production and marine bunkering activity in players who wish to realise the opportunity to serve a new generation of sustainable vessels.

Methanol marine fuel related developments for Week 44 of 2024:

Wan Hai Lines Orders Eight Methanol-Ready Container Ships from Hyundai and Samsung

Date: October 29, 2024

Key Points: Wan Hai Lines has ordered eight methanol-ready container ships, each with a capacity of 16,000 TEU, to support future green fuel usage. The order includes four vessels from HD Hyundai Samho and four from Samsung Heavy Industries, with an estimated price range of $186.49-204 million per vessel. The methanol-ready design includes larger storage capabilities to accommodate methanol bunkering. These ships can be converted to methanol either during construction or after delivery, marking a strategic move by Wan Hai Lines towards sustainable shipping options.

Sinopec Completes Record Methanol Bunkering Operation for Maersk in China

Date: October 29, 2024

Key Points: Sinopec has successfully completed China’s largest methanol bunkering operation, supplying nearly 938 tonnes of methanol to the Maersk Halifax at Zhoushan Xinya Shipyard on October 13, 2024. This landmark operation marks a significant development in Sinopec’s methanol bunkering capabilities, achieved through innovative logistics and a custom-developed methanol fueling unit. Sinopec now aims to provide regular methanol supply and expand ship-to-ship fueling services, positioning itself as a leader in clean energy for maritime vessels.

Danone Joins Maersk’s ECO Delivery Programme to Reduce GHG Emissions in Shipping

Date: October 29, 2024

Key Points: Danone has joined Maersk’s ECO Delivery programme to reduce greenhouse gas emissions in its shipping operations. The programme allocates Danone’s shipments to vessels using biofuels derived from waste feedstocks, such as biodiesel and bio-methanol, which reduce GHG emissions by over 40% compared to traditional fossil fuels. This partnership aligns with Danone’s decarbonization strategy focused on alternative fuels and multimodal transport, furthering its commitment to sustainable logistics in collaboration with Maersk.

Maersk Secures Long-Term Bio-Methanol Supply Deal with Longi Green Energy

Date: October 30, 2024

Key Points: Maersk has entered a long-term supply agreement with Longi Green Energy Technology to secure bio-methanol for its expanding dual-fuel methanol fleet. The agreement, extending well into the next decade, will see bio-methanol produced from agricultural residues, such as straw and fruit tree cuttings, at a facility in Xu Chang, China. The first volumes are expected in 2026, supporting Maersk’s global alternative fuels portfolio and advancing its decarbonization strategy through the adoption of bio- and e-methanol.

South Korea Aims to Lead Global Eco-Bunker Fuel Market with Major Methanol Bunkering Milestone

Date: October 30, 2024

Key Points: South Korea has taken significant steps toward becoming a global leader in eco-friendly bunker fuels, successfully completing its first ship-to-ship methanol bunkering operation. Conducted at Busan New Port on October 4, the operation saw Maersk’s Antonia Maersk refuel with 3,000 tonnes of methanol from Hyodong Shipping’s vessel. The Ministry of Oceans and Fisheries (MOF) is enhancing bunkering infrastructure, securing vessels, and standardizing procedures for green fuels, including methanol and LNG. This progress supports South Korea’s goal to position its ports, particularly Busan, as central hubs for sustainable maritime fuel.

Methanol Integral to Design of Eco-Friendly VLCC by Japanese Consortium

Date: October 31, 2024

Key Points: A Japanese consortium, including Idemitsu Tanker, IINO Lines, NYK, and Nihon Shipyard, has completed the design concept for Japan's first eco-friendly Malacca Max VLCC (Very Large Crude Carrier) utilizing methanol as a primary fuel. The vessel will feature a dual-fuel engine capable of running on methanol and conventional fuels, with a shaft generator for energy efficiency. Additionally, the design includes an optional wind propulsion system, aiming to meet the Energy Efficiency Design Index (EEDI) Phase 3 regulations by reducing CO2 emissions by over 40%. This development highlights Japan’s efforts to lead in sustainable vessel design.

CMA CGM Expands Alternative Fuel Options with Synthetic LNG and Methanol Bunkering in Morocco

Date: November 1, 2024

Key Points: CMA CGM has partnered with Marsa Maroc to equip and operate part of the Nador West Med container terminal in Morocco, enabling bunkering of synthetic LNG and methanol. This joint venture aims to increase the terminal’s throughput to 1.2 million TEU annually and position it as a hub for green fuel in the Mediterranean. Supported by Morocco’s growing green hydrogen sector, the terminal is expected to offer synthetic methane and methanol, serving CMA CGM’s fleet of dual-fuel vessels and reinforcing the region’s commitment to sustainable maritime fuels.

 

Photo credit: Methanol Institute
Published: 7 November, 2024

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Interview

KPI OceanConnect sees huge potential in Singapore and China green bunker fuels

Li Wen, Head of China Team at KPI OceanConnect, based in Singapore, gives her take on the future of alternative bunker fuels including methanol, LNG and biofuels especially in Singapore and China.

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Li Wen, Head of China Team at KPI OceanConnect

Li Wen, Head of China Team at KPI OceanConnect, based in Singapore, who is an expert in the field of bunker trading, marine fuels, and low-carbon energy strategies, recently shared with Manifold Times on the future of alternative bunker fuels, their availability and uptake in Singapore and China as well as the future of methanol in these two countries.

She also addressed the critical need for collaborative efforts across the marine fuels value chain to drive up the adoption of alternative marine fuels:

MT: What alternative marine fuels should the maritime industry focus on for IMO2030 and IMO2050? 

We expect the marine fuels market will have a multi-fuel future to meet the IMO’s targets, with a choice of low-carbon and carbon-neutral alternatives available for powering deep sea vessels.

The industry must evaluate available fuels for both short-term and long-term use to ensure they make the best choice that aligns with their specific needs. Short-term fuels, such as biofuel and fossil LNG, are readily available today, supported by existing infrastructure for production, transportation, and distribution, and are compatible with current vessel technology. In contrast, long-term fuels, like those derived from hydrogen produced by renewable energy-powered electrolysers, are still in early stages of technological development but offer greater decarbonisation potential for operators.

When advising our global clients, we leverage our expertise across all fuel types, ensuring that ship owners and operators can select the best fuel aligned with their operational needs and decarbonisation goals. Through our contractual partnerships with some of the largest industry players, we differentiate ourselves by driving innovation in green fuels and infrastructure development projects.

KPI OceanConnect is committed to partnering with the industry to accelerate the transition to sustainable marine fuels and developing tailored strategies that lead the way in sustainability and operational efficiency.

MT: What is the current availability and uptake of these fuels in Asia, particularly in Singapore and China, and its supply forecast? 

China has the infrastructure to be a major provider of biofuel, particularly UCOME but, presently, customs regulations are a barrier to this growth. These restrictions increase the price and lower the availability of biofuels in China. Once these customs challenges are resolved, we expect China-grown biofuel blends to take off and uptake to increase, like markets in Singapore and Europe.

Looking at LNG, China has five LNG bunker vessels in operation which are supported with demand largely from container vessels. Major suppliers have invested in LNG bunker vessels, which means China is comparatively well positioned as a supplier on the global market. As the fleet of dual-fuel vessels operating on LNG expands in the coming years, we expect to see the volume of LNG supplied by China to rise exponentially.

As in most of the rest of the world, long-term alternative fuels, such as methanol and ammonia, remain very much in development, limiting their availability.

MT: What are the challenges for a trading firm, such as KPI OceanConnect, to incorporate such alternative marine fuels into its product portfolio and how does the company solve them to ensure shipowners get the correct type of fuel at specific ports when needed? 

In helping the industry adopt alternative fuels, we see a huge opportunity to drive partnerships across the value chain to meet our clients’ goals. By establishing these partnerships, we can connect the supply side and demand side of the equation and encourage investment in alternative fuel infrastructure. As a market leader, this is our area of expertise and we are actively pushing to accelerate the energy transition by sharing our knowledge and insights with industry partners.

With this approach, we can support suppliers of alternative fuels in finding a market, while assuring ship owners and operators that they will be able to access alternative fuels as they adopt new technologies. This may mean we find ourselves working with multiple suppliers to ensure they can deliver for our clients. Enabling the uptake of these fuels will depend on being more engaged with the supply chain and this is something we do, with our last mile delivery experience, and will continue to do.

The energy transition is still in its early stages and demand levels in Asia in particular reflect this. While in Europe there are a lot of regulations and incentives to invest in low-carbon fuels, the equivalent is not present in Asia. In this regulatory environment, the industry may need to look to the IMO to drive decarbonisation as well as work with industry partners to future-proof operations.

It is important we act as a partner to our clients during this energy transition, and the feedback we have had from our customers tells us this role remains important.

MT: With Singapore’s recent announcement that it is ready for commercial scale operations for shore-to-ship, ship-to-ship, and SIMOPS for methanol, where do you think Singapore is heading with methanol bunkering after this? 

From KPI OceanConnect’s perspective, it is encouraging to see Singapore committing to be a frontrunner in yet another new area of the marine energy industry. This development is a positive step towards building the framework and infrastructure for the use of methanol as a part of the fuel mix.

However, the readiness of Singapore to fully meet the demand for green methanol, as in many other locations, is still uncertain at this stage. The Maritime and Port Authority (MPA) is best positioned to provide more detailed insights on how they plan to address this matter and its overall strategy.

MT: An expert earlier informed Manifold Times of the increasing supply of green methanol coming from China post 2025; do you agree with the development and how green methanol avails from China can support the bunkering industry in Singapore, China and rest of the world?

Chinese projects for green methanol are getting a lot of attention; however, most of these projects have not yet reached the final investment decision. Like the rest of the world, until the projects reach FID status, there is a need for more clarity on whether they will produce any green methanol in the future. Therefore, the prospect of green methanol from China in 2025 is quite optimistic and we do not anticipate production on a large scale.

In terms of availability, when green methanol production is up and running, the volume will likely cover demand at key ports in China. As production increases, the most likely destinations for the export of Chinese green methanol will be Singapore and Hong Kong.

Related: First SIMOPS methanol bunkering operation completed in Singapore
Related: Singapore: Industry expert clarifies rising misconception of methanol bunker fuel carbon intensity

 

Photo credit: KPI OceanConnect
Published: 7 November, 2024

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Fuel Testing

China: VPS and Lingang New Area to launch marine fuel testing lab and digital platform

Facility will support the growth of sustainable bunker fuel solutions – including green methanol, LNG, and traditional fuels – providing testing, inspection, and certification services.

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China: VPS and Lingang New Area to launch marine fuel testing lab and digital platform

Marine fuels testing company VPS on Tuesday (5 November) said it joined forces with Lingang New Area to launch a testing lab and digital decarbonisation platform.

On 29 October, VPS signed an agreement with the Lingang New Area Administrative Committee, marking a new chapter in its commitment to cleaner, smarter maritime practices.

“This partnership brings us to the Lingang New Area, where we’ll establish a fuel testing laboratory and a digital platform focused on maritime decarbonisation,” VPS said in a social media post. 

“Our new facility will support the growth of sustainable fuel solutions - including green methanol, LNG, and traditional fuels - providing testing, inspection, and certification services tailored to the evolving needs of the maritime industry.”

VPS added its goal is to drive environmental sustainability by leveraging advanced technology and data insights, helping accelerate the maritime sector’s transition to cleaner fuels and greener operations. 

Photo credit: VPS
Published: 6 November, 2024

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