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Wartsila: Methanol as marine fuel – is it the solution you are looking for?

Publishes comprehensive Insight article to help ship owners and operators navigate the advantages and issues of using the product as a marine fuel.

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NYK methanol bunkering at Rotterdam port on 21 July 2021

Technology group Wärtsilä on Monday (20 February) published the Insight article “Methanol as marine fuel – is it the solution you are looking for?” to help ship owners and operators navigate the advantages and issues of using the product as a marine fuel. An excerpt of the article is as follows:

What is methanol?

Methanol (methyl alcohol, CH3OH or MeOH) is a biodegradable wood alcohol used to make everything from plastics to paints and pharmaceuticals. Although it is toxic and highly flammable, it dissolves in water and biodegrades quickly. Methanol has been used in industrial applications for over 100 years, but it’s now also showing great promise as a clean and sustainable future fuel for maritime applications.

What types of methanol are there?

Broadly speaking, methanol can be categorised into fossil-based methanol and renewable methanol. Fossil-based methanol is produced from coal or natural gas. Renewable methanol can be made from things like biomass or captured CO2 combined with green hydrogen.

What colour is methanol?

  • Methanol is a colourless liquid, but colour names are used to show what it’s made from:
  • Green methanol is made from biomass or captured CO2 and green hydrogen
  • Blue methanol is made using blue hydrogen in combination with carbon capture technology
  • Grey methanol is produced using natural gas
  • Brown methanol is produced using coal.

Green methanol is the most environmentally sustainable. Blue methanol still significantly reduces well-to-tank CO2 emissions compared to fossil fuels like diesel. One of the biggest challenges for maritime decarbonisation is that most methanol today is either grey or brown. All types of methanol could lead to a tank-to-wake CO2 reduction of about 7% compared to diesel. However, if we take the well-to-wake approach (from production to utilisation), the CO2 impact of grey and brown methanol is worse than that of diesel. This is why green and blue methanol are the only real alternatives when targeting well-to-tank GHG reduction.

Is methanol as fuel good for the environment?

The main benefit of green methanol is that it produces less CO2 than diesel combustion, as well as lower SOx and NOx emissions. The amount you can reduce emissions by will depend on the load your engines are running at. Studies have shown that, taking a tank-to-wake approach, by using methanol instead of heavy fuel oil (HFO):

  • CO2 emissions can be cut by 7%
  • SOx emissions can be cut by 99%, and
  • NOx emissions can be cut by 60%.

Methanol also biodegrades rapidly in water, which also makes it less of a risk to the environment than many alternatives.

Is methanol as marine fuel bad for the environment?

The CO2 footprint of methanol varies according to how it’s produced and transported, with fossil-based methanol generating more lifetime CO2 emissions than diesel. This makes green methanol the right choice for decarbonisation. Since the methanol molecule is the same whether it is grey, brown, blue or green, blending methanol is also a viable option to support the transition from conventional to renewable marine fuels.

How can methanol help with decarbonisation in shipping and the maritime energy transition?

The methanol molecule – CH3OH – is the same whether it is produced from grey, brown, blue or green feedstocks. This means you can blend it to help you transition gradually towards using a greater percentage of sustainable green methanol.

Is methanol expensive?

Compared to diesel operation, fuel expenses can be up to 15 times higher depending on the type of methanol consumed, its price and the share of energy provided by methanol. Although fuel expenses are higher with methanol than with diesel, this should be considered in terms of today’s regulatory environment. Vessels that fail to meet CII and EEXI targets will not be allowed to operate any longer. So the extra cost of the fuel should be compared not only with today's fossil fuel price but with the cost of a brand new and more efficient ship and with the possible losses due to a mandatory stop of operations.

The Powerzeek Energy Platform has added methanol to its online marketplace in response to increased enquiries from shipowners. Powerzeek makes it easier for shipowners and trucking companies to find and buy cleaner fuels at the best available price.

Is methanol safe onboard ships?

From the perspective of onboard safety, there are well-established rules and regulations pertaining to the use of methanol as a marine fuel in the form of the IMO’s MSC.1-Circ.1621 – Interim Guidelines For The Safety Of Ships Using Methyl/Ethyl Alcohol As Fuel. Additionally, Wärtsilä has developed a safety concept for methanol engines that acts as an internal design guideline for all marine projects that involve using methanol as a fuel.

Where can I buy methanol as fuel for ships?

If you’re looking for methanol suppliers for ships, in 2020 the Methanol Institute confirmed that methanol was available at about 100 ports around the world.

Maritime-dedicated infrastructure for methanol transportation is still in the early stages of development but is expanding all the time.

Note: The full Insight article “Methanol as marine fuel – is it the solution you are looking for?” is available at Wartsila’s website here

 

Photo credit: NYK, Waterfront Shipping, Vopak, TankMatch
Published: 28 February, 2023

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LNG Bunkering

Titan completes first STS LNG bunkering operation in Cuxhaven

Port of Cuxhaven in Germany had previously only seen LNG operations conducted via truck and currently only permits LNG bunkering at one berth, says Titan.

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Titan completes first STS LNG bunkering operation in Cuxhaven

LNG bunker fuel supplier Titan on Thursday (11 July) said it completed the first-ever LNG bunkering operation by ship in the port of Cuxhaven.

Titan’s bunker vessel Optimus successfully delivered LNG to dredger Vox Ariane operated by its long-term client Van Oord. 

“Our ship-to-ship bunkering in Cuxhaven represents a pioneering step in the region's LNG infrastructure development, as the port had previously only seen LNG operations conducted via truck and currently only permits LNG bunkering at one berth,” it said in a social media post. 

“LNG infrastructure development is part of a broader trend, with more ports across Germany adopting LNG operations to support shipping’s clean fuels transition.”

Titan added the improved LNG bunkering capabilities in Cuxhaven, a Niedersachsen Ports GmbH & Co. KG port, also opened up the pathway to maritime decarbonisation via liquified biomethane (LBM) and then renewable e-methane going forward.

 

Photo credit: Titan
Published: 12 July, 2024

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LNG Bunkering

UECC “Auto Achieve” receives first LNG bunker fuel delivery by barge in home country

Firm said it received the first ever supply of LNG by barge to their multi-fuel LNG battery hybrid car carrier in the Port of Drammen, Norway.

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UECC “Auto Achieve” receives first LNG bunker fuel delivery by barge in home country

Norwegian roll-on/roll-off shipping line United European Car Carriers (UECC) on Wednesday (10 July) said it received the first ever supply of LNG by barge to their multi-fuel LNG battery hybrid car carrier Auto Achieve in the Port of Drammen on 4 July.

The firm said this was the first time UECC received LNG by barge to any of their vessels in their home country Norway. 

“We also believe that it was the first time LNG was delivered by barge to any vessel in Drammen, and most likely the entire Oslofjord,” UECC said in a social media post.

The LNG was supplied by the Molgas Energy Holding vessel Pioneer Knutsen, owned by Knutsen Group OAS.

“UECC is very pleased to see the expansion of the LNG barge network in Norway,” it said. 

 

Photo credit: UECC
Published: 12 July, 2024

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FuelEU

OceanScore reveals ship segments set to feel EUR 1.3 billion sting of FuelEU penalties

Container segment will bear the brunt of FuelEU costs, accounting for 29% of gross penalties, followed by RoPax on 14% with tankers and bulkers each on 13%, says firm.

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OceanScore Managing Director Albrecht Grell

Hamburg-based technology platform OceanScore on Tuesday (9 July) said the financial impact of FuelEU Maritime is focusing the minds of shipping companies as they face potential penalties for non-compliance with greenhouse gas (GHG) intensity reduction targets - and OceanScore has identified those segments set to be hit hardest.

The following is an article by OceanScore elaborating on the matter:

Vessels in the passenger/cruise, container, RoPax, bulker and tanker segments will have significant cost exposure from the complex regulation due to be implemented from 1 January next year, despite a relatively modest initial target of a 2% cut in GHG intensity, according to OceanScore.

The firm’s data analytics team has calculated that shipping will rack up total FuelEU penalties of €1.345 billion in 2025 through analysis of the 13,000 vessels over 5000gt trading within and into the EU/EEA that are subject to the regulation. This is based on data on trading patterns and fuel mix from 2022 - the last full year currently available.

Containers bear burden

The team has been able to determine FuelEU compliance balances and resulting penalties for each vessel using OceanScore’s proprietary data modelling incorporating AIS data, Thetis emissions data, bunker intelligence and advanced analytics/AI. It has factored in the likely fuel mix for each vessel between EU ports and to/from the EU, as well as in ports.

Vessels will be hit with a penalty of €2400 per tonne of VLSFO-equivalent for failing to meet the initial 2% reduction target relative to a 2020 baseline for average well-to-wake GHG intensity from fleet energy consumption of 91.16 gCO2e per megajoule (MJ) - or emissions per energy unit. The GHG intensity requirement applies to 100% of energy used on voyages and port calls within the EU/EEA and 50% of voyages into and out of the bloc.

As with the EU Emissions Trading System (EU ETS), it is the container segment that will bear the brunt of FuelEU costs, accounting for 29% of gross penalties, followed by RoPax on 14% with tankers and bulkers each on 13%.

“It is critical for shipping companies to determine a baseline for expected FuelEU costs to secure proper planning and budgeting processes to compare different mitigation options, as well as to decide what to do with outstanding compliance balances,” says OceanScore Managing Director Albrecht Grell.

“This will require, to a higher degree than the EU ETS, a corporate strategy to determine how to reduce the compliance balance/deficit, how to commercialise a surplus and deal with deficits that remain.”

Wide spread of vessel liabilities

OceanScore has found that liabilities per vessel will differ widely across the various segments due to increasingly diversified fuel choices, including greater uptake of biofuels and LNG. Passenger vessels will be penalised the most with an average of €520,000 per vessel annually, followed by RoPax at €480,000 and RoRo at €314,000, with an average penalty for container ships of only €214,000, according to OceanScore.

Grell points out there are also massive discrepancies between vessels within these segments, with a number of ships in the passenger and RoPax segments exposed to penalties of between €1.8m and €2.5m, and payment obligations for some container ships approaching €1m. This is driven by higher energy consumption simply due to vessel size and trading profile.

While penalties will arise from so-called compliance deficits for vessels using conventional fuels, surpluses totalling an estimated €669m will be generated mainly by vessels fuelled by LNG and LPG with significantly lower carbon intensity.

LNG carriers will account for 78% of the total market surplus and gas carriers 8%, while a further 8% will be generated by container ships that have seen a modest uptake in alternative fuels in recent years.

Pooling can halve costs for the industry

Taking into account this estimated compliance surplus, the net cost of FuelEU penalties for shipping from 2025 would be €680m, which indicates that pooling of vessels can roughly halve the gross burden for the industry.

Penalties will, in segments typically using conventional fuels with comparable carbon intensities such as HFO, LFO or MDO, be roughly proportional to the overall fuel consumption, thus correlating with the EU ETS cost.

Initial costs of FuelEU for most conventionally fuelled vessels, prior to pooling, will be around one-third of those associated with the EU ETS next year when the latter regulation will have 70% phase-in. But ultimately FuelEU is likely to prove a much more costly affair as the requirement for GHG intensity cuts rises to 6% by 2030 and then accelerates to reach 80% by 2050.

“It is therefore incumbent on shipowners to define their strategies not only towards fuel choices and the use of onshore power but also towards handling of residual compliance balances such as pooling, banking and borrowing of balances, to mitigate the financial impact of FuelEU. However, pooling will also come at a cost, while banking and borrowing will incur interest costs and only push liabilities into the future,” Grell explains.

‘Sound administrative processes’

He further points out that pooling compensations paid between different shipping companies will effectively divert cash flow away from the EU that it would otherwise have earned from FuelEU penalties – but that this effect is intended by the regulator to “reward” early adopters of clean fuels.

Another factor that will curb potential income for the EU from this regulation is that the compliance gap has been reduced to only 1.6% by 2022, as average GHG intensity from shipping has come down by 0.4% to 90.82 gCO2e per MJ, mainly due to increased LNG carrier calls to Europe after gas supplies via pipelines from Russia were halted when the latter invaded Ukraine. Given this trend and increasing adoption of biofuels, the 2% compliance gap will probably be closed before the first tightening of reduction targets in 2030.

Grell says the priority for shipping companies, especially at this early stage while cost exposure is relatively low, is to get to grips with the complexity of the regulation and tackle the risks arising from the fact the party liable for penalties - the DoC holder, or possibly shipowner - is not the one responsible for emissions, which is typically the charterer.

“As well as having costs oversight, companies require reliable monitoring and reporting mechanisms with high-quality emissions data. They must also have in place complex contractual arrangements and sound administrative processes to manage compliance and mitigate the financial consequences of the new regulation,” Grell concludes.

Related: FuelEU: New regulation leaves DoC holder with fuel liabilities risk, says OceanScore
Related: ‘Big opportunity’ for bunker traders, suppliers on upcoming FuelEU regulation, forecasts OceanScore

 

Photo credit: OceanScore
Published: 12 July, 2024

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