Maritime cargo decarbonization expertise could be a lucrative new B.C. export.
Three local companies that are leaders in their respective shipping sectors could also be leaders in developing that export potential, and methanol is one of the fuels driving that potential.
Along with liquefied natural gas (LNG), methanol is the frontrunner in the race to become a viable low-carbon alternative to conventional heavy marine, diesel and marine gas oil (MGO) as a bridge fuel in marine shipping’s transition to greener operations.
Neither will be the only alternative. The smart money today is riding on a mix of fuels being the long-term answer. An April shipping industry report co-ordinated by McKinsey & Company backs that bet. Forty-nine per cent of respondents to The Shipping Industry’s Fuel Choices on the Path to Net Zero survey expect to adopt four or more fuel families or mixes in their fleets by 2050.
Methanol is a prominent member of those families.
As with any alternative, methanol has disadvantages and advantages. For example, when it is produced from natural gas, methanol has similar well-to-tank greenhouse gas emissions as conventional MGO.
But methanol, which has the highest hydrogen-to-carbon ratio of any liquid fuel at room temperature, provides a viable pathway to decarbonizing shipping because the technology for its use in large ocean-going ships and the global refuelling infrastructure to support that use are here now.
And because methanol produced from biomass or other renewable sources has the same properties as methanol produced from coal or other carbon-intensive sources, ship owners investing multimillions in ships whose average working life is around 25 years know that an investment in methanol engine technology now will not become a sunk asset 10 years from now.
According to the Together in Safety shipping industry coalition, it also requires the fewest additional safety measures of any alternative ship fuel.
That combination sets methanol apart from the rest of the alternative fuel pack. And that is good news for B.C., because Vancouver is home to the world’s largest methanol producer. Methanex Corp.’s (TSX:MX) 2022 revenue was US$4.3 billion on sales of 10.8 million tonnes of methanol, which is used in a wide variety of products, but approximately 30 per cent of that production is now going into energy-related applications.
Not surprisingly, Methanex operates the world’s largest methanol-powered tanker fleet through its Waterfront Shipping Co. Ltd. subsidiary. Nineteen of its 30-tanker fleet are methanol powered, and the company now has seven years and more than 130,000 hours of experience in operating ships that can run on methanol.
That puts it among the leaders in methanol use and innovation at a time when push is coming to shove to reduce the international shipping fleet’s carbon footprint.
“So, it’s been an exciting last couple of years,” said Waterfront Shipping president Paul Hexter.
Because of methanol’s clean-burning properties, Hexter estimated that it cuts tank-to-wake carbon emissions by 15 per cent compared with conventional marine fuels.
That CO2 reduction increases exponentially when methanol produced from renewable natural gas or other biomass (bio-methanol) is used.
Bio-methanol produced at Methanex’s plant in Geismar, Louisiana, powered Waterfront Shipping’s first net-zero voyage from Louisiana to Antwerp, Belgium, earlier this year.
While critics point out that methanol produced from fossil fuels delivers no significant gain in overall decarbonization for ships, Hexter pointed out that, for a capital-intensive industry, it offers a viable route to decarbonization.
“The advantage of methanol is that it’s safe and proven. It is environmentally benign. It is water-soluble. So, if there was an incident, it doesn’t have a lasting impact on the environment. The technology is proven. We’ve been running the ships since 2016.”
Hexter added that methanol is available in over 125 ports worldwide.
And that, he said, provides the shipping industry with “a pathway to low carbon.”
But Methanex is not the only B.C. company charting a course to greener operating destinations.
“Chase the Molecule” (CTM) is the working title for the green initiative recently adopted by Atlas Corp. (NYSE:ATCO), the parent company of Seaspan Corp.
The world’s largest lessor of container ships is well on its way to having a fleet of just over 200 containerships and a container-shipping capacity of 1.95 million 20-foot-equivalent units. So, its market moves are watched closely by competitors and the rest of the container-shipping world.
Torsten Pedersen, Seaspan’s chief operating officer, said the idea behind CTM is to help Seaspan customers find the best route to compliance with International Maritime Organization decarbonization requirements to cut shipping’s carbon intensity 40 per cent by 2030 compared with 2008.
“It is a project where we look at our customer base, and look at container shipping in general, and say, OK, where are the pain points in the transition to [alternative] fuel? … Can we try to alleviate some of these pain points and make that a smoother journey by, for instance, looking at whether we could source the fuels and deliver them in the right locations?”
Seaspan is leaning heavily in LNG’s direction as the alternative fuel of choice for its fleet: 25 of its new ships with be outfitted with dual-fuel LNG technology.
Meanwhile Vancouver’s Robert Allan Ltd. (RAL), the world’s leading tugboat designer, is also a leader in incorporating electrification in their design.
Michael Fitzpatrick, RAL’s president and CEO, said the push to decarbonize the global tugboat sector has increased significantly over the past four years.
For example, he said that in 2019 approximately 10 per cent of RAL’s projects included some decarbonization element, but “in the last 12 months, 68 per cent of the projects we’ve gotten have some element of decarbonization.”
For RAL customers committed to decarbonization in regions where electrification makes little practical or financial sense, the company's tugboat designs incorporate ammonia, green methanol or other alternative fuels.
Of the alternatives with the best long-term chance of being used in tight tugboat quarters, Fitzpatrick said green methanol would be “the best of a bunch of bad options.”
In the final reckoning, however, consumers will determine which alternative fuel will prevail in the global shipping industry.
“That’s where it all comes down to for us,” Pedersen said. “We never build ships on speculation. We build ships when we have a shipbuilding contract and a commercial contract to charter agreement done. So, it’s our customers, the container shipping lines [that] will determine what type of ships we should build. In turn, it’s their customers and their willingness to pay for it.”
trenshaw@biv.com
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