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Maersk buys more low-emissions shipping fuel

The world’s second-biggest maritime shipping company sees bio-methanol as the most promising option at this time for cutting emissions. Read More

The Alette is one of Maerk's seven ships that can run on methanol. Source: Maersk

Maersk has signed a long-term contract to buy bio-methanol made from wood, a deal that will dramatically increase the supply of fuel for its growing fleet of ships that can be powered with either oil-derived marine fuel or lower-emissions alternatives.

The deal with Chinese supplier Longi Green Energy, announced Wednesday, will help the world’s second biggest maritime shipping company source more than 50 percent of the bio-methanol it needs for its fleet by 2027, said Charles van der Steene, regional president for Maersk North America, during a session about Maersk’s strategy at the VERGE climate tech conference. 

Maersk has pledged to reach net zero by 2040 across its shipping fleet and supporting logistics operations based on land, in large part to help customers such as Amazon, Volvo and other big corporations reduce the carbon footprint related to their logistics organizations.

Maersk considers e-methanol as the most promising option available today to reduce emissions, but is also investing in electrification of port operations and other emerging technologies such as fuel cells and green ammonia, van der Steene said. 

“The future is one of many fuels,” he said. 

Limited supply

The bio-methanol that the Danish company will buy through the new deal, made from straw and fruit tree cuttings, will cut greenhouse gas emissions by 65 percent over its life cycle compared with traditional bunker fuel used for ships.

The worldwide production capacity of bio-methanol is small: projected at 10.3 million tons per year by 2029. Production would need to reach 540 million tons annually by 2050 to replace all marine fuel. Maersk operates seven vessels capable of running on more than one type of fuel, including methanol produced from non-fossil fuels feedstocks including wood waste or captured carbon dioxide. Two dozen more are on order. Maersk has approximately 700 ships.

“We are pretty confident that supply will continue to be created, the question is where will it be created,” van der Steene said. “Right now, most of what we see is in developments that come from Asia. We want to see, of course, more of the supply being created in North America.”

The maritime industry is reaching an inflection point in adoption of lower-emissions fuels, but the high price customers must pay to procure it remains a barrier. Between 60 percent and 70 percent of Maersk’s biggest customers are interested in these options because they also have tangible net-zero targets. Danone, for example, on Tuesday became another high-profile customer for Maersk’s Eco Delivery initiative, a service that helps fund bio-methanol investments and that helps companies get credit for maritime emissions reductions.

“We need to get the industry to raise demand. We need to get the price down, supply up,” he said at VERGE.

Pushing for policy

Regulations taking effect Jan. 1 in Europe will begin to level the playing field between low-priced, highly polluting fuels and lower-emissions alternatives. Corporations will be required to report on emissions and to adopt certain greenhouse gas emissions intensity targets, starting with a 2 percent cut in 2025 up to an 80 percent reduction by 2050.

Europe is the most advanced region with maritime-related policies, and North America is the biggest laggard, van der Steene said. 

The Inflation Reduction Act largely overlooks incentives for maritime emissions reduction opportunities because the industry wasn’t proactive enough with its lobbying. That needs to change in order to level the playing field, he said.

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