Maersk’s road to carbon neutrality still requires LNG

AP Moller-Maersk is still working towards its carbon emissions targets, but market forces require them to take an alternative route.

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Methanol has been promoted as an alternative to heavy fuel oil, known as bunker fuel, which has long powered shipping vessels and contributes 3% of all global greenhouse gas emissions each year. Like many other shipping giants, Maersk has signed contracts and ordered 25 ships that can run on bunker fuel and methanol. However, the supply of methanol has been a problem that has plagued the industry and ultimately the cost of this industry change.

Global methanol production will be around 30,000 tonnes at the end of 2022. Maersk alone will need nearly 1 million tonnes to operate its new ships for a year. Nearly two years later, the oversupply situation has not improved, and the price of available green methanol is almost twice that of marine fuel.

Green methanol is a term used to describe liquid methanol produced using renewable energy, most commonly solar or wind power. Currently, its production remains limited, which means that prices are rising. Therefore, despite Maersk’s past commitment to avoid using liquefied natural gas (LNG) powered vessels, the company is turning to adding new LNG powered vessels to its fleet.

The transition to clean shipping is a costly undertaking. Clarksons Research estimates that the cost of switching to new forms of energy is more than $3 trillion. Efforts to produce alternative fuels on the scale needed for global shipping remain woefully inadequate, leaving shipping companies like Maersk with little choice. LNG ships emit 25% less carbon than fuel-burning ships, but more than methanol-powered ships, which emit no CO2.

The shipping industry has a carbon emissions target of halving its emissions by 2050 compared with 2008 levels. The International Maritime Organization, the United Nations maritime regulator, is overseeing the process, and shipping companies such as Maersk have their own targets.

The addition of LNG vessels is not expected to hinder Maersk’s goal of a carbon-neutral fleet by 2040. However, in a year marked by geopolitical challenges and rising operating costs, an alternative route to a carbon-neutral future is needed.