Setting Course, an ABS Podcast

Methanol as a Maritime Fuel With Maersk

• American Bureau of Shipping • Season 1 • Episode 13

Share episode

Once considered future fuels, options like LNG, methanol and ammonia are quickly becoming current fuels for the maritime industry. However, as alternative fuel-enabled ships start hitting the water, challenges remain for both availability and risk assessment.

On this episode of Setting Course, an ABS Podcast, Dinesh Balraj, Maersk Head of Fleet Operations East, and Shu Yong Koh, ABS Director of Global Sustainability, explore some of the biggest challenges of methanol as a marine fuel with host Brad Cox, ABS.

If you like this episode, share it with your colleagues, leave a review, or send us feedback to podcast@eagle.org. More episodes are available at www.eagle.org/podcast and all major podcast platforms.

Key Points

  • Maersk is using methanol as a pioneer fuel to achieve carbon neutrality and meet their ambitious sustainability goals.
  • Methanol offers speed, scalability, and cost-effectiveness, making it a viable option for reducing emissions.
  • The complete methanol value chain is still developing, with challenges in sourcing and infrastructure.
  • ABS has published a bunkering advisory to support the safe handling of methanol.
  • Methanol is expected to play a key role in the future fuel mix, but a diverse range of green fuels is also anticipated.

Guests
Dinesh Balraj is the Head of Fleet Operations East at A.P. Moller-Maersk. Dinesh oversees the technical management of a fleet comprising 185 container vessels. In this role, Dinesh champions safety, reliability and energy efficiency, leveraging his diverse background spanning Chief Engineer, Classification Surveyor, Fleet Superintendent, and Fleet Manager positions. As a key member of the Fleet Management and Technology leadership team, Dinesh spearheads strategic initiatives aimed at driving cultural transformation, decarbonization efforts, and operational excellence throughout the organization.

Shu Yong Koh serves as ABS Director of Global Sustainability, responsible for driving the ABS sustainability strategy and assisting ship owners and operators with achieving their sustainability and environmental, social and governance (ESG) goals through industry-leading support and digital solutions. He has been involved in various sustainability initiatives and is actively pursuing the challenges of the maritime and shipping industry. He is working on energy, emissions and innovative technologies associated with alternative fuels, taking into account technical, environmental, regulatory and economic factors.

Brad Cox (00:08.00)
Welcome to Setting Course, an ABS podcast, where we're charting the future of the marine and offshore industries. I'm Brad Cox, and I'll be your host today. 

When it comes to fuels, it seems like shipping is approaching a watershed moment. The orderbook is loaded with ships being built for what we used to call future fuels. I know this is going to sound cheesy, but with LNG and methanol-ready ships already on the water and ammonia not far behind, the future really is now. 

Today we're joined by a special guest from Maersk to discuss methanol's place in the current fuels reshaping the industry. Maersk is already operating three methanol-ready ships and has a fleet of methanol ships on order, several of which are being built to ABS class. We'll also be discussing the recent methanol bunkering advisory that ABS and Maersk collaborated on. 

With that, I'm pleased to welcome Dinesh Balraj, Head of Fleet Operations East for Maersk. Thank you for joining us today, Dinesh.

Dinesh Balraj (01:03.403)
Brad, it's a pleasure to be on this podcast.

Brad Cox (01:07.194)
And making a return to the show is Shu Yong Koh, ABS Director of Sustainability in Singapore. Good to have you again, Shu Yong.

Shu Yong Koh (01:14.629)
Thanks, Brad, for having me, and welcome, Dinesh.

Dinesh Balraj (01:16.593)
Thank you.

Brad Cox (01:17.369)
Dinesh, we'll go ahead and get started with you. You know, I mentioned that Maersk is already operating methanol ready ships. With the industry looking at a lot of different fuels and solutions for reducing emissions, how did Maersk come about embracing methanol at this stage?

Dinesh Balraj (01:31.778)
Absolutely, it's a great question. And let me give you a little bit of background. You know, Maersk had set an ambitious target of becoming carbon-neutral by 2040, which is much ahead of the industry. We also had an ambitious target of having 25% of container volume to be transported using green fuels by 2030. We chose methanol as the, you may call it, pioneer fuel for this. And the reason we did that was considering three, I would say dimensions. One is speed, second is scalability, and thirdly, cost. So if we talk about speed, we had to act really fast to meet our customers' demand and address the problems in terms of climate change. Methanol engines were available, are available in the market. So there is already some experience in terms of safe operation of methanol in marine conditions, whereas this was not the case for ammonia. So it was too early to start with large-scale investments in ammonia. Methanol-powered vessels were the fastest and least risky way to a scalable green solution for us. So this is also reflected now, you know, if you look at the orderbook, the green methanol-powered container vessels is currently at over 100. So, indicating this is the fuel of choice in the industry. 

Secondly, when we talk about scalability, right, the green fuel quantities that are needed to propel our entire shipping fleet is gigantic. So, the technology for producing green methanol is considered mature enough to scale and there are several pathways for production of green methanol. So, while we know that there are different green fuels that will be in the mix in the coming years, for powering our fleet, methanol is definitely one of the front runners that will play a key role. So, it is a safe option. Thirdly, like I mentioned, cost in terms of long-term cost picture for different fuels. That is not very clear, but based on foreseeable oil prices, green methanol can be two to three times the price of fossil fuel. However, with the growing demand that we see, and the production that is expected to scale, we expect the cost to decrease. So, these are some of the reasons why we went with methanol.

Brad Cox (04:15.592)
So, of course, the whole reason we’re talking about methanol is for emissions reduction, so how does methanol compare to conventional fuels in that regard?

Dinesh Balraj (04:22.917)
Definitely, methanol is less carbon intense. We cannot say it is completely 100% neutral, right, because of the sourcing challenges and, we really need to look at the well-to-wake picture of it. So, if you talk about green methanol, it is definitely less carbon intense compared to the traditional fuels. So, we expect around, in terms of emissions, from a life cycle perspective, in the long run, we expect the greenhouse gas emissions reductions to be well above 80%, and in the best cases, above 90%. So, just to give you an example, the green bio-methanol produced for our first dual-fuel engine vessel, Laura Maersk, by our partner, OCI, from biogas — this fuel was certified by ISCC and achieved 65% lifecycle greenhouse gas savings.

Brad Cox (05:22.610)
And I think that segues into this next one pretty well. Shu Yong, like we're discussing here, it seems like methanol is at a relatively mature stage, as Dinesh pointed out. But it's really not that quite simple. There are sourcing challenges, and getting green methanol is its own challenge. And especially as we have to look at these well-to-wake emissions. So, while the fuel itself may be relatively mature, what's the maturity of the complete methanol value chain? What are the near-term hurdles for methanol to be more broadly adopted?

Shu Yong Koh (05:53.355)
Thanks, Brad. That's a very good question. And I think Dinesh has pointed out a lot of good points that is under operation from Maersk. Looking at methanol, as we can see, this is one of the alternative marine fuels that is on the trend that is going up. Infrastructure-wise, supplies-wise, the market has actually had that kind of demand with regards to supplying the vessels, the fuels, the bunkers to such methanol vessels ready in terms of the notations or even a single propulsion as methanol itself. And of course, as what you have asked in the previous questions, methanol is increasingly recognized as a viable alternative fuel, that we can see, and of course becomes a significant fuel during this energy transition periods in reducing greenhouse gas emissions and other pollutants compared to conventional marine fuels.

And in terms of the productions, we are moving forward. We’re also looking into more of the renewable sources, such as biomass for bio-methanol, like Dinesh has mentioned. And, of course, potentially green hydrogens, which are derived from e-methanol itself. And this will actually further enhance its sustainability credentials in the market, in greenhouse gas accounting. Once again, I also want to highlight that with infrastructures in place, regulatory (aspects) in place, maintaining the CII of the vessels, methanol is one of the better alternative fuels looking forward right now, in terms of the trend. As you can see, there are also new and more orders being placed as single-fuel vessels are being built from the container segment as well. 

I feel this is one of the crucial resources for maritime in terms of safety aspects, where everybody is coming together, learning about this fuel and operating this fuel safely as well. That is why ABS released the methanol bunkering advisory for the industry. This comprehensive guidance in terms of technical, operational and safety aspects of methanol bunkering.

Dinesh Balraj (07:52.916)
If I can add to this, Brad, I think Shu Yong is spot on. From a Maersk perspective, the challenges that we see are more towards sourcing of the fuel, especially green methanol. Market is, of course, rapidly developing. The innovation is promising. We're seeing a long list of potential projects, and Maersk is working hard to ensure this is translating into sufficient volumes for green methanol as fast as possible. Yes, we are making some progress, but we still face sourcing challenges. So, it's really important for all the players to come together. We need customers to really go with us. We need the regulation, like Shu Yong mentioned, to play a role. So, we need all these stakeholders to come together to make this possible.

Brad Cox (08:45.550)
Shu Yong, you mentioned the bunkering advisory. Safety is always front of mind for us at ABS. And that's definitely been at the heart of producing publications like the bunkering advisory. So, can you tell our listeners a little bit more about the bunkering advisory? Maybe what went into its development and what some of the key considerations are for safe bunkering and safe handling of methanol?

Shu Yong Koh (09:07.521)
Yeah, thanks, Brad. The recent advisory for methanol bunkering, which has been titled Methanol Bunkering: Technical and Operational Advisory, this publication actually gives the industry a critical insight about the challenges and strategies for safe bunkering of methanol as a fuel itself. And as we have seen the market uptrend on the growing adoptions of methanol fuel vessels, this advisory gives the industry more understanding and addresses the complexities of the methanol bunkering operations, especially on these five points that is listed within the safe methanol bunkering context. 

First of all, is the design issues. How is this going to be designed in terms of considerations for both
delivering and receiving vessels, the compatibility of the materials that is used, and also the pipelines and other equipment handling methanol, corrosive properties, and also the low flash point — for example, 12 degrees Celsius in terms of the methanol itself as a gas. 

And the second point will be regulatory compliance. When methanol bunkering becomes more and more common, compliance with international and local regulations is very critical. So, this advisory will emphasize a lot on the regulatory standards and also anticipates the developments of the standards and also specific to methanol as a marine fuel. 

And third point, I would say, is the safe practices, the implementation of safe practices that has been during the bunkering operations is essential in preventing accidents and also environment protection. So this includes maybe strict monitoring of a fuel transfer, proper ventilations, and preventing vapor accumulations, and also the right use of PPEs, personal protective equipment, during the bunkering operations. 

And of course, the most important part is when we're coming to the operations, the process. How has it been outlined in terms of safety and in terms of efficiency? What is the protocols involved in delivering and receiving of both vessels? The measurements, and of course, the quality control of the fuel as well? And what are the emergency response plans that will be in place if there is an emergency situation that arise? 

But last but not least, is also the proper training for the crew members and personnel involved in methanol bunkering. Such tasks on this advisory actually address these considerations. And hopefully the industry can adopt it, practice, and use it safely and effectively during this transition. And also using methanol as a fuel to achieve the significant part in terms of emissions, reducing and advance towards a sustainable future. 

Brad Cox (11:49.297)
And, of course, one of the big safety risks of methanol is that it burns at a near invisible flame, especially in daylight. Dinesh, what steps has Maersk taken to mitigate that risk and be prepared to respond to potential methanol fires?

Dinesh Balraj (12:05.934)
Absolutely, I think Shu Yong also rightly touched upon some of the aspects and one of the important aspects is the crew training. So, training is normally covered by the SDCW. Of course, in the case of methanol, this was, when we did the bunkering for Laura, that was the first time that we bunkered methanol. And then of course, we had to work with the industry to prepare a program, training on how to handle the training on firefighting. So, we actually sent our crew on an actual firefighting course, training for operational aspects, including how to detect leaks and how to react. So, we also formed an internal working group, which identified the training standards for our crew. So, crew training is definitely a crucial aspect of how to deal with methanol. 

Like you mentioned, there are definitely challenges. It is especially toxic when it is ingested or contacted if you have an eye contact or skin contact. So, there are challenges and some of the safety measures that we've been using is around methanol detection systems. So, having those zones identified, hazardous zones, what are the safety zones and having the firefighting equipment available. There is also the emergency shutdown system, especially for bunkering, that we have developed where the QCDC coupling, the quick closing disconnect coupling, both on the liquid and vapor lines. This is also a crucial part of the safety feature in terms of bunkering.

Brad Cox (13:49.802)
Great. Yeah. So, I'd like to pivot a little bit and discuss engine technology. Using methanol as a fuel isn't exactly new. Here in the U.S., several automotive racing series have used pure methanol as a primary fuel for a few different reasons. However, shipping has kind of gone down a little bit different path with the dual-fuel engines. So Dinesh, why has the industry focused on dual-fuel engines for methanol. And are these perhaps a steppingstone to a future where fuel oil isn't really in the equation?

Dinesh Balraj (14:18.497)
Yeah, I mean, the dual-fuel concept is primarily coming from apprehensions about the scalability. Whether we will be able to produce enough green methanol to power our fuels only on it. So, this is why we've gone for the dual fuel options. In fact, I can also share that we've had recently some challenges even for the newer vessels to get green methanol available at all the ports. So, if you're on a long voyage, you need to be able to bunker this across the world, and this is a challenge currently. Hopefully, like I mentioned, with more maturity and more adoption, we should be able to see it being available across the world. But right now it is a challenge and therefore having dual engine kind of safeguards us from lack of availability.

Brad Cox (15:11.030)
So, this question, I'd like to get both of your perspectives. What's the long-term outlook for methanol? Will it still have a place in the basket of fuels in 2050? Or is it going to get kind of phased out in favor of other things? But where do you guys see it kind of fitting in in the future?

Dinesh Balraj (15:26.919)
Maybe I can take a stab at it. What we see is that momentum for green methanol as a green fuel of choice is becoming clear. As mentioned earlier, as we can see, the orderbooks for methanol enabled vessels continue to grow and quite rapidly. So, we are confident that methanol will play a key role.

But we also expect a diverse green fuel mix in the transition years. We do believe that we will see a basket of green fuels as technologies mature and become available. So, from this point of view, Maersk is actually green fuel agnostic. So, we're not placing our bets completely on methanol. But like I mentioned, we do believe green methanol will play a significant role in this decade with already three operational and in total with 25 vessels, dual-fuel vessels, methanol-operated currently under production. 

So, we're continuously trying to expand the partnership to secure the volumes that is needed. We've signed some green fuel MOUs. There are MOUs for more than 1.5 million tons of methanol that has been signed. So, there is a strong pipeline. We're working with sovereign governments around sourcing. So, it is indeed promising, but we believe that it will be a basket of fuels.

Shu Yong Koh (16:54.483)
Yes, definitely I do agree what Dinesh mentioned. So, based on the statistics, in terms of dual-fuel methanol, it's about 6% in terms of the world uptake right now. And of course, primarily methanol is produced through natural gas. With this method, like what Dinesh also mentioned, the technology will mature and become more cost effective. And definitely, it will align with the sustainability and decarbonization journey and goals that the global industry is looking at. 

In ABS, we recently have just launched a new ABS Outlook with regards to alternative fuels. It's also looking at the productions need to shift in terms of renewable sources towards biomass or using new efficient technologies in terms of CO2 capture and green hydrogen. And, of course, green methanol in terms of production from renewable electricity and the bio-methanol involvement will actually become the key focus moving forward. And I think that is where Maersk is trying, like what Dinesh had mentioned, trying to secure more green methanol bunkers in terms of the consumptions.

And definitely methanol will still be in the place of basket between all the marine fuels and is significantly comparable with the existing infrastructures, technology readiness, and also environmental benefits as of now. And to realize its full potential, the scaling of renewable methanol productions is essential. And I believe this will be a coordinated effort across industry, governments, and research institutions to overcome such technical economics and regulatory challenges. And I believe it will be one of the green fuels moving forward in terms of adoptions in comparison to maybe LNG as it goes forward.

Brad Cox (18:34.017)
And as we're reaching the end of our show here, I'd like to open things up to any closing thoughts or key things you want our listeners to know or take away from this. Dinesh, why don't you go first?

Dinesh Balraj (18:45.257)
Yeah, sure. I think the most important message here is that no one can make this journey alone. We need support from partners, regulators, and then most importantly, the commitment of our customers is very important to keep accelerating the transition to net-zero. When we talk about our customers, we are really hopeful that our customers will increase their commitment to their climate targets by showing a willingness to lower their transport emissions, especially the scope 3 emissions. And we do see a trend of ambitious customers upping their game, strengthening their signals for further investment into low-emission vessels. But we also need regulators to close the price gap between green and fossil fuel transport. This is so important. We'll only achieve net-zero across global shipping if the regulators work on the price difference. And we need to introduce a level playing field and reduce the price gap between the fossil fuels and green fuels.

Shu Yong Koh (19:54.693)
When it comes to ABS, the key takeaway is during this maritime decarbonization, I think, of course, to meet net-zero by 2050 is year-by-year, fossil fuels have to be reduced. If the green fuel has been adopting at maybe a good rate of 5% annually, and then that will actually create a net-zero by 2050 to meet the targets.

And of course, what Dinesh had mentioned is the productions of the alternative fuels that's available in the market, in terms of the infrastructures, in terms of green methanol and the pricing at the end of the day. And the adoptions of ship owners being open in using alternative marine fuels as a change during this energy transition period is definitely a plus point towards the carbon emissions and also decarbonization journey. 

And nevertheless, last but not least, hopefully by then, crude oil or fossil fuels will be of reductions in terms of utilization to where more different marine alternative fuels have been used on the vessel itself and also the utilization of different energy efficiency technologies on board the vessels. I guess all this leads back to the carbon footprint and potential carbon-neutral methods in terms of producing fuel and also the significant potential of broader strategies toward this decarbonization of the maritime industry.

Brad Cox (21:17.751)
Excellent. So, thank you both for joining me today and a special thanks to Maersk for being part of this episode.

Dinesh Balraj (21:25.328)
Thank you, Brad. It was a pleasure. Thanks to ABS as well. And thanks, Shu Yong, for really partnering on this podcast.

Shu Yong Koh (21:33.773)
Thank you, Dinesh.

Brad Cox (21:35.983)
And for our listeners, thank you for joining us today on Setting Course. If you liked this episode, leave a review, share it with your colleagues, and give us a follow. To learn more about methanol and other alternative fuels, visit us at www.eagle.org. Thank you for listening.