Setting Course, an ABS Podcast

Maritime’s Methanol Demand with MPC Container Ships, Methanol Institute and HIF Global

• American Bureau of Shipping • Season 1 • Episode 25

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With the demand for methanol as a marine fuel expected to grow rapidly over the coming years, can green methanol production scale enough to help shipowners comply with evolving regulations?

Join us in this episode of Setting Course, an ABS Podcast, as we bring together leaders from across the methanol value chain to discuss the growing methanol-ready fleet, scaling production, reducing fuel costs, and expanding port and bunkering infrastructure.

Featured:

  • Greg Dolan, Former Methanol Institute CEO
  • Meg Gentle, HIF Global Executive Director
  • Sebastian Ebbing, MPC Container Ships Group Sustainability Officer
  • Sundeep Shaw, ABS Global Sustainability Manager

Share this episode on social media, leave a review on your favorite podcast platform or send feedback to podcast@eagle.org. Learn more about how ABS is supporting the maritime industry at www.eagle.org.

Footnote: After this episode was recorded, Greg Dolan announced his retirement as CEO of the Methanol Institute. Congratulations, Greg, and thank you for joining this episode of Setting Course.

Key Points

  • There are over 1,300 methanol-capable vessels operating or on order.
  • Regulatory clarity is essential for shipowners to plan their strategies.
  • Industry is working on lowering the cost of green and blue methanol.
  • Bunkering infrastructure for methanol is developing but still limited.
  • Investment certainty is needed to scale up methanol production.

Guests

Greg Dolan recently retired from the Methanol Institute after holding a variety of senior management positions with MI over the past 29 years, serving as CEO for the past 14 years. He managed MI’s offices in Washington, Singapore, Brussels, Beijing, and Delhi, while directing international governmental relations, media relations, public education, and outreach efforts. He has presented papers on methanol-related topics at more than 200 international conferences and webinars, authored magazine articles, and written book chapters on the methanol industry. He holds a Bachelor of Arts degree in Political Science from Boston University, and did extensive postgraduate work in Political Communication at the State University of New York-Albany.

Meg Gentle is an Executive Director of the Board of HIF Global. She has over 20 years of experience developing large scale energy infrastructure. She has served in numerous senior management positions and boards of directors of publicly traded energy companies in the U.S., including Cheniere, Tellurian, and Ovintiv. She has a B.A. in economics and international affairs from James Madison University and an MBA from Rice University.

Sebastian Ebbing is an expert in green shipping and clean technology with a robust background in regulatory affairs and sustainability. He currently serves as the Group Sustainability Officer at MPC Container Ship ASA, where he spearheads corporate strategies focused on sustainability, decarbonization, and fleet modernization. His academic credentials include a Master of Science in International Maritime Management and ongoing doctoral research on carbon capture and recycling in maritime transport. He is also a university lecturer and a member of the Management Board at the Institute for Innovative Logistics and Environment located at the Jade University of Applied Science.

Sundeep Shaw is a Copenhagen-based maritime sustainability expert helping the shipping industry navigate the transition to net-zero emissions. With deep operational insight and a strategic mindset, he supports ship owners and managers in areas like carbon accounting, retrofit feasibility and alternative fuels. As Manager of the ABS Copenhagen Sustainability Center, Sundeep also leads research and innovation focused on carbon dioxide reduction and green fuel solutions.

Brad Cox (00:08)
Welcome to Setting Course, an ABS Podcast, where we're charting the future of the marine and offshore industries. I'm your host, Brad Cox. And today we're going to be talking about methanol, not just methanol as a fuel, but the availability of green methanol and what the fuels and energy sector is doing to meet the shipping industry's growing demand. We have a great lineup for this one, so, I'm going to go and jump right in and introduce our guests. 

First up, have Meg Gentle, who is the executive director of e-fuels company, HIF Global.

HIF is developing projects around the world to produce synthetic fuels with renewable energy, green hydrogen and recycled carbon dioxide. Thanks for joining us, Meg.

Meg A. Gentle (00:46)
Happy to be here. Thank you, Brad.

Brad Cox (00:48)
I'm also pleased to welcome Greg Dolan, CEO of the Methanol Institute. The Institute is a trade association for the methanol industry representing producers, distributors and technology companies. Thanks for joining us, Greg.

Greg Dolan (01:00)
Thanks, Brad. It's pleasure to participate in today's discussion.

Brad Cox (01:03)
It's also great to have Sebastian Ebbing, a Group Sustainability Officer of MPC Container Ships. MPCC is a Norway-based ship owner and has taken delivery of two dual-fuel methanol newbuilds this year. Thanks for joining us, Sebastian.

Sebastian Ebbing (01:17)
Thanks, Brad, it's my absolute pleasure being here.

Brad Cox (01:20)
And from ABS, it's great to have Global Sustainability Manager, Sundeep Shaw with us. Sundeep was also recently a secondee at the Maersk Mc-Kinney Moller Center for Zero-Carbon Shipping. Thanks for joining us, Sundeep.

Sundeep Shaw (01:31)
Thank you, Brad. I'm super excited to be here on behalf of ABS and all our teams working on alternate fuels and methanol in particular.

Brad Cox (01:39)
Okay, so to go and get us kicked off here, when you look at the scope of methanol-ready ships in the industry, it's probably a lot bigger than people realize. I believe the numbers we discussed a couple weeks ago, you know, it's more than 50 on the water, almost 400 on order. Greg, what are the biggest challenges in meeting the growing demand for methanol?

Greg Dolan (01:57)
Thanks, Brad. Yeah, we're up to now 58 methanol dual-fueled vessels on the water, another 320 in the orderbooks and shipyards, launching largely between now and 2028. In addition, many owners are hedging their bets with methanol-ready vessels built with upfront investments to facilitate easier conversion of methanol operation at a later date, and that could be when methanol supply becomes more readily available. There are now 141 methanol-ready vessels in service, another 620 on order.

Plus, we've seen the first couple of methanol retrofits to operate. And total retrofit orders today are about another 236 vessels. So, you add up all the methanol capable, methanol ready, methanol retrofits, and that's investments of tens of billions of dollars on more than 1,300 vessels — a pretty big bet on methanol. 

In a paper last year, Bloomberg noted that 225 methanol dual-fuel ships that were then on order could use as much as 14 million tons of low-carbon methanol by 2028. Now, fortunately, methanol is a very flexible molecule that can be produced from a wide range of conventional and renewable feedstocks. Global trade of methanol is roughly 100 million metric tons, with most methanol produced from the steam reformation of natural gas. Low-carbon or blue methanol can be produced at these existing facilities through carbon capture, utilization and storage, with ISCC now having a carbon footprint certification, the ISCC CFC, for natural gas-based methanol with a 70% GHG reduction. 

Green or renewable methanol can be produced as bio-methanol from the gasification of biomass material, or using biogas or bio-methane, or e-methanol made from green hydrogen and CO2 from post-industrial flue gas, biogenic sources or direct air capture. And in China, we're actually seeing a rapid expansion of hybrid facilities from the gasification of agricultural waste or municipal solid waste with hydrogen injection. 

Now, on our website at methanol.org, we have a database with Gena Solutions, and as of May, we're tracking 131 e-methanol projects, 89 bio-methanol projects, 16 low-carbon methanol projects and when you add up all the announced total production capacity, you get up to 47 million tons by 2030. 

Again, those are announced projects. More realistically, we could probably see 7–14 million tons of production starting up by 2030, largely to support the growing demand for methanol as a marine fuel. And the main challenges for the supply side is really going to be having stable policy to drive the shipping sector towards decarbonization, which we are now seeing taking shape at the IMO with the Net-Zero Framework and in Europe with FuelEU Maritime and the ETS. We know that the cleaner or greener the fuel, the more expensive it is to produce. So, closing that green price premium is going to be essential, and policy can help us do that.

Brad Cox (04:50)
And Sundeep, you know, obviously ABS kind of has that high-level view looking at the overview of how these things come together. So, you know, what are you seeing are the big challenges in meeting that growing demand?

Sundeep Shaw (05:01)
From ABS perspective, and if you just talk about meeting the demand, I think what we are hearing mostly is about securing the supply at the moment, which has been what we gather from number of ship owners that it's not readily available at the moment.

But on the regulation part, which Greg mentioned, I think it's a great point that IMO actually has now come up with clear targets for 2030 and 2035 onwards for the GFI standards. Now, shipowners and operators, they have some kind of reduction targets as well as implications on the finance side, which helps them plan their strategy going forward. So, these two things were, I would say, big challenges which we're seeing. And I think there is more visibility now, which will enable shipowners to plan with a clearer goal for the future.

Brad Cox (05:50)
Obviously, renewable energy is a part of that puzzle to produce green fuels, but it's also part of the puzzle for broader energy demand. Meg, I know renewables are a key factor in HIF's developments. So how are renewables scaling to meet such broad demand? And are there other avenues for producing enough green methanol to support maritime and other sectors?

Meg A. Gentle (06:11)
You're exactly right, Brad, that renewable energy is such an important input to making green fuels. So, the greenest fuels are made from renewable electricity. We use most of that electricity, about 90% of the electricity that comes to the facility, to separate hydrogen from water.

And then, as Greg was explaining, we bring CO2 to the plant and we reattach the hydrogen molecules and the CO2 molecules. So, all of that chemistry requires a lot of electricity. And if we want to have the very, very lowest carbon emissions on a net basis coming from the fuel, we have to have very, very green power. And so that really means hydroelectric, wind and solar. And when we look around the world, we're looking for places that are either already abundant in renewable electricity on the grid or have renewable energy resources that are not being used today and really have no way of being used. 

And so one great example of that has been our development in the very southern tip of Chile, where the best wind resource in the world exists with a wind coming very, very dense off of the winds from Antarctica and really no way to use it. We tried to develop industry there. There's very, very little population. So this is a resource that is getting wasted today. And we have the capability to expand our existing producing footprint to about 20 gigawatts of wind power. So that's a great example where the renewable resource is not being used today.

And a great contrast to that is the project in Texas, where Texas is leading the nation on wind and solar development — about, I think, 64, 65 gigawatts now in Texas of wind and solar. So the grid is already very robust for renewable electricity. And that's one way that we can reduce the cost of production to narrow that price gap.

Greg Dolan (08:16)
And Brad, if I can just add one more piece of the puzzle, and that is, you know, part of the net-zero transition will involve the use of blended fuels. The methanol molecule is the same whether it's gray, blue or green. So we can take low-carbon methanol or blue methanol, blend some bio-methanol or e-methanol to get to the most stringent carbon intensity targets that we're expecting to see coming out of the IMO.

Brad Cox (08:38)
Sebastian, did you have anything to add to that?

Sebastian Ebbing (08:40)
I mean, generally speaking, Greg made a very valid point and Sundeep touched upon it as well. To get a reliable regulation, like the GFI on the IMO level or the IMO Net-Zero Framework, is one of the most crucial points because we need to have certainty in industry — how to invest, where to invest and which amount to invest. And considering that everything seems to be that we will get a very good and very profound IMO Net-Zero Framework adopted in October, it is definitely a point which we highly welcome based on the fact that it allows us to have certainty about where to invest, in which degree to invest, etc. So, I fully would echo what Greg said — that regulation and reliability and the certainty, the investment certainty is one of the most crucial points there.

Brad Cox (09:23)
So, branching off that renewables discussion, I understand there's a lot of interest in methanol for cars, from aviation. I'm sure a lot of shipowners are wanting to know if there will be enough methanol for maritime. So, Sebastian, what has MPCC's experience been with securing methanol?

Sebastian Ebbing (09:39)
Yeah, definitely. I mean, that's quite a relevant question. To recall, we as MPCC have two methanol-driven vessels in our fleet since this year. So, we had to dive into the environment of sourcing methanol together with our charters, together with our cargo owners. So securing methanol, especially green methanol, is still quite challenging today. The market is fragmented. The volumes are quite limited, and prices are, compared to conventional fuels, still quite high.

So, what we see so far is that sourcing of methanol requires a quite proactive approach. I mean, gathering around your project partners, namely the charterers, the cargo owners, the shipyards and technology provider, to work closely with them and define a scope and an environment where, for example, sourcing and the sourcing strategy of methanol can be taken up.

We also see that there are off-take agreements and long-term partnerships are becoming more important. While fossil methanol, even though we can substitute it with green methanol, is readily available, the scaling of green methanol production, both biofuel or the e-methanol, is quite critical. If we want to meet the maritime demand alongside with the growing interest from other sectors, we need to accelerate it. 

And speaking about other sectors, the competition for renewable energy or renewable fuels is quite intensifying. Aviation, road transport and even chemical industry are seeking for the same green methanol molecules. And we do see that in some cases, the other sectors like the chemical industry are willing to pay a premium for it. So, they can be easily accessed by other sectors as long as shipping has not the advantage that costs will be at least, I mean, derived along the value chain. And that is one of the crucial points we need to rethink and work on within shipping.

Brad Cox (11:25)
You mentioned cost. Is it simply a matter of supply catching up to demand or is there anything else at play here that can make methanol more affordable?

Sebastian Ebbing (11:35)
I mean, we touched upon the regulation. We see that there will be a pricing of greenhouse gases. However, the pricing of greenhouse gases will not close a cost gap which is six, sevenfold as a price of conventional fuel. So in that sense, we need to think about, for example, smart ideas and smart regulation, which really kickstarts and provides certainty not only for shipping companies, but also for fuel producers. 

One of the primary examples would be the FuelEU Maritime in Europe, which is quite, I mean, it was quite a good opportunity to get a shared responsibility within FuelEU Maritime, like in the aviation sector. So, oblige the fuel producers to bring into the shipping market renewable fuels, and the same requirement is defined for the ship owners to use this. And that would be quite a good opportunity at least to provide certainty for producers and for users.

Meg A. Gentle (12:27)
Brad, if I could comment a little bit from the fuel producer’s perspective. We have a little bit different experience on the cost side. We know that some of the European projects for producing e-methanol are, as Sebastian was saying, in the seven-times fossil fuel equivalent kind of price range. But because we've been specifically siting our production projects in areas where the electricity costs are much, much lower, we've been able to reduce the cost just from siting, to about two- to three-times fossil fuel, which does get helped by carbon pricing. 

And so how do we get the price down from there? The biggest place is going to be reduction of the construction cost of the technology. And even in the last three years, we've seen a 50% reduction in the cost of electrolyzer manufacturing. So we're closing that price gap every single day as new manufacturers from China and the U.S. are bringing electrolyzers in at a fraction of the historical cost. 

And the next place is going to be reduction of the cost of installation for the capturing of the CO2. So, we're very optimistic that we'll close the cost gap from two places — both from the development of a carbon pricing market and from just reduction in the construction costs.

Greg Dolan (13:51)
And if I could add too, I mean, Sebastian mentioned FuelEU Maritime and I'm a lobbyist, so I do look at this from a policy perspective. And, you know, if you look at FuelEU Maritime, ETS, there's a growing cost of compliance for vessel operators who want to continue to use diesel bunker fuels, say, very low sulfur fuel oil. By our estimate, that cost of compliance can be 460 euros per ton in 2030, climbing to 2,300 euros a ton by 2050.

Which means that as an alternative compliance option, if the price of methanol is below that cost to compliance, those penalties, then there's a value. And we peg that economic value right now for bio-methanol would be about 1,200 euro per ton. And for e-methanol through 2035, it's as much as 2,500 euro per ton. And further, the pooling provisions under FuelEU Maritime provide even further incentives for running vessels in your fleet on renewable methanol.

So again, the policy can really make a big difference in changing the dynamics of the pricing picture.

Meg A. Gentle (14:53)
I'm going to rise to the challenge that the producer needs to bring fuels to the market on an economic basis without such steep penalties. At HIF, that's what we're trying to do. And at the same time, support the development of carbon traded markets where the market actually values the carbon reduction. And we're seeing those markets develop today. I think the EU Maritime and EU ETS is a very big step in supporting development of that market in Europe. But even in California, it's accelerating the carbon reduction targets just from the market operating as a freely traded market.

Brad Cox (15:37)
So, at least from the maritime side, international and regional regulations are big driving forces behind all of this. Sebastian, you've mentioned the IMO and Net-Zero and FuelEU. So, Sundeep, how will these regulations impact owners and operators who don’t pivot or run into the bottlenecks we’ve discussed? And what is a class society’s role in supporting shipowners who want to use methanol?

Sundeep Shaw (16:01)
Yeah, regulations are absolutely driving the transformation we are seeing now. The IMO's revised strategy for net-zero ambition as well as the regional measures like EU ETS and FuelEU are creating those financial incentives for reducing the emissions. The IMO approved a new GHG fuel index, which is due to be adopted in October. And this has provided clarity on the cost implications and emission targets which ship owners can use to strategize. 

And it will not be a one solution fit all. Every ship is different, and every ship owner will have their unique operational profile and challenges. So, the plan and strategy must be tailored accordingly and ABS is actually positioned to help ship owners and our clients in this journey. We have published numerous studies as well as we are supporting lots of vessels which will use alternate fuel, including methanol, in the future. 

As a class society, we are playing a crucial role in methanol adoption. Firstly, we are providing the technical guidance through our alternate fuel guidance and methanol-specific rules for integration of these systems. Secondly, we are heavily involved in the risk mitigation and assessments, supporting safety of methanol as marine fuel, which given its toxicity and low flash point, it is required to do a risk assessment for these fuels. And thirdly, we are engaged in regulatory development process, helping to shape practical achievable standards which maintain safety while enabling innovation. 

What's particularly valuable is ABS’ position to share knowledge across the industry. Incrementally we are making it more efficient, better, safer. So, enabling the ecosystem, if I may say so.

Brad Cox (17:50)
And so kind of progressing from that point, ports and bunkering infrastructure are other key enablers for alternative fuels. So, methanol is especially interesting because its lower energy density would mean ships need more frequent bunkering. So, Greg, what does the bunkering infrastructure look like today and how is it developing for the future?

Greg Dolan (18:09)
Yeah, we're really seeing a ramp up, or the beginning of the ramp up of methanol bunkering at some of the largest ports in the world. As one of the leading globally traded chemicals, we know methanol storage capacity already exists at 125 ports around the world. So, the challenge is getting the methanol from that chemical tank farm to the vessel. And we've shown that that can be done by truck-to-ship, shore-to-ship or ship-to-ship bunkering.

Methanol bunkering has now been done at 15 ports. Another 20 ports are developing methanol bunker capacity. We've developed all the safe handling guidance around methanol safe bunkering and we've now seen methanol product barges being used for bunkering. That can be done on the Rhine or the Mississippi or, you know, major ports where methanol is moved by barge.

And now, again, we're seeing these large methanol bunker vessels, dedicated bunker vessels, that have been introduced at the ports of Shanghai and Singapore, both of which — both ports have also shown now simultaneous bunkering and cargo loading operations. So, you know, you're able to do that SIMOP and keep the vessel operating as you're doing the bunkering. And, you know, we're now — I think ports are starting to feel a little bit of competition. They need to establish methanol bunkering supply to keep enticing that growing fleet of methanol vessels to be calling at their ports.

Brad Cox (19:34)
And Sebastian, you know, we've already talked a little bit about what MPCC has seen as far as acquiring methanol for use on your ships. But what about methanol bunkering? You know, what has that experience been like for you guys?

Sebastian Ebbing (19:45)
Yeah, absolutely. I would like to underline what Greg said. We do see the tendency that ports will develop bunkering infrastructure and will develop at least processes for bunkering. However, we are still in early stages when it comes to investment on bunkering and that's quite reflected on a relatively limited number of ports. I know those port numbers are increasing, steadily increasing. But for full global coverage, it's still too less.

Typically, those bunkerings take place, at least within MPCC, by the truck-to-ship operations rather than dedicated bunkering infrastructure. From our perspective, we've been awhile to secure methanol for our dual-fuel newbuilds, but it requires quite detailed planning, very good processes, close cooperation, coordination with fuel suppliers and especially port authorities. Not saying it is impossible, but it requires quite significant efforts, at least, to realize it. It is definitely not yet a plug-and-play solution. 

Having said that, we are seeing quite strong momentum in the development of ports and port infrastructure. Several ports, especially within Europe, Asia and America, are quite active on establishing methanol bunkering infrastructure processes and risk assessments for it. So, we do hope that new regulatory frameworks like the IMO Net-Zero Framework will at least assist shaping those developments. 

For us, definitely the advantage with methanol, even though in bunkering processes, is that it builds on existing liquid fuel infrastructure. So, what we see for the last decades on conventional fuels is, in a wide range, still usable. And it's still at least comparable to liquid fuels. So, scaling it up and scaling up the port infrastructure is feasible, but I understand that the demand needs to be there as well.

Greg Dolan (21:31)
And just to add, Brad, too, I think the green corridors of shipping are going to be kind of an essential building block for bringing everybody in the value chain together. Fuel suppliers, terminal operators, ports, shippers, government officials. There are, I think, now 60 different green corridors of shipping around the world. We're involved in several of them. And there it's sharing best practices, looking at what can be done to overcome the green premium. And I think that's going to be important because it's got, you know, all the people in that ecosystem talking together and really identifying how you can create the methanol supply and the bunkering between these major ports that are connecting different routes.

Sebastian Ebbing (22:11)
Definitely, Greg. We really do like the concept of green corridors. I mean, you have a quite small environment where every stakeholder is engaged and committed in setting up processes, infrastructure, and as long as the green corridors are developed within this short environment, you can scale it up. And we do experience that while working within green corridors, the commitment of stakeholders, ports, shipping lanes, etc., is still increasing and that is quite a positive note. Hopefully we will reach a point where we can scale out of the green corridor more in a regional area.

Greg Dolan (22:43)
And too, as a liquid fuel at ambient temperature and pressure, scaling up is easier with methanol because you can increase supply and bunkering capability as you have more vessels come into port. If you're looking at the cryogenic fuels like LNG or ammonia, a port has to make really large investments right from the start. And methanol gives, I think, port operators a bit more flexibility to grow as the demand increases at their ports.

Brad Cox (23:09)
And Meg, are ports and bunkering infrastructure a factor for where you guys choose to produce methanol?

Meg A. Gentle (23:15)
It absolutely matters, Brad. And I can tell you a couple of stories on that. First, you know, we take the facility in Texas. We were originally expecting — that facility, by the way, is designed for 1.4 million tons of methanol production. So, it's optimized for the size of the best economies of scale on a methanol plant in existence today.

We can build that facility in phases and we may do that so that it's a little bit better size optimized for the market absorption. But we originally expected that we would load that methanol cargo on very large cargo vessels and transport it to ports where people wanted to bunker. And those are ports where the ship operators are bunkering their fuel today.. And what we found is that instead, our customers have been asking if they can just bunker the fuel in Houston or one of the Texas ports along the Texas Gulf Coast. And Houston already has a capability for methanol bunkering. So, it kind of changed our entire thought process of how we were going to load and move the methanol production that we had. So, that's just an example of what you can do to leverage existing infrastructure by building facilities in places where you already have massive energy corridors. 

By corollary to that, we also recently secured a site in the Port of Acu in Brazil. And that's a case where the port itself is very active in transforming the port operations into a green energy hub. And they had already set aside part of the port property to build a sustainable fuels facility and had completed the environmental permitting. So that's a different example where the port actually came to us and said, is there something that you could do here with us on sustainable fuels? And the Port of Acu is already part of the green corridor with the Port of Antwerp and Rotterdam in Europe.

A lot of these connections are happening. It absolutely does matter on the siting of the facility, how we're going to integrate with existing infrastructure. And that's one of the beauties of producing e-fuels is that we are making synthetic hydrocarbons. These are exactly the same as the hydrocarbons that we use today. And therefore, they can use all of the existing infrastructure. So, in terms of being the most, most efficient with how we're turning over our energy systems and making them every day more and more clean, e-fuels are able to leverage existing infrastructure more than any other solution.

Brad Cox (26:08)
So a lot of what we've talked about hinges on investment today for meeting future needs. So how does the industry balance the near-term needs with long-term ambitions and what will methanol availability look like in 10, 20 years? Meg?

Meg A. Gentle (26:23)
So, Brad, as we think about the overall portfolio, we basically have a global portfolio of roughly 15 million tons of e-methanol production. And that comes from facilities that we're developing in Chile, Uruguay, Brazil, Texas, Australia. And we're always looking to increase that funnel with sites, as we talked about earlier, where we have the best combination of low-cost renewable energy and off take accessibility to either the domestic or the international market and the best port facilities, either for loading or for bunkering. 

And as we balance, as you asked, short-term versus long-term, we have to do everything that we can to get those projects to construction readiness, even amid the sort of massive uncertainty that there is today in final formation of some of these regulations and compliance markets. And so what we've been doing is spending money on engineering and design. We now have the Texas facility to full FEED to class two category estimate. Bechtel did that work for us. We're completing the FEED in Uruguay. The Uruguay project is probably the most advanced from all of our South American projects. We're trying to bring both of those to construction ready for 2025. And that has been about, I would say, between $200 and $300 million of spending just on project development and engineering to get these projects to construction ready. 

And so what we need to begin construction, and Sebastian was talking about this earlier, is that we need long-term contracts. And so the certainty in some of these regulatory markets is critical, not from necessarily the perspective of price gap closing, but from the perspective of setting the rules so that ship operators just know, okay, this is what we have to do. And then we deliver a solution to them that is competitive in the market. 

And as we look toward long-term, the 15 million tons we can easily bring into production between 2030 and 2035. And then we will have learned, from bringing those projects to market, what are the combinations that we need to have to continue to reduce the cost. And we simply expand the portfolio from there. But the key is going to be that as we put together the first and second projects, other people will start to copy. And we saw that happen in developing LNG infrastructure from one plant, now in the case of the U.S., now the U.S. production is 35 times that first plant. So as an industry, we're going to come together to make sure we have the supply coming into the market for maritime, for aviation, and for road transport.

Greg Dolan (29:38)
And if I could give you another kind of concrete example where we've seen methanol supply grow to meet demand. In China, the first methanol to olefins plant opened in 2010. Olefins being the backbone of the plastics industry. Typically, olefins are produced from natural gas or naphtha products. 

Today, there are 40 MTO units, methanol to olefin plants, in China, consuming 34 million metric tons of methanol, with China last year having imported 14 million tons of methanol just to feed those MTO units. That means that the methanol industry was able to rapidly scale up supply to meet demand from a single market segment in a single geography, which shows me that if there's a market for methanol as a marine fuel or we could do another podcast looking at sustainable aviation fuel, supply will follow.

Brad Cox (30:26)
So, to go ahead and wrap us up here, I'd like to open things up to any closing thoughts each of you might have. Maybe one thing you'd like our listeners to know about methanol. Sebastian, you want to take that one first?

Sebastian Ebbing (30:35)
Yeah, perfect. Thanks a lot. I mean, for us, methanol is one of the most feasible options, at least to achieve our climate targets. We should not take less efforts in further development of availability and building ships, etc. Just by keeping in mind being brave enough but not careless about the technology and the costs behind it, methanol is still one of the two or three prime or leading options for shipping to decarbonize.

Brad Cox (31:02)
And Sundeep, any closing thoughts from you?

Sundeep Shaw (31:04)
Yes, thanks Brad. And I think one takeaway that I will try to leave with this podcast is that it's definitely one of the solutions which is very mature, technically. There are engines available, there are boilers available. Technically wise, it is ready to deploy and there’re lots of ships in the water, as Greg was mentioning in the beginning. And there is also a lot of experience in the industry on how to handle methanol, despite its toxicity and flammability. 

And what the challenge is — what we see now basically is in scaling up the production, which gives a signal to the shipowners to build more. And also, I think, availability of the bunkering infrastructure, which is still simpler but still some work is needed. 

Actually, ABS also has a beautiful bunkering guideline published. It was actually an industry-first, which was published on methanol specifically. So I think I will encourage listeners to also have a look at it. We support all fuel types, whichever is coming up, and we also see methanol as one of the prime ways of this industry to switch over to green fuel. ABS is there to enable the ecosystem so we will support our shipowners and clients in this journey going forward in whatever way we can.

Brad Cox (32:22)
And Meg?

Meg A. Gentle (32:23)
Well, from the supplier side, we are here to bring as much methanol to the market as we possibly can. And so I would say that I think it's important that everybody recognize that the supply is there and producers are ready. So, what is the step we need next? It's really the certainty that will support long-term contracts so that we can go from the development investment to the billions of dollars that are going to be needed for the construction phase. And so, from the standpoint of policy development, we as an industry, all of us, the producers, the consumers, policymakers, government, we need to create those regulatory systems that give certainty to signing long-term contracts.

Brad Cox (33:11)
And Greg, we opened with you, so we'll close it out with your closing thoughts.

Greg Dolan (33:15)
Well, first I want to thank ABS for hosting this. When I look at the different class societies, I think ABS has been a real strong partner in looking at methanol as marine fuel. We were happy to support the bunkering guidelines that ABS did. I would encourage people to look at the ABS reports on where the future fuels for shipping are going to go. 

You know, I think when we look at methanol today, we're just really on the cusp of methanol just breaking out as a marine fuel. We've gotten the ships on the water, the engine technology is mature, we're expanding the bunkering infrastructure, the policy frameworks look to be advantaged for methanol. And you know, that 58 vessels we have on the water today, we're going to see hundreds more coming on the water in the next couple of years. And I think, as you've heard from Meg and others in the industry, that we're looking at ramping up the supply to make sure that we can keep those vessels running on methanol in the future.

Brad Cox (34:13)
Okay great, this has really been fantastic. Meg, Sebastian, Greg, Sundeep, thank you all for joining us for this episode.

Meg A. Gentle (34:20)
Thank you, Brad.

Greg Dolan (34:21)
Thank you.

Sundeep Shaw (34:22)
Thank you, Brad, for hosting it. It was wonderful.

Sebastian Ebbing (34:25)
Thank you, Brad. It was awesome to discuss with you.

Brad Cox (34:28)
And for everybody listening, thank you for joining us for another episode of Setting Course. Be sure to subscribe, leave a review and share this episode. To learn more about alternative fuels for the maritime industry, visit us at www.eagle.org. Thank you for listening.