Maersk Establishes First Global Methanol Production Network
A.P. Moller – Maersk is forming strategic partnerships around the globe to create the first global supply infrastructure for green methanol production as it seeks to spur efforts toward the decarbonization of the shipping industry. Partnering with six companies, Maersk reports that it has laid the groundwork which when scaled by 2025 will supply well beyond the green methanol needed to fuel the line’s first 12 methanol-ready dual-fuel containerships.
Maersk is seeking to lead the industry and demonstrate by example the potential for decarbonization using currently available technologies. Last year, Maersk became the first large shipping company to announce the construction of methanol-fueled containerships. The company ordered both a smaller feeder ship to operate in the Baltic region as well as a dozen large, next-generation containerships using dual-fuel engines. At the time they announced the strategy they said one of the challenges especially at the time of introduction would be sourcing sufficient quantities of methanol for the ships.
“To transition towards decarbonization, we need a significant and timely acceleration in the production of green fuels,” says Henriette Hallberg Thygesen, CEO of Fleet & Strategic Brands for A.P. Moller - Maersk. She emphasizes the company’s belief that green methanol is the only market-ready and scalable available solution today for shipping. “Production must be increased through collaboration across the ecosystem and around the world. That is why these partnerships mark an important milestone to get the transition to green energy underway.”
Once fully developed, these projects of both bio- and e-methanol production will enable Maersk to source green methanol at scale across several regions around the globe. By the end of 2025 at the latest, Maersk expects to be sourcing at least 730,000 tons per year of the green fuels, reaching well beyond the green methanol required for the first 12 green container vessels currently on order.
The six companies that are partnering with Maersk are CIMC ENRIC, European Energy, Green Technology Bank, Orsted, Proman, and WasteFuel. The individual projects range in scope between 50,000 and 300,000 tons of annual production all focusing on either bio- or e-methanol. They will include China, North and South America.
European Energy will be one of the first producers providing e-methanol for Maersk´s first green feeder vessel, which is expected to enter service before the end of 2023. Longer-term they will also develop e-methanol projects in Latin America and the United States that will have a capacity to produce up to 200-300,000 tons annually of e-methanol starting in 2025-2026.
China’s CIMC ENRIC will also develop one of the first bio-methanol projects for Maersk using agricultural residues. The phase one project starting by 2024 will have a capacity to produce 50,000 tons per year and will lead to a larger project which in the future that will have a capacity to produce 200,000 tons per year. Green Technology Bank will also identify project developers in China to facilitate the development of bio-methanol projects, with their first project producing 50,000 tons per year starting from 2024, and a second project planned for the future with the capacity to produce 300,000 tons per year.
The largest of the projects, expected to be online before the end of 2025, will produce 300,000 tons per year using an innovative Power-to-X-facility developed by Ørsted. The most ambitious of the projects, the companies will invest in a 675 MW Power-to-X facility that they anticipate locating on the U.S. Gulf Coast. As the first project of its kind for the U.S., they plan to draw power from 1.2 GW of renewable energy from new onshore wind and solar PV farms. The biogenic carbon needed to produce e-methanol will be extracted through carbon capture at one or more large point sources. Ørsted and Maersk separately have previously announced a potentially 1,300 MW Green Fuels for Denmark project in Copenhagen, which the two companies are partnering on with other large offtakers.
Proman aims to supply Maersk with 100,000 – 150,000 tons per year of green methanol from its in-development facility in North America. The project will be built by Proman with a target to start operations in 2025, producing bio-methanol from non-recyclable forestry residues and municipal solid waste.
As part of the agreements, Maersk is also building on its previous investments designed to spur green energy. In 2021, Maersk Growth invested in California-based WasteFuel. Maersk agreed with WasteFuel to offtake 300,000 tons per year starting in 2024 from a bio-methanol project in South America.
Under the individual agreements, Maersk in most cases intends during the early stage to offtake all the product from the individual plants. By forming long-term contracts, it supplies the market to develop the projects while also providing the shipping line’s customers the ability to begin to realize their own emission targets. Maersk reports that it will keep working with a wide-ranging group of leading companies on these and further projects to accelerate the transition to green energy.