Pricing, availability among shipping's top obstacles for methanol uptake - LR

Classification society Lloyd’s Register (LR) has published a new report that identifies pricing, availability and carbon accounting as main obstacles impeding the uptake of methanol as a marine fuel.

PHOTO: Methanol vessels. Lloyd's Register

The technology to use methanol as a marine fuel is feasible, available and mature, while the shipping industry's readiness to adopt the fuel is poor but improving, LR says. Methanol could account for 20%, or up to 1,200 vessels, of the total orderbook by 2030, the LR report says citing data from Clarksons.

In 2022, Methanol accounted for 3% of the orderbook, the data shows.

Despite the technological preparedness, cost of methanol production is among the biggest challenges for the shipping industry. Green methanol, produced using renewable electricity, is being supplied at around $1,000/mt, compared with VLSFO around $600/mt and HSFO at around $465/mt, according to LR's estimates.

Moreover, methanol's energy density lags conventional fuel oils, with vessels requiring up to two and a half times more methanol than fuel oils, LR says. This makes methanol even more expensive, and therefore requires price mechanisms to encourage its uptake.

Customers who have been using methanol sourced from natural gas so far are also likely to seek green and blue methanol in the future. This could add more pressures on its cost and availability, LR says.

"Due to the low production of green methanol and the current orderbook, availability could be a major issue for shipping with low supply driving up prices. Lack of methanol availability could also lead to questions as to whether methanol produced will be certified as green, which ensures that the greenhouse gas (GHG) emissions are accounted for as part of a full lifecycle assessment," LR says.

By Debarati Bhattacharjee

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