The Week in Alt Fuels: Shipping’s e-fuel showstopper

Recent e-fuel production wins offer hope, but potential green hydrogen bottlenecks continue to cast doubts over shipping’s future e-fuel supply.

IMAGE: Laura Maersk docked at European Energy's e-methanol plant in Kasso, Denmark. X of @Maersk

Ineratec's plant location has been corrected from Finland to Frankfurt.

Recent announcements suggest that e-fuel production, both for shipping and otherwise, is edging closer to industrial scale.

E-fuel production finds footing

German firm Ineratec produced its first drop of e-diesel at its 2,500 mt/year capacity plant in Frankfurt, Germany. The fuel is designed to be compatible with existing infrastructure across multiple sectors, including shipping.

"With this plant, we are turning years of scaling into industrial reality, bringing synthetic fuels into use, and reducing our dependence on fossil resources,” Tim Böltken, chief executive of Ineratec said.

European Energy has started producing e-methanol in Denmark, with A.P. Moller-Maersk and Lego onboard as early offtakers.

German chemical firm BASF has produced green ammonia at its Ludwigshafen site, using a mass balance approach to blend hydrogen from renewable and fossil sources. While not shipping-specific, the project reflects a broader shift from research and development to delivery.

These are early wins, but they signal a shift.

After years of anticipation, e-fuel producers are showing real molecules. For shipping - a sector limited by a lack of truly scalable, low-emission fuels - this momentum offers hope.

Green hydrogen momentum falters

But behind the scenes, another story seems to be unfolding upstream.

In December 2024, research firm Westwood Global Energy identified 23 green hydrogen projects across 11 European countries as “cancelled or stalled”, with capacity amounting to over 20% of the regional pipeline. High production costs, offtake risk and capital constraints were highlighted as the key reasons.

Those risks are still present.

Norwegian energy giant Statkraft recently paused new green hydrogen projects, citing uncertain market conditions.

“After reducing the ambition level on green hydrogen development last year, we are experiencing even more uncertainty in the market,” Birgitte Ringstad Vartdal, chief executive of Statkraft said. The company now plans to “prioritise growth opportunities in other technologies, and market operations,” she added.

In 2023, Statkraft announced plans to produce 1,000–1,500 mt/year of green ammonia by 2028, with shipping listed among the target sectors. But with the company now pulling back from new green hydrogen projects, the future of this initiative may also be in jeopardy.

And Statkraft is not the only company to pull back.

In March, Reuters reported that commodity trader Trafigura pulled the plug on its highly publicised 440-MW green hydrogen facility in Port Pirie, South Australia.

Oil major BP shelved 18 early-stage hydrogen initiatives in 2024 as part of a shift towards more “high-value” fossil fuel projects. That pivot is expected to free up $200 million and help BP meet its $2 billion target in “sustainable cost reductions” by the end of 2026. 

From molecules to maybes

While each case has its own drivers, undercurrents of caution among producers point to deeper uncertainties around green hydrogen’s commercial viability.

For shipping, green hydrogen may not be the end product, but it is the foundation. E-methanol, green ammonia, e-methane and other electrofuels depend on a steady supply of it. Without sufficient green hydrogen feedstock, the entire supply chain stands at the risk of stalling.

Shipping may not be a major driver of e-fuel investments today. But the IMO’s Net-Zero Framework is expected to accelerate demand for marine e-fuels in the coming years, leaving the sector exposed to upstream fragility.

For now, some producers are pressing ahead. And early adopters like Maersk are helping to build market credibility. But inconsistent demand signals, steep green fuel premiums and looming hydrogen bottlenecks could be casting a dark cloud over the future availability of low- and zero-emission fuels.

In other news this week, Nordic energy firm Gasum has started operating its new biogas plant in Götene, Sweden. The facility has capacity to produce around 120 gigawatt hours/year (GWh) of liquefied biogas, making it one of the largest of its kind in the country, Gasum said.

Financial institution Nordic Investment Bank signed a 10-year loan agreement with dry bulk shipping company ESL Shipping to finance four bulk carriers to be built and equipped with methanol dual-fuel engines. Deliveries are scheduled between the third quarter of 2027 and the first quarter of 2028.

Germany been allowed by the European Commission to gather more evidence related to alleged sustainability certification and mislabelling fraud for biofuel imports originating from China. This follows a complaint filed by Germany in 2023 concerning suspected fraudulent Chinese fatty acid methyl ester (FAME) biofuels that had been certified by the International Sustainability and Carbon Certification (ISCC) system. 

By Konica Bhatt

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