Methanol-fuelled fleet grows in wake of trailblazing Laura Maersk

Room for improvement

As DNV explained in a recent paper, while methanol technology is well advanced, there is room for improvement: “Technologies required to use methane as fuel can be considered mature, while methanol technologies are maturing.” However the range of dedicated methanol-burning engines remains “relatively limited, though improving”. On the plus side, methanol is easier to integrate and use compared with other alternative fuels because it is stored as a liquid and the presence of storage terminals close to most major ports means the required capital outlay is described as “moderate”.

Methanol is clearly the leader in dual-fuelled engines – Maersk, for instance, has no ethanol-fuelled ships – but ethanol volumes are rising steadily, according to several sources. Statista estimates global production in 2024 at 31Bn gallons, up by nearly 1.6Bn over 2023. Roughly 80% of global production comes from the US, where the primary feedstock is corn, and from Brazil, which processes sugarcane. Sustainable energy group Cosan, an investor in Brazilian producer Raizen, also sees ethanol demand rising, predicting 32M cubic metres a year by 2030. Rystad Energy expects India to become an important producer. Albeit from a low base, India has more than tripled production capacity in the last four years, reports Rystad recently, and “has set an ambitious target to double current ethanol production by 2028.” The energy consultancy predicts that production could hit 200,000 barrels a day by 2030.

“Tariff policy could affect the maritime industry’s uptake of ethanol”

In the US at least, tariff policy could affect the maritime industry’s uptake of ethanol, long a drop-in fuel for smaller engines.

Along with dozens of other associations, in April America’s Renewable Fuels Association became alarmed at the White House’s proposed fees on Chinese-built ships. Most US-produced alternative fuels, including ethanol, go by sea, passing through 29 customs districts and numerous ports. On the basis that “in 2024 the American ethanol industry enjoyed record exports of renewable fuel to countries around the world”, wrote RFA president, Geoff Cooper, in an open letter to the White House, the trade body sought an exemption from the fees, pointing out that vessel operators had warned they intended to pass on 100% of the costs of the port fees, which could price out US-produced ethanol in export markets.

“Adequate infrastructure and supply are still low”

In 2024, ethanol exports jumped to a record 1.91Bn gallons and were shipped to 80 countries. By value, exports amounted to US$4.3Bn, according to the RFA.

A long transition

Overhanging the widespread acceptance of alcohol-based fuels are the usual suspects – shortages and cost. “Getting the global fleet to transition to these new fuels will be a long and arduous task, stacked with uncertainties, that may take decades instead of years,” warns DNV. “Adequate infrastructure and supply are still low for most fuels and the demand is high from several competing industries, while the global fleet needs to be rebuilt in order to be powered by them.”  

However, the situation is not nearly as dire as it was before the launch of Laura Maersk. DNV’s latest Maritime Forecast, a definitive review of the state of play, predicts the global fleet will need 25 to 30% of the global green fuel supply by 2030. But beyond 2030, availability will increase and most probably will suffice.

The risk of stranded assets

In the meantime, notes DNV, “shipowners investing in new vessels are still unsure which fuel to bet on and run the risk of creating stranded assets if an ecosystem for their chosen fuel fails to develop. Even if they make the right choice, it is certain that the cost of alternative fuels will be considerably higher than traditional options, affecting the competitiveness of many operating vessels by the mid-2030s. For existing vessels, the cost to retrofit new fuel technologies is quite high and does not make commercial sense for the majority.”

Lloyds Register is in broad agreement: “Uncompetitive price point relative to conventional oil”, it says about methanol in its latest Fuel for Thought.

Yet as the alcohol-fuelled fleet expands rapidly in the next few years, it is inevitable that volumes of methanol and ethanol will grow to meet demand and, say experts, that prices will fall to commercially viable levels.