CBAM – most forwarders still can’t price what it costs their clients
The rise of the carbon border
© Woranuch Athiwatakara |
In September 2023, Mærsk took delivery of its first methanol-fuelled container vessel, Laura Mærsk, the product of a pioneering initiative to cultivate methanol-powered shipping from first principles.
While green methanol was unavailable, it was thought that a liner giant throwing its weight behind the fuel – and investing no small amount of capital to incubate it – would alter the dynamic.
A handful of other carriers followed suit. But a year and a change in leadership later, Mærsk made a U-turn: not a disavowal of methanol, so much as a sheepish rapprochement with LNG.
LNG, the fuel of futures-past, has a lot in common with methanol. They are both clean burning, producing virtually no sulphur or particulate matter; both are impractical, with low energy densities; both are ‘grey’ fuels with ‘green’ analogues; and unfortunately, at time of writing, neither of these – bio-LNG, nor green methanol – are available in quantity.
This leaves carriers with an as-yet largely theoretical pathway to decarbonisation, and a dichotomy between conventional grey LNG, boasting a modest 20% CO2 emissions reduction over conventional fuels, assuming the engines that use it are tuned correctly; and the – worse – grey methanol.
To make matters greyer still, it seems customers are wearying of carriers’ unfulfilled promises. Addressing the recent TOC Container Supply China event in Rotterdam, Bjorn Vang Jensen, EVP of ocean freight at Chinese forwarder Easy Speed Logistics, confessed a lack of faith in carrier decision-making as a driver for cleaner fuels.
“The carriers can’t even agree on what the nautical distance between two ports is… they certainly can’t agree on the emissions produced on the same vessel,” he said. “During the 2M [Maersk and MSC] partnership you could halve your emissions… on the same ship… if your cargo went in a yellow box rather than a blue one.
“Only regulations can force change – if everyone was forced to run on green fuel then I would hope that the cost of it would come down for everyone, and that is the only way that we will ever get an acceptable implementation rate,” said Mr Jensen. “It has happened before of course, look at the implementation of VLSFO [very low sulphur fuel oil] – we all paid for it. We were all, literally, in the same boat.”
Meanwhile, methanol-mania continues unabated. This week’s Alphaliner notes that some 225 methanol vessels are set to deliver between now and 2030, and those vessels already delivered – including, most recently, Cosco’s first methanol vessel, 16,136teu Cosco Shipping Yangpu – are straining the supply of green methanol, such as it is.
“While such ‘green methanol’ is available on the market, the sheer quantities required by a thirsty fleet of mainline vessels still overstrain the ’green fuel’ supply chain which is still in its infancy,” Alphaliner notes.
With a shortage of green methanol, carriers face the option of grey methanol, a less energy-dense fuel which, thanks to its lifecycle emissions, is even worse for the climate than conventional fuel oils. While IFL380, VLSFO and others require cracking and refinement, they are at least products of crude oil, which comes out of the ground. Grey methanol, on the other hand, is created by burning fossil fuels, and then burning even more to power secondary and tertiary production processes.
In the absence of enough green methanol, then, instead of getting stuck with grey, carriers are wisely choosing to revert to burning the classic fossil fuels. “In most cases, this will have to come in the form of low-sulfur variants (VLSFO or ULSFO), but some methanol ships are fitted with scrubbers,” Alphaliner explains. “This means these vessels can operate on essentially any kind of heavy fuel.”
Recent discussion with Andreas Enger, Höegh Autoliners CEO, makes clear that a similar situation is arising with ammonia, the prospective methanol competitor. In absence of green ammonia, rather than burn the grey version of the fuel and make things even worse, the line is sticking with LNG. “We have no plans to burn grey ammonia, except perhaps for testing purposes,” he reassured The Loadstar.
With ample methanol ships available, carriers wait for a supply of green methanol – and burn LNG in the meantime. “We all know the dirty little secret of LNG is that it’s worse than conventional fuels because of the lifecycle emissions, but we as customers are stuck with the solutions coming from the carriers,” said Mr Jensen. “So as far as our sustainability is concerned we control what we can control.
“The only question is: when will the regulations come?”
Comment on this article