‘Methanol emerged as a leading alternative fuel in the maritime sector’

Mr Jason Chesko, Director, Global Market Development at Methanex Corporation, shares his opinion on the growing demand for methanol  as fuel of the future, the role of his company Methanex in meeting the supply side to match new demand.

How many methanol production plants do you have currently and how many in the pipeline? What are the Methanex’s expansion plans for methanol production and supply in future?

Methanex is the global methanol leader and the largest methanol producer and supplier globally with sales volumes totalling 11.2 MMT in 2021 representing approximately 13 per cent market share.

Our strategically located six global production sites give us the ability to meet our customers’ evolving needs, providing them with a reliable and secure supply of methanol:

  • Trinidad: Our plant in Trinidad supplies methanol markets in North and South America, Europe and Asia Pacific.
  • New Zealand: Our two production facilities in New Zealand supply methanol primarily to customers in Asia Pacific.
  • Egypt: Our joint venture facility in Egypt (Methanex interest 50 per cent) is located on the Mediterranean Sea and supplies domestic and European methanol markets.
  • Canada: Our plant in Medicine Hat is located in southeastern Alberta and supplies methanol via rail and tanker truck to customers in North America.
  • United States: Our two plants in Geismar have the capability to serve customers in all major markets around the globe. . We are currently building a third plant at this location, which will be completed in late 2023/early 2024.
  • Chile: Our two plants in Punta Arenas are the world’s southernmost methanol production facilities, supplying methanol to major markets in Latin America and Asia Pacific.

Recently, a lot big shipping liners have unveiled plans to build methanol-powered vessels, do you think methanol will become a potential alternative to fossil fuels in shipping?

Methanex and our shipping subsidiary, Waterfront Shipping, have been the global leader supporting the adoption of methanol as a marine fuel. Waterfront Shipping has been operating methanol-fueled vessels since 2016.

We are excited by the performance of our first eleven methanol dual-fuel vessels with over 100,000 operating hours under our belt, which has proved the safety and reliability of the technology. We, along with our partners, have invested in eight more second-generation vessels which will be added to our fleet between 2022 and 2023 resulting in approximately 60% of our fleet that will be powered by methanol.

According to the recent 4th IMO study on GHGs, methanol’s use as a fuel has developed and   is already identified as one of the most significant alternative fuels for the marine sector.

Methanol has emerged as a leading alternative fuel in the maritime sector and is receiving significant consideration as a marine fuel; there have been many recent commercial announcements of methanol dual-fuel vessels operating or being built, ~65+ now versus only 20 just a year ago, and many others in the shipping sector are assessing methanol.

With the strong increase in interest in methanol by shipping companies, we have also seen many leading engine manufacturers, including Wartsila and Rolls-Royce, commit to producing methanol engines which will open up the adoption of methanol across the marine sector.

Methanol as a marine fuel is:

  • Compliant with the most stringent emission regulations, including NOx Tier III.
  • Cost competitive with today’s low sulphur fuels.
  • Available globally at over 125 ports.
  • Easily supplied via landside storage or supply infrastructure that either exists today
  • or, if not, existing diesel infrastructure can be repurposed at low cost.
  • Recognized within many regulatory frameworks and operating standards
  • Methanol is biodegradable and has established safe handling procedures. Methanol provides a pathway to lower carbon through green methanol.
  • Methanol can reduce CO₂ emissions during combustion by up to 15 per cent compared to conventional fuels on a tank-to-wake (TtW) basis.
  • It also offers a pathway to carbon neutrality through the use of blue and green methanol which aligns with IMO’s decarbonization goals.

Can methanol as a fuel meet all the production requirements of the maritime industry by 2050?

Methanol has the potential to add significant supply to the marine fuel industry. Methanol is already a large global commodity chemical and fuel and hence we would expect the supply side to grow to match new demand. This would be similar to how the industry responded to the growth of methanol to olefin use over the past decade.

With many recent commercial announcements of methanol dual-fuel vessels operating or being built, ~65+ now versus only 20 just a year ago, and many others in the shipping sector assessing methanol, this will continue to open up adoption for methanol as a fuel across the marine sector.

How can the price gap between conventional fuel and methanol be bridged over the years?

Over the past decade, globally, methanol has been cost-competitive with conventional marine fuels (MGO) on an energy-equivalent basis and offers a lower emission benefit.

Also, as a liquid fuel, the cost to adopt methanol dual-fueled vessels is low relative to other alternative fuels.

Do you think the Governments and regulatory agencies have a role to play in stabilizing the prices of methanol?

Methanol has been cost-competitive to conventional marine fuels (e.g.; diesel). Regulation and compliance will be the key drivers for shipowners to switch to green methanol or other lower-carbon fuels, as they are likely to be more expensive than traditional marine fuels. It is reasonable to expect that regulations or customer demand will be needed to drive higher uptake.

Other than the marine industry where else do you see the potential for methanol as alternative fuel?

For the same reasons methanol is emerging as a leading marine fuel (e.g., economical, clean burning liquid at room temperature, path to a low carbon future), there is increasing interest in using methanol in other fuel applications:

Methanol is an alternative liquid road transportation fuel due to its energy density, efficient combustion, ease of distribution and wide availability around the globe.

Fuel for passenger vehicles – In China, increasingly stringent air quality standards are supporting the adoption of methanol as a cleaner-burning vehicle fuel. By the end of 2021, approximately one hundred M100 (100 per cent methanol fuel) filling stations were operating in China’s Shaanxi, Shanxi, Gansu and Guizhou provinces to service approximately 27,000 M100 taxis (running on 100 per cent methanol).

Fuel for heavy-duty vehicles – Methanol is a diesel substitute for heavy-duty vehicles. Commercial trucks are another emerging opportunity in China, with Geely developing the world’s first pure methanol combustion heavy-duty truck. As of 2021, there were 1,000 methanol heavy-duty trucks in operation in China, and Geely has ambitions to grow that market further

Methanol is also being used as a fuel for thermal applications, including industrial boilers, kilns, heating furnaces and cooking fuel. When used in thermal applications, it has significantly lower air emissions (i.e., NOx, SOx) than coal and other fossil fuels.

Growing demand for methanol as an industrial boiler and kiln fuel has been driven largely by China, where industrial boilers are used extensively to generate heat and steam for various industrial applications and kilns. Industrial boilers have traditionally been coal-fueled in China. However, environmental regulations being phased in by the Chinese government are prompting a transition to cleaner-burning fuels (including methanol) that can reduce impacts on local air quality and related human health. Chinese residential buildings, restaurants and homes are also using methanol as a lower air emission and affordable heating alternative to burning coal. Methanol is also being used as a cleaner-burning cooking fuel.

Tags: China, Maersk, Maritime Sector, Methanex Corporation, Methanol, Waterfront Shipping