Number of methanol-powered vessels doubles in 12 months

One year ago the number of methanol-powered vessels stood at modest 30 ships. Today, this number stands at 62 vessels, including those in operation and those on order, data from DNV shows.

The surging demand over the past 12 months has been triggered by the shipping industry’s accelerating decarbonization drive, which has seen over 40 methanol-powered ships added to the ordering tally.

According to the latest figures from DNV’s Alternative Fuels Insight, there are 56 methanol-powered vessels in operation and on order. The figure doesn’t include those from CMA CGM’s most recent order, which bring the total to 62.

Based on DNV’s data, the container shipping sector accounts for 23 methanol-powered vessels (+6 CMA CGM ships), followed by oil/chemical tankers that account for 25 ships (in operation and on order). The offshore wind service segment (4 ships) and the gas tankers (2 vessels) account for the remainder.

Container shipping companies have been at the forefront of the recent ordering spree led by industry majors A.P. Moller Maersk and most recently its French counterpart CMA CGM.

Specifically, last June CMA CGM announced an order for six 15,000 TEU dual-fuel methanol-powered containerships from an unnamed shipbuilder. The newbuilds are planned to join the CMA CGM fleet by the end of 2025.

Market reports indicate that the order was booked by Dalian Shipbuilding of China, with CMA CGM paying around $175 million per ship, Business Korea reported. The French liner giant reportedly picked the Chinese yard over its Korean counterparts due to more attractive prices and timeslots.

CMA CGM said earlier that its decarbonization strategy will include massive investment in gas and methanol fuels, as the company seeks to achieve carbon neutrality by 2050. So far, LNG as fuel was the option of choice for the company’s newbuilds.

The order came on the back of a strong vote of confidence from Maersk, which doubled down on its investment in large methanol-powered newbuilds earlier this year pushing the envelope to 12 16,000 TEU ships.

Maersk started testing the waters with methanol back in 2021 when it revealed an order for the world’s 1st containership fueled by methanol. The company started small by ordering a feeder vessel from South Korean Hyundai Mipo Dockyard. The vessel will feature a dual-engine technology enabling it to sail on either methanol or traditional very low sulphur fuel. It is set to hit the waters in 2023.

Being a carbon-neutral solution, which is readily available today, methanol is gaining in popularity in the maritime sector, especially having in mind that other alternatives such as ammonia have a long way to go before becoming more mainstream.

The key benefits of methanol include its density, which doesn’t affect the load capacity of ships, the fact that it is relatively safe to bunker, and that it has an attractive price.

Ordering of around 40 methanol-powred ships over the past 12 months compared to just a handful in the year before shows quite a dramatic change in this space, Mano Modi, Founder, and CEO of MSEA Group, said while speaking in a recent Capital Link-hosted panel on Decarbonization of Shipping.

In 2021, MSEA joined hands with Arkview Capital and Scorpio Tankers in creating a joint venture Clean Sea Transport. The JV saw the acquisition of Marinvest, which managed a fleet of five dual-fuel methanol carriers and four LR1 ice class 1A product tankers.

The methanol-powered ships are deployed on long-term charters of up to 15 years to a joint venture partner, Waterfront Shipping Limited, a subsidiary of Methanex Corporation, the world’s largest producer of methanol.

“What secures methanol’s place in the decarbonization pathway of the shipping industry is its simplicity and its availability. The CAPEX of building a new vessel powered by methanol in terms of the engine and fuel system components is more competitive than any other alternative fuel option at the moment. Furthermore, it is quite safe as you handle it like a liquid, basically as ‘normal bunkers’ that we are used to. Finally, over the past few months, we have seen that LNG and HFO prices are going up quite significantly while methanol is becoming more competitive,” he noted.

Mano explained that what is also attractive about methanol is that with the greater production of blue and green methanol, those opting for this fuel can basically use the same ships and the same fuel burning system available today.

“This gives you the path into 2030 and 2040 and beyond,” he concluded.