Danish container shipping and logistics giant Maersk has entered several strategic partnerships to secure green fuel supply for its fleet of twelve new methanol-powered vessels.
The company intends to source at least 730,000 tonnes/year by end of 2025.
The deals have been inked with Danish power company Ørsted, Swiss integrated energy company Proman, Danish solar energy equipment supplier European Energy, China’s Green Technology Bank, China’s engineering services company CIMC Enric and US renewable fuel producer WasteFuel.
Collaboration and investments in innovative projects are the most important ways to reach a net-zero fuel value chain, Maersk believes.
To remind, in 2021 Maersk ordered a total of twelve 16,000 TEU boxships from South Korean shipbuilder Hyundai Heavy Industries (HHI). Prior to the order, Maersk also ordered from Hyundai Mipo Dockyard (HMD) a feeder vessel with a dual-engine technology enabling it to sail on either methanol or traditional very low sulphur fuel.
With this production capacity, by the end of 2025 at the latest, Maersk will reach well beyond the green methanol needed for the first 12 green container vessels currently on order.
Ørsted to develop Power-to-X-facility in the US
The first deal, signed with Ørsted, will see the development of a Power-to-X-facility on the US Gulf Coast to fuel the twelve new ships.
Maersk and Ørsted have signed a letter of intent (LOI) about partnering on the new Power-to-X facility which can become a landmark project in the green transformation of international deep-water shipping and set the standard for future large-scale production of green maritime fuels.
Specifically, Ørsted will develop a 675 MW Power-to-X facility that will produce approx. 300,000 tonnes of e-methanol per year, which Maersk will offtake for its newly ordered fleet being built in South Korea.
The facility will be powered by approx. 1.2GW of renewable energy from new onshore wind and solar PV farms. The biogenic carbon needed to produce e-methanol will be extracted through carbon capture at one or more large point sources.
The project is targeted to be commissioned in the second half of 2025, making it by far “the most ambitious project” globally producing e-methanol at scale and a driving force in the decarbonisation journey of the maritime sector, according to the duo.
Final investment decision could be made in late 2023.
The 300,000 tonnes of e-methanol are the largest potential offtake agreement for green fuels in the maritime industry ever announced, and it is said to be a testimony to the action taken to shape green ocean transport by both Ørsted and Maersk. The agreement also marks Ørsted’s entry into the US Power-to-X market, a new strategic market for the company as it seeks to construct 50 GW of renewable energy capacity by 2030.
“Partnerships with large offtakers of green fuels, like Maersk, is an important part of Ørsted’s strategic journey, as we broaden our Power-to-X footprint… The project with Maersk is our first in the US, and we look forward to help accelerating the US Power-to-X market while creating local jobs and economic activity, just as we’ve done in the growing offshore wind industry in the US,” Martin Neubert, Deputy CEO and Chief Commercial Officer at Ørsted, commented.
“To transition towards decarbonisation, we need a significant and timely acceleration in the production of green fuels. Green methanol is the only market-ready and scalable available solution today for shipping. Production must be increased through collaboration across the ecosystem and around the world. That is why these partnerships mark an important milestone to get the transition to green energy underway,” Henriette Hallberg Thygesen, CEO of Fleet & Strategic Brands, A.P. Moller – Maersk, said.
“The US Gulf States have an abundance of cheap renewable energy resources, both solar and wind, making the region a natural location for large-scale production of green fuels, which we expect there will be a very large demand for in the US going forward. The Power-to-X project with Maersk will expectedly be powered by approx. 1.2 GW of new onshore wind and solar PV, which in itself represent a significant investment in the region, while also helping Ørsted reach its target of 17.5 GW of installed onshore capacity in 2030,” Neil O’Donovan, CEO of Ørsted Onshore, explained.
The Power-to-X project in the US Gulf Coast region is the second green fuels collaboration between Ørsted and Maersk after the potentially 1,300 MW Green Fuels for Denmark project in Copenhagen, which the two companies are partnering on with other large offtakers.
Ørsted and Maersk intend to continue to investigate opportunities within green fuels together, as Maersk works towards its 2040 net-zero commitment.
Proman to develop green methanol supply solutions for Maersk’s boxships
Separately, Maersk signed with methanol producer Proman a new cooperation agreement to identify and develop green methanol supply solutions for Maersk’s new methanol-fuelled vessels.
Proman will aim to supply Maersk with 100,000 – 150,000 tonnes per year of green methanol from its new 200,000 tonnes per year methanol facility in development in North America.
The project will be built by Proman with target start of operations in 2025, producing bio-methanol from non-recyclable forestry residues and municipal solid waste.
Proman and Maersk will further collaborate on developing global projects with the aim of producing and delivering green methanol for Maersk’s vessels. Proman will leverage its expertise across the methanol value chain to optimise global supply at Maersk’s key bunkering ports, alongside wider collaboration and sharing of operational and technological best practices to drive forward shipping sustainability.
What is more, Proman is evaluating multiple bio-methanol and e-methanol projects in South America, Europe and the United Kingdom, which Maersk and Proman will explore as part of a longer-term green methanol supply strategy for Maersk and for the shipping industry.
Proman continues to develop worldwide investments in new ultra-low emission natural gas to methanol plants, in which plants are designed to maximise efficiency and minimise emissions, to help serve the broader marine fuel demand.
“Maersk’s … commitment to green methanol is fully aligned with Proman’s belief that methanol should be a key part of the energy transition. Methanol-powered vessels are already in use today, with a proven track record of reducing and even eliminating major emissions like particulate matter and sulphur oxides,” David Cassidy, Proman Chief Executive, said.
“We are excited to bring our … experience to help deliver on Maersk’s bold ambitions, working together to deliver green methanol and clean shipping at a global scale.”
Key challenges remain in securing competitively priced green methanol globally. In order to help decarbonise the global shipping industry, further legislative action is required to help level the playing field and incentivise the adoption of lower-emission fuels. Consistent and transparent emissions calculation and accounting standards will be critical to allowing like-for-like comparisons between future fuels, according to the two partners.
European Energy to supply up to 300,000 tons of e-methanol annually to Maersk
Maersk also inked a letter of intent with Danish European Energy on the development of e-methanol projects.
As part of the partnership, European Energy will develop and construct large scale e-methanol projects in North and South America with production start in 2025/26. The plants will have a combined production capacity of up to 300,000 tons annually.
Maersk will be the sole off-taker on a multi-year contract of the e-methanol from the plants.
Underlining European Energy’s business model of combining the entire value chain from production of renewable electricity to production of e-methanol, the plants will be located in connection with new renewable electricity facilities developed and constructed by European Energy.
“We are very happy to further strengthen our partnership with Maersk which began with the supply agreement of e-methanol from our plant in Kassø, Denmark. With this new letter of intent, we significantly increase the size of our e-methanol projects and locate them in areas with some of the most inexpensive renewable energy available,” Knud Erik Andersen, CEO of European Energy, said.
“This will provide for even lower cost of e-methanol and accelerate the transition away from fossil-based shipping fuel.”
CIMC ENRIC: 50,000 tones/year of green methanol in phase one
CIMC energy division CIMC ENRIC will develop bio-methanol projects for Maersk in China.
The phase one project will have a capacity to produce 50,000 tonnes/year of green methanol, starting in 2024.
The second phase of the project will have capacity produce of 200,000 tonnes/year with start date to be determined.
The feedstock for the bio-methanol will be agricultural residues. Maersk intends to offtake the full volume produced.
GTB to support Maersk’s commitment to green methanol
Green Technology Bank (GTB) was established in 2016 by the Chinese government with the priority task to fulfill the 2030 Agenda for Sustainable Development. The purpose is to strengthen the integration of technology and finance, to accelerate the transformation and industrialization of technological achievements, to drive the realization of 2030 sustainable development goals, and explore for a green development model.
GTB will facilitate development of bio-methanol projects in China together with project developers to be identified.
The first project is planned to have a capacity to produce 50,000 tonnes/year starting from 2024, and the second project is planned to have a capacity to produce 300,000 tonnes/year at a start date to be determined.
“We’re pleased to support Maersk’s pursuit for green energy to achieve sustainable development. We will collaborate with our partners, integrate technical and financial resources to establish facilities in China to produce green methanol for Maersk,” Junhao Zhu, President of GTB, said.
“We believe this will also contribute to reduce China’s dependence on energy imports such as oil and liquefied natural gas (LNG). The green methanol produced will rely entirely on resources available in China.”
WasteFuel prepares for bio-methanol production
WasteFuel is a California-based start-up addressing the climate emergency by transforming unrecovered waste into sustainable fuels using proven technologies.
WasteFuel has established strategic partnerships with global companies and technology providers to develop biorefinery projects and to ensure the environmental and commercial aspects of each project and industry are met safely, efficiently, and economically.
Maersk Growth invested in the company in 2021.
WasteFuel is developing a bio-methanol project in South America that will produce over 30,000 tons per year starting in 2024. Maersk intends to offtake the full volume produced.
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