The Week in Alternative Fuels
Here are some of the key developments in alternative bunker fuels from the past week.
PHOTO: The European Commission is pushing for greater uptake and infrastructure for green hydrogen in Europe, targeting future production potential in Africa. Getty Images
Global warming and a mounting climate crisis had already put renewables high up on the EU’s agenda. Russia’s invasion of Ukraine has forced a major European rethink on energy dependence and a shift towards speeding up renewables uptake. The EU is now planning to draw up the continent’s first hydrogen infrastructure map by the end of next year, the European Commission’s Aleksandra Tomczak said at a webinar this week.
Shell announced this week it will move forward with plans to build Europe’s biggest hydrogen production plant in Rotterdam. It targets a 2025 production start for the upcoming 200 megawatt-capacity hydrogen plant, saying it can produce up to 22,000 mt/year of green hydrogen that initially will be used to power part of operations at its local refinery.
Following the European Parliament’s decision last month to include shipping in the EU Emissions Trading System (EU ETS), observers have highlighted measures that can help avoid ETS cost evasion and carbon leakages to other regions. The Port of Rotterdam Authority said vessels will find it harder to evade emissions costs by extending the ETS area to also cover non-EU ports within a 300 nautical mile periphery.
Hydrogen derivatives such as ammonia and methanol are likely to play a key role in shipping’s decarbonisation. Early movers have been investing in vessels that can run on alternative fuels. This week, MPC Container Ships (MPCC) announced an order of two methanol-ready 1,300 TEU vessels set for delivery in the second half of 2024.
With growing thrust behind alternative fuels production, shipping companies and energy producers are now developing new facilities to supply bunkers. CMA CGM and ENGIE announced a joint investment in an 11,000 mt/year biomethane production facility in Le Havre.
Here are the top five stories in alternative fuels this week:
Europe to accelerate energy transition to ditch dependence on Russia – EU
The continent is aiming to draw up its first map for hydrogen infrastructure by the end of next year, and have a preliminary assessment done by March, to accelerate the energy transition and reduce its dependence on Russia, the European Commission’s Aleksandra Tomczak has said.
The world of energy has changed drastically especially after Russia invaded Ukraine, says Tomczak, who is the Member of Cabinet of the Executive of the European Commission Vice President Frans Timmermans. She made the comments at a webinar organised by Brussels-based industry body Hydrogen Europe on Wednesday.
In the light of these events, the European Commission has proposed a plan, called REPowerEU, to reduce Europe’s dependence on Russia’s fossil fuels by 2030.
“Hydrogen is a key part of this energy transition. We are now talking about 2 times of 10 million mt of renewable hydrogen that we will be consuming in Europe through domestic production and imports,” says Tomczak.
A big part of the targeted 20 million mt green hydrogen will come from production in sub-Saharan Africa and the MENA region, and some of the share from the UK and Norway, says Hydrogen Europe’s chief executive Jorgo Chatzimarkakis.
Europe needs to focus on Africa to enable green hydrogen production at a competitive rate. There is a technical potential to produce green hydrogen under $1.5/kg in Africa due to abundant sunshine and wind power, he says.
Green hydrogen is produced by separating hydrogen molecules from water through electrolysis powered with renewable energy.
This is a win-win situation for both continents. The partnership will create high-value energy in Africa that has not been tapped before and enable Europe to import green hydrogen at competitive rates, he adds.
The European Commission is also looking at setting up a mechanism to facilitate joint purchase of hydrogen for member states in Europe, Tomczak says.
However, she highlights that infrastructure remains a big hurdle in achieving this goal.
She adds that a lot of infrastructure that is already in place for gas supplies can be retrofitted to transport green hydrogen, but investments are needed to add more.
“We are in a classic chicken and egg situation where the producers of hydrogen are waiting for buyers of hydrogen and both sides are waiting for the infrastructure,” she adds.
The European Commission says it is committed to develop a market for hydrogen.
“Under Fitfor55 and REPowerEU we have proposed that a certain share of hydrogen that is already used in Europe should be renewable hydrogen,” she adds.
The Commission has proposed that 75% of the 10 million mt of grey hydrogen currently used in Europe should be switched to renewable by 2030. Besides, 5% of fuel used in transport should be renewable hydrogen by 2030.
In the next two years, EU countries’ can either choose to subsidise fossil fuels because of increased prices, or developing other sources of energy, she argues.
“We want to push that needle as much as possible towards the clean energy acceleration because subsidising fossil fuel will flush out a lot of money from the European economy. This is an important and perfect moment for us to start developing green hydrogen partnerships with countries that are interested in it,” she adds.
Currently, Europe is looking at proposing hydrogen partnerships in Africa and the Middle East, with Mediterranean as a trading basin where the hydrogen trade can happen, she says.
Shell moves to build Europe’s biggest green hydrogen plant to power Rotterdam refinery
Shell’s upcoming Holland Hydrogen 1 plant is set to be Europe’s biggest with a 200-megawatt electrolyser when it is up and running.
The electrolyser will be fed with electricity generated from offshore wind from the Hollandse Kust windfarm north of Rotterdam, and is expected to produce 60 mt/day, or nearly 22,000 mt/year, of green hydrogen.
It will be built in Tweede Maasvlakte with a target completion date in 2025 and produce green hydrogen to replace grey hydrogen consumption at the Shell Energy and Chemicals Park Rotterdam refinery.
Shell says oil products production at the refinery can partly be decarbonised with the green hydrogen produced at Holland Hydrogen 1. It will eventually also target hydrogen expected growth in demand from heavy-duty road trucks.
Shell announced last year it is also building an 820,000 mt/year capacity biofuels plant at the refinery, which was previously known as Pernis, to produce sustainable aviation fuel and biodiesel.
Port of Rotterdam Authority highlights measures to prevent EU ETS evasion
The Port of Rotterdam Authority has welcomed the European Parliament’s decision to make the Emissions Trading System (EU ETS) cover shipping and says the EU can take steps to avoid carbon leakage to other regions.
The ETS reforms that were passed through a European Parliament vote last month will cover half of emissions from vessel voyages to and from EU countries between 2024-2026, before being expanded to cover 100% of these emissions from 2027.
Concerns have been raised over whether vessels can circumvent the ETS by various means. A big vessel could conceivably sail to a port just outside the ETS area to unload cargo, for a smaller vessel to pick up and bring across to a destination EU port. The voyage from a non-EU to EU port would then both be shorter and taken by a smaller vessel, resulting in less carbon dioxide emitted on the distance covered by the ETS, and lower emission costs.
Rotterdam says that vessels will find it harder to evade emissions costs by including non-EU ports within a 300 nautical mile periphery of the ETS area, and covering 100% of the emissions on extra-EU routes by 2027.
These steps will discourage vessels from circumventing the ETS, it argues.
On 22 June, the European Parliament voted in favour of ETS reforms. The next step is for the proposal to be negotiated between EU member states.
MPC Container Ships orders two methanol-ready vessels
Norway-headquartered feeder shipowner MPC Container Ships (MPCC) has ordered two methanol-ready 1,300 TEU vessels for delivery in the second half of 2024.
The vessels will be able to run on either methanol or MGO will be built by Chinese shipyard Taizhou Sanfu Ship Engineering.
The new order will help the firm to set up a “green transportation corridor in Northern Europe”, says MPCC’s chief executive Constantin Baack.
They have been chartered for 15 years to North Sea Container Line (NCL), and they will be used to ship products for industrial group Elkem and other companies.
MPCC has received a subsidy from Enova, and from the NOx fund for the new orders.
Enova is a state-owned enterprise under the Norwegian Ministry of Climate and Environment. Its task is to promote production, consumption and development of green energy and related technology.
NOx is the Norwegian business sector’s fund to reduce emissions.
CMA CGM, ENGIE to set up biomethane production site in Le Havre
French container line CMA CGM and energy company ENGIE have agreed to invest in an 11,000 mt/year biomethane production facility in Le Havre under the Salamander project.
The plant is expected to start producing biomethane from 2026, which they claim can reduce greenhouse gas emissions by up to 67% compared to VLSFO.
Biomethane will be produced with pyrogasification, which generally involves thermo-chemical processing of different types of biomasses.
Dry biomass from local wood waste sources and solid recovered fuel will be heated to high temperatures and broken down into solid and liquid materials, and gas. The solid and liquid materials will then be gasified into biomethane.
The biomethane will supply CMA CGM’s fleet and other shipping company fleets. CMA CGM currently has a fleet of 30 dual-fuel e-methane ready ships and aims to add 47 more by the end of 2026.
CMA CGM and ENGIE entered into a strategic partnership last year, saying they aim to produce up to 200,000 mt/year of renewable gas worldwide by 2028.
“Salamander is the first industrial ramp-up to emerge from the partnership, an advanced pilot helping to develop the renewable gas sector, in keeping with the goals of energy independence and the energy transition set forth by the European Commission in the RepowerEU plan,” said CMA CGM’s executive vice president for assets and operation Christine Cabau Woehrel.
