The Week in Alternative Fuels

Lower LNG prices has spurred more bunker demand for it, but as this week's headlines show, methanol remains a strong contender as a future fuel.

PHOTO: Hafnia's dual-fuel LNG vessel Hafnia Loire under construction at Guangzhou Shipyard. Hafnia

Russia’s invasion of Ukraine disrupted global LNG flows and pushed LNG prices above $2,500/mt in Rotterdam and over $2,000/mt in Singapore last year. Since then, however, the prices have dropped dramatically and LNG is now available at discounts to VLSFO at major global ports such as Singapore and Rotterdam.

Himalaya Shipping’s chief executive, Herman Billung predicts that LNG bunker prices will continue to trade at discounts to oil-based bunker fuels in the future. In addition, a sustained price cooldown could spur LNG vessel orders and motivate dual-fuel vessels to burn more LNG than VLSFO or other fossil fuel oils, a trader told ENGINE. In contrast, Ship It Zero lead at Pacific Environment Eric Leveridge pointed out that the methane in LNG has much greater global warming potential than CO2 and is not a preferred alternative for reducing maritime emissions.

Ship It Zero is a campaign led by non-profits including US-based Pacific Environment and Stand.earth and climate advocates across the shipping and retail sectors. It recommends green methanol and ammonia as viable alternatives to fossil fuels and urges global retailers to drive up demand as an "incentive" to stimulate more alternative fuel supply capacity developments.

Methanol-powered vessels are already popular. Tanker company Hafnia ordered four 49,800-dwt methanol dual-fuel tankers from China’s Guangzhou Shipyard. Deliveries will begin in 2025 and continue until 2026. A growing interest in methanol-fuelled vessels showcases its potential as a “cleaner marine fuel,” said Hafnia.

Greek shipping company Danaos Shipping ordered two methanol-ready container ships for delivery in 2026. Danaos Shipping has now ordered a total of 10 vessels that are classified as methanol-ready - which does not mean they are capable of consuming methanol, but have made preparations for future retrofits. Seven other ships will be delivered in 2024 and one in 2025. They will likely run on conventional fuels when delivered.

As Ship It Zero pointed out in its outlook, methanol producers like European Energy are expanding their capacities to meet shipping sector’s growing demand. European Energy will buy biogenic carbon dioxide (CO2) from US-based Montauk Renewables to produce e-methanol in the US for shipping. European Energy is also building a plant in Denmark to supply shipping with 42,000 mt/year of e-methanol from 2024.

By Konica Bhatt

Here is our selection of top five alternative fuels stories from this week:

Cheaper and stable LNG pricing motivates bunker demand

INTERVIEW: Demand-driven approach can speed up green fuel adoption – Ship It Zero

Hafnia places order for four dual-fuel methanol-powered tankers

Danaos takes methanol-ready vessels order tally to 10

European Energy will buy biogenic CO2 to produce e-methanol in the US