- The shipping industry’s shift to green methanol faces challenges due to supply chain issues, prompting many companies to revert to LNG-fueled vessels.
- Delays in green methanol projects and uncertainties in production and affordability threaten the industry’s net-zero goals for 2050.
- Addressing green methanol supply concerns quickly could help realign the industry with its sustainability commitments.
The shipping industry, responsible for nearly 3% of global greenhouse gas emissions, has committed to achieving net zero by 2050. However, the transition to green methanol—a key alternative fuel—has hit significant obstacles. This has led companies to favor LNG-fueled ships, raising concerns about the industry’s ability to meet its sustainability goals, reports ReedSmith.
Shipping’s Shift to Green Methanol Hits Roadblocks
At COP28, major shipping CEOs called for a ban on fossil fuel-powered newbuilds. However, transitioning to green methanol has proven challenging due to supply issues.
Green methanol, produced from biological waste or renewable energy combined with captured CO2, faces shortages in biological feedstock, cost-effective renewable energy, and the necessary electrolyzers.
Supply Chain Disruptions and Project Delays
Production difficulties have plagued green methanol projects, such as those in China, leading to delays and unmet deliveries.
This has shaken confidence among shipping companies, causing many to reconsider their investment in methanol-powered vessels.
Shift to LNG: A Temporary Fix with Risks
Faced with green methanol supply concerns, shipping companies are turning to LNG-fueled vessels for stability. Data shows a rise in LNG-capable ship orders, with 109 such vessels ordered by mid-2024, while green methanol orders have declined.
However, LNG is also a finite resource and reliance on it is not a sustainable long-term solution.
Impact on Net Zero Goals
Most vessels ordered today will not be operational until 2026 or later, potentially delaying progress toward the shipping industry’s 2050 net zero target.
Swift resolution of green methanol supply issues is crucial to minimizing the impact on environmental, social, and governance (ESG) commitments.
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Source: ReedSmith
