- Despite higher production costs, shipping leans towards methanol over ammonia due to safety concerns.
- Total cost of ownership impacts are manageable, with methanol retrofitting proving more cost-effective.
Green ammonia and methanol, derived from renewable hydrogen, promise to revolutionize shipping’s decarbonization efforts. Despite methanol’s headstart, an International Energy Agency (IEA) report warns that it could be 25-100% more expensive than ammonia due to the need for carbon-neutral production.
Challenges in E-fuel Production
The IEA underscores the cost challenges in producing green methanol, especially the requirement for biogenic CO2 to ensure carbon neutrality. Equivalently optimized plants, with low-cost biogenic CO2, project higher costs for e-methanol ($47/GJ) compared to e-ammonia ($40/GJ) in 2023, potentially narrowing by 2030.
Carbon Dioxide Sources
The report highlights challenges in securing biogenic CO2, with high-concentration sources like fermentation offering cost advantages over post-combustion capture. The mismatch between biogenic CO2 availability and shipping demand poses a hurdle, with direct air capture considered expensive and nascent.
Shipping Sector Dynamics
Despite higher production costs, shipping companies are opting for methanol-fueled vessels due to safety considerations. Ammonia, while cheaper to produce, demands additional safety measures, potentially balancing the overall costs. Methanol’s inclusion in safety guidelines gives it an edge over ammonia in the short term.
Total Cost of Ownership and Investments
Both ammonia and methanol significantly raise the total cost of ownership for container vessels, impacting transport costs marginally. IEA estimates suggest a small increase in the shipping cost per twenty-foot-equivalent unit (TEU), demonstrating a manageable impact on transported goods.
Investment and Retrofitting Challenges
Converting existing vessels to e-fuel compatibility involves significant investments, with ammonia retrofitting costs roughly double that of methanol. New shipping capacity built by 2030 for ammonia could total 9.5 million TEU, while methanol requires six million TEU. The estimated $75 billion cost for ammonia conversion contrasts with a $30 billion investment for methanol.
The maritime sector faces a critical decision in choosing between green methanol and ammonia. While production costs favor ammonia, safety considerations and retrofitting challenges may tilt the balance in favor of methanol, impacting the future of sustainable shipping.
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Source: Hydrogeninsight
