U.S Producers To Ramp Up Green Methanol Output For Shipping

Credits: Maersk

Emerging fuel producers are looking to rapidly ramp up “green methanol” output from later this decade, with demand from the shipping sector set to rise due to decarbonization requirements. sources SPglobal. 

Infusing Capital Investment

David LaMont, a senior vice-president at Houston-based SunGas, said the company targets to build six plants each with a capability of around 400,000 mt/year that can convert residues from the forestry and wood products industries into methanol, with a total capital investment of nearly $9 billion. The GTI Energy spin-out plans to commission the first such biomethanol plant near Beaver Lake, Louisiana, in 2027, depending on a final investment decision in the fourth quarter of next year. For the other five, “the full development timing isn’t set…but fundamentally we want to go as fast as we can to build all six projects,” LaMont said. The IRA has raised the 45Q tax credit to $60/mt for carbon dioxide used in enhanced oil recovery or other industrial operations and to $85/mt for permanently stored CO2, from $35/mt and $50/mt, respectively. “We do get the benefits from 45Q, and those packages are helpful,” CEO Robert Rigdon said, as the carbon from SunGas’ Beaver Lake facility will be stored permanently.

Shipping Demand

Maersk has invested in 36 containerships that can burn methanol, all of them are to be delivered by the end of 2027, as an initial step to reach net-zero emissions by 2040. To achieve its interim goal of halving emissions per transported container from 2020 levels by 2030, Maersk estimated it would need at least 5 million mt/year of green fuels. “I don’t think you can build things fast enough to meet that demand,” said Peter Jorgensen, who will serve as WasteFuel’s chief financial officer from Oct. 1.

The California-based venture, whose shareholders include BP and Maersk as potential offtakers, is aiming to have 10-12 biomethanol plants at various development stages in the US, South America and other regions three to four years from now, each with a production capacity of 40,000-80,000 mt/year, Jorgensen said. Globally, the number of methanol-capable ships across all shipping sectors is expected to grow from 30 this year to at least 204 in 2028, according to classification society DNV’s estimates based on the existing order book. Maritime transportation accounts for 2%-3% of global greenhouse gas emissions, and a growing number of shipowners, faced with tightening emissions regulations and pressure form eco-conscious customers, have bet on methanol’s decarbonization potential due to low capital investments and well-established supply infrastructure.

Renewable Resources

Carbon Sink, a Virginia-based e-methanol project developer, has aimed to bring its first 100,000 mt/year plant online in South Dakota in 2028. Following its first project, the company plans to commission another nine plants with a similar capacity within eight years, said Jim McVaney, head of business development. “We believe that we’re going to be able to do multiple projects each year,” said McVaney, adding that Carbon Sink projects will seek to take advantage of renewable hydrogen produced by abundant wind power and biogenic carbon captured by bioethanol plants in the US.

The IRA provides a tax credit for clean hydrogen producers worth up to $3/kg, depending on the overall carbon footprint of the product, and the policy is expected by some to trigger large production of the low-, zero-carbon fuel that can be used as feedstock for e-methanol plants in the long run. “Because of incentives created by the US government and the relatively low cost of wind energy in the US, we think that we’re going to be able to be a very attractive option in the market for green methanol,” McVaney said.

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Source: Spglobal