(Bloomberg) -- Shipping giant A.P. Moller-Maersk A/S struck a long-term supply deal for cleaner bio-methanol from a Chinese facility, the latest iteration in its search for low-emission marine fuel.
The container carrier will receive bio-methanol made from residues — including fruit tree cuttings — at a production facility in Xu Chang, China, as part of a deal with Longi Green Energy Technology Co. Supply will start in 2026, with full production expected at the end of the decade.
“Everyone who is involved in this energy transition in the shipping industry agrees that the crux is the access to fuel,” said Morten Bo Christiansen, head of energy transition at Maersk. “There are plenty of ships on the way that can burn alternative fuel.”
The shipping industry is still largely powered by oil and pumps hundreds of millions of tons of greenhouse gas emissions into the atmosphere each year. Biofuels, including bio-methanol, are part of a range of alternative fuels that have the potential to drastically cut the industry’s pollution.
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Maersk’s agreement with Longi follows an earlier deal with Chinese developer Goldwind, for annual supply of 500,000 tons of green methanol. This latest deal will put Maersk closer to 750,000 tons of supply, Christiansen said in response to questions about supply volumes. Maersk had initially planned to have that level of green methanol supply lined up by 2025, but the timeline has now been pushed back a couple of years, according to Christiansen.
“When we set out this goal we were more optimistic about what the market could supply us,” Christiansen said. “But things didn’t go exactly as we had expected.”
The volume is still only a fraction of Maersk’s overall fuel consumption. In the second quarter of this year alone, the company consumed almost three million tons of ship fuel.
The bio-methanol supplied by Longi will meet Maersk’s methanol sustainability requirements, including at least 65% reductions in greenhouse gas emissions on a lifecycle basis compared with fossil fuel.
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Maersk owns seven ships that are in operation and capable of running on either methanol or oil-derived marine fuel, and has plans for more. The firm’s combined green methanol off-take agreements now meet more than half of the expected demand from its dual fuel methanol fleet in 2027.
The firm has also recently ordered vessels capable of running on liquefied natural gas.
--With assistance from Christian Wienberg.
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