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Danish partners eye largest ever green fuels deal

10 March 2022

Over the past two decades, greenhouse gas emissions from the global maritime industry have risen sharply to account for around two percent of global energy-related emissions. As the world races to fight climate change, the maritime sector urgently needs new zero-emission fuels at scale to reduce its climate impact.

In doing so, the Danish shipping giant Maersk has entered strategic partnerships with four companies, which from 2025 will supply the carrier with roughly 730,000 tonnes of green methanol annually. Moreover, similar deals are signed with two other companies hired to supply another 500,000 tonnes after 2025. Combined, the six partnerships are expected to produce more than enough fuels to power the Maersk upcoming 12 green container vessels. A needed move to speed up global decarbonisation according to shipping giant:

"To transition towards decarbonisation, we need a significant and timely acceleration in the production of green fuels. Green methanol is the only market-ready and scalable available solution today for shipping. Production must be increased through collaboration across the ecosystem and around the world. That is why these partnerships mark an important milestone to get the transition to green energy underway,” says A.P. Moller – Maersk Fleet & Strategic Brand Chief Executive Henriette Hallberg Thygesen in a statement.

Danish companies are selected as the main source of methanol deliveries from 2025. In part, the shipping giant has signed a deal with Ørsted who will provide 300,000 tonnes on a yearly basis. The Danish renewables developer European Energy will further supply 200,000-300,000 tonnes of fuel annually.

In both cases, production will be of e-methanol made using renewable power. The other partnerships with US based Wastefuel and the Chinese companies CIMC ENRIC and GTP will supply 130,000 tonnes of bio-based methanol by late 2024.

Maersk has collaborated with several of the players throughout many years. For instance, the shipping group signed a contract with European Energy back in August pertaining to green fuel supply from the developer’s planned Reintegrate projects in Denmark starting from 2023.

In relation to the new partnership with Ørsted, the Danish energy major will develop a 675 MW Power-to-X facility on the US Gulf Coast to produce the approx. 300,000 tonnes of e-methanol yearly. The facility will be powered by 1.2GW of renewable energy from new onshore wind and solar PV farms. The biogenic carbon needed to produce e-methanol will be extracted through carbon capture at one or more large point sources.

The project is targeted to be commissioned in the second half of 2025, making it by far the most ambitious project globally producing e-methanol at scale and a driving force in the decarbonisation journey of the maritime sector. Final investment decision could be made in late 2023. The 300,000 tonnes of e-methanol are the largest potential offtake agreement for green fuels in the maritime industry ever announced.

“The maritime industry faces a chicken-and-egg challenge, where the supply and demand of green fuels will have to evolve in parallel to fast ensure a sustainable development of zero emission fuels. Orsted is very pleased to partner with A.P. Moller - Maersk to address this challenge by scaling green fuel production together with an industry leader in the maritime sector,” says Martin Neubert, Deputy CEO and Chief Commercial Officer at Ørsted.

"We are very pleased to strengthen our already strong relationship with Maersk with this multi-year partnership where the annual target is to deliver up to 300.000 tons of e-methanol. The shipping industry is a vital part in global efforts to curb carbon emissions, and together with Maersk we are now leading this crucial transition towards running ships 100 percent on renewable energy,” underscores Knud Erik Andersen, cofounder and CEO of European Energy.