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Greening the hard-to-abate shipping sector that runs almost
exclusively on fossil fuels was a commitment that Danish shipping
giant A.P. Moller-Maersk made at the UN COP26 meeting in
November.
As members of a global coalition committed to greening their
supply chains, Maersk is now acting on that goal with Danish
utility Ørsted. Under a 10 March deal, Maersk will power its
newly ordered fleet of 12 vessels with 300,000 metric tons (mt) of
green methanol that Ørsted will supply from a site it is looking to
develop in Texas along the Gulf of Mexico and have online by late
2025.
Announcing the deal in Houston at the 2022 conference of
CERAWeek by S&P Global, Ørsted Offshore North America CEO David
Hardy said, "We believe [it] is the largest green fuel
announcement."
The agreement also marks Ørsted's entry into the US Power-to-X
market, which refers to the use of renewable energy to electrolyze
water to produce hydrogen. It also marks the first partnership
between the two companies in the US.
The Fourth IMO GHG Study
2020, published by the International Maritime
Organization, estimated that shipping emitted 1,056 million mt of
CO2 in 2018, accounting for about 2.89% of the total
global anthropogenic CO2 emissions for that year.
Methanol, a market-ready solution
Green methanol is the only market-ready and scalable
zero-emissions fuel solution today for shipping, but to transition
towards decarbonization "we need a significant and timely
acceleration in the production of green fuels," Maersk CEO
Henriette Hallberg Thygesen said in a statement accompanying the
announcement.
As methanol is synthesized from hydrogen and carbon dioxide
(CO2), Ørsted also plans to capture CO2 from the one or two large
refineries and petrochemical firms that dot the Gulf of Mexico. The
hydrogen will arise from Ørsted's 625 MW electrolyzer that will be
fueled 1.2 GW of a mix of onshore wind and solar energy.
As yet, Ørsted spokesman Ryan Ferguson said the company has not
chosen a specific site for developing its facility, though it has
narrowed it down to a few locations. He could not say though
whether the renewable energy sources would be located on the same
site as the electrolzer.
The firm expects to make a final investment decision in late
2023.
The most ambitious part of this plan, and perhaps the biggest
challenge for the firm, is to get this done by late 2025, "so we've
got a lot of work to do," Hardy said.
First movers
Both Ørsted and Maersk are among the initial 34 companies that
committed at the COP26 summit to buying products with a low-carbon
footprint to help develop green supply chains and meet the world's
climate goals under the umbrella of the First Movers Coalition.
In January, Maersk announced that it was strengthening its
ambition to reach net-zero levels across its business and 100%
green supply chains to its customers by 2040, a decade earlier than
its initial goal.
The Power-to-X project will enable Ørsted to meet its global
goal of installing 50 GW of renewable energy that includes 30 GW of
offshore wind, 17.5 GW of onshore wind, solar PV, and 2.5 GW from
renewable technologies including green hydrogen.
In the US, Orsted already operates the nation's
first 30-MW, five-turbine Block Island Wind Farm in Rhode Island
waters, and has 5 GW of projects under development. Ørsted and
Massachusetts-based utility Eversource Energy are the joint-venture
partners in the 130-MW South Fork offshore wind project, which is
already under construction and scheduled to begin delivering power
in late 2023 to Long Island Power Authority.
Posted 11 March 2022 by Amena Saiyid, Senior Climate and Energy Research Analyst
This article was published by S&P Global Commodity Insights and not by S&P Global Ratings, which is a separately managed division of S&P Global.
