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CERAWeek 2022: Ørsted inks deal to supply renewable-sourced hydrogen to power Maersk fleet

11 March 2022 Amena Saiyid

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.


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