Fossil fuel prices are likely to outperform green alternatives by 2025 based on the research report

In order to comply with the more stringent emissions regulations of the International Maritime Organization (IMO) and the European Union (EU), shipowners have begun to act aggressively to tackle the emerging problem of decarbonization and methanol as a main solution. And methanol is the most viable alternative fuel being considered by container shipping, according to Adam Forsyth, head of research at Longspur Capital. That’s why the current marine fuels will become more expensive than low-carbon alternatives by early 2025.

The proof is that with more than 100 methanol-fueled ships already in operation or on order, special attention is being paid to the importance of low-carbon shipping. The European Parliament and European Council have reached an interim agreement that sets fuel standards for ships to gradually increase the use of renewable and low-carbon fuels to reduce emissions over the next 25 years. Accordingly, the EU will also include shipping operations in the Emissions Trading System (ETS) from 2024 by imposing a tax on marine fuels under the Energy Tax Directive later this year and plans to enforce significant emissions penalties to encourage the use of low-carbon fuels.

The IMO also sets limits on tightening energy efficiency so that it can be tightened further towards the goal of a 40% reduction in carbon dioxide (CO2) emissions by 2030.

Rolf Habben Jansen, CEO of Hapag-Lloyd, said that carbon-neutral fuel options are still limited as they are produced in insufficient quantities. However, he also added that while the production of alternative fuels such as methanol is more expensive than existing marine bunkers, the more industry adopts them, the faster the production costs will fall.
“If we look at what it costs to produce methanol, it will be materially more expensive than the fuel we produce today, and we need to be prepared for that,” he said. “While the adoption may not go that fast, once it is rolling then it will get faster and faster, and that will place pressure on the industry to decarbonize even faster.”

Habben Jansen also expects methanol to be just one of many potential alternative fuels shipped by containers.