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Why IMO approval is rocket fuel for uptake of methanol as a marine fuel9 March 2021 • 09:00-09:45 GMT
Marine FuelsWebinar Week
Part of
8-12 March 2021
Panellist documents
Page 2: Jacob Sterling, A.P. Moller - MaerskPage 11: Chris Chatterton, Methanol InstitutePage 21: Anita Gajadhar, Proman Shipping
Riviera Maritime: Why IMO approval is rocket fuel for uptake of methanol as a marine fuel
9th March 2021
DISCLAIMER
2
• This Document (“Document”) has been prepared solely for informational purposes from information supplied by Proman Holding AG ( “COMPANY” or “PROMAN”) and is being furnished to you in your capacity to evaluate a partnership or transaction with PROMAN with respect to methanol as a marine fuel (the “PROJECT”)
• ACCEPTANCE OF THIS DOCUMENT CONSTITUTES AN AGREEMENT TO BE BOUND BY THE TERMS OF THIS NOTICE AND UNDERTAKING AND THE SPECIAL NOTICE SET FORTH ON THE COVER PAGE HEREOF (THE “SPECIAL NOTICE”). IF THE RECIPIENT IS NOT WILLING TO ACCEPT THE DOCUMENT AND OTHER EVALUATION MATERIAL (AS DEFINED HEREIN) ON THE TERMS SET FORTH IN THIS NOTICE AND UNDERTAKING AND THE SPECIAL NOTICE, IT MUST RETURN THE DOCUMENT AND ANY OTHER EVALUATION MATERIAL TO THE COMPANY IMMEDIATELY WITHOUT MAKING ANY COPIES THEREOF, EXTRACTS THEREFROM OR USE THEREOF.
• THE EVALUATION MATERIAL HAS BEEN PREPARED TO ASSIST INTERESTED PARTIES IN MAKING THEIR OWN EVALUATION OF THE PROJECT AND DOES NOT PURPORT TO BE ALL-INCLUSIVE OR TO CONTAIN ALL OF THE INFORMATION THAT A PROSPECTIVE PARTICIPANT MAY CONSIDER MATERIAL OR DESIRABLE IN MAKING ITS DECISION. NONE OF THE COMPANY, THEIR AFFILIATES OR ANY OF THEIR REPRESENTATIVES HAVE MADE OR MAKE ANY REPRESENTATION OR WARRANTY AS TO THE ACCURACY OR COMPLETENESS OF THE EVALUATION MATERIAL. YOU FURTHER AGREE THAT NONE OF THE COMPANY OR ANY OF THEIR REPRESENTATIVES SHALL HAVE ANY LIABILITY WHATSOEVER TO YOU OR ANY OF YOUR REPRESENTATIVES RESULTING FROM THE USE OF OR OTHERWISE RELATING TO THE EVALUATION MATERIAL, EXCEPT AND THEN ONLY TO THE EXTENT AGREED TO IN ANY DEFINITIVE TRANSACTION AGREEMENT WHEN, AS AND IF IT IS EXECUTED WITH YOU, AND SUBJECT IN ALL CASES TO SUCH LIMITATIONS AND RESTRICTIONS AS MAY BE SPECIFIED IN SUCH DEFINITIVE TRANSACTION AGREEMENT.
• This Document does not purport to contain all the risks which could affect investments in the Project. All Recipients are invited to ask questions regarding the Project, including the foregoing risks, and are expected to undertake their own independent review of these risks and all other risks associated with the Project, to obtain advice from their counsel and other independent experts, and to make their own determination as to the existence and significance of any and all such risks.
• Finally, this Document shall not constitute an offer to buy or sell any investment or services and the Company shall have no obligation to transact with the recipient, unless and until all Parties have executed and delivered binding definitive transaction agreements
Why Methanol?
• Methanol is a clean burning fuel with significantly lower emissions than traditional marine fuels• It eliminates SOx and Particulate Matter, and cuts NOx by 60%• Grey methanol also brings an immediate 10-15% CO2 reduction, which increases to >90% with
Green methanol
• Methanol is fully biodegradable, reducing lasting environmental harm and complying with the latest environmental regulations
• Methanol is safe to handle, and part of a tested and established infrastructure • It is available in 122 ports worldwide, including all major bunkering hubs, with relatively low
infrastructure costs • Methanol Bunkering Readiness surveys being conducted by the industry
• Methanol is cost competitive as a fuel now• Long term pricing visible to market, global cost curve not oil based
• Methanol runs well in existing engine technology with few modifications and significantly lower CAPEX when compared to other available alternative fuels
• Significant operating history already available
3
MethanolGasoline
Methanol as a Marine Fuel
• Methanol has the same energy and chemical characteristics no matter how it is produced
• Completely fungible commodity chemical molecule which has increasing fuel energy applications low (Grey) to negative carbon intensity (
• For vessel owners, methanol solves SOx, Nox and Particulate Matter GHG emissions across the methanol spectrum today
• Grey methanol immediately reduces carbon intensity as well as being a pathway fuel
• Blending approach likely as Green Methanol production capacity begins to increase
4
Grey Methanolprovides CO2 savings of 10% - 15% today
Green Methanol provides CO2 savings of >90%
Blue Methanol and Green Methanol
General Pricing and Economic Considerations
5
• Methanol is an attractive and competitive alternative from the point of view of fuel storage and bunkering infrastructure costs
• The capital costs of marine methanol are significantly lower than the equivalent costs of marine LNG, a competing fuel that also is compliant with SOx and NOx reductions regulations (LNG infrastructure requires scale to become economic)
• Additionally, methanol allows shipping companies to start with relatively modest investments and build up gradually as more ships convert to the fuel
• As a fuel, methanol has been cost-competitive with MGO
• Methanol is also competitive when compared with emissions abatement measures such as scrubbers and catalysts, as the latter also add to operational costs
• A dual fuel engine can also be installed to allow the use of VLSFO/MGO as well as methanol, enabling a ship to switch between fuels to operate cost-effectively whilst remaining compliant with environmental regulations
$0
$30
$60
$90
$120
$150
$100
$300
$500
$700
$900
$1,100
Jan
-11
Au
g-1
1
Mar
-12
Oct
-12
May
-13
Dec
-13
Jul-
14
Feb
-15
Sep
-15
Ap
r-1
6
No
v-1
6
Jun
-17
Jan
-18
Au
g-1
8
Mar
-19
Oct
-19
May
-20
Dec
-20
Pri
ce $
/bb
l.
Pri
ce $
/MT
European Commodity Price Comparison
MGO - Rotterdam ($/MT) Methanol Spot - CFR Rotterdam ($/MT)
VLSFO - Rotterdam (Post 2020; $/MT) Brent Crude Oil ($/bbl)
Maersk estimates that a doubling of fuel costs would only add 6c to the price of $100 trainersMaersk Sustainability Report 2020
Proman Stena Bulk JV – Dual-fuel vessels to be in service in 2022
Size (DWT): 49,900 MT
Fleet Size No. – 3
Delivery – 2022
Owner: Proman Stena Bulk Limited
Engine: Methanol Dual Fuel (MAN B&W 6G50ME-C9.6 MW Tier III)
IMO II – 18 Cargo Tanks
Methanol consumption: ~ 40-46 MT/Day
Bunkering Considerations
7
• Safety procedures for handling methanol are well known and practiced all over the world
• Methanol molecule remains stable through ambient temperatures. It handles easily like
existing fuels, with reduced “spill implications”
• Bunkering companies supportive of methanol due to ease of handling for their existing
operations, with minor alteration to infrastructure expected
• Methanol readiness evaluations taking place in major ports already
• Proman is prepared to perform the work required to ensure methanol deliveries to support ship bunkering globally
• Secure/support necessary approvals with the Port, local authorities and setting up the necessary bunkering infrastructure
BunkeringAvailability
Proman – Your Partner for Low Emission Marine Fuel Today
Proman is a global leader in the production of natural gas derived products & services
• Number 2 global producer of methanol with c7m tons of low carbon Grey methanol production capacity
• Significant producer of ammonia and other fertilisers• Existing fleet of 13 vessels transporting methanol globally which will begin to burn
methanol as a marine fuel from 2022 onwards
Proman transports methanol to all major shipping bunkering ports already• Exploring methanol bunkering solutions as part of industry initiative and with close
partners
Significant sustainability commitment with:• Current low carbon methanol in Trinidad and the United States• Green methanol Projects in development and construction in Canada and Belgium
and in development in other global locations• Vessel replacement programme in JV with Stena to build three methanol fuelled
vessels
Ability to provide low carbon methanol as a marine fuel today, with a clear and invested pathway to reducing current carbon intensity as we blend Blue and Green methanol with Grey methanol
8
Q&A
Riviera Marine Fuels Webinar Week
March 9, 2021
Singapore | Washington | Brussels | Beijing | New Delhi
IMO Approval of Methanol:
What does it mean, really?
Chris Chatterton
www.methanol.org/join-us
IMO approval timeline for methanol & measures
CCC 1o Ethyl/methyl alcoholo Fuel cellso Low-flashpoint diesel
2014 2019
CCC 5o Ethyl/methyl
alcoholo Fuel cellso Low-flashpoint
diesel
///
2020
CCC 6o Ethyl/methyl
alcoholo Fuel cellso Low-flashpoint
diesel
MSC 102• New Chapter 5• Amendments• Approval• Adoption
Interim Guidelines Confirmed
Interim Guidelines Approved
Short Term Measures
///
2023
Mid Term Measures
2030
Long Term Measures
2040
Short
Mid
Long
“possible short/mid/long-term measures could be
measures finalized and agreed by the Committee
between 2018-2023, 2023-2030 and 2030>.
Dates of entry into force and when the measure
can effectively start to reduce GHG emissions
would be defined for each measure individually”
40% GHGReduction
www.methanol.org/join-us
IMO indicative workplan
Source: IMO
www.methanol.org/join-us
IMO CII
• Technical (i.e. design): Energy Efficiency for Existing Ships (EEXI) - EEDI applied to existing ships
• Operational: Enhanced SEEMP (Ship Energy Efficiency Management Plan)with mandatory Carbon Intensity Indicator (CII) rating scheme (A-E)
• Measures consolidated into a singlepackage; the outcome is a finelybalanced political compromise
Source: IMO, DNV GL
Methanol provides immediate compliance with substantial net GHG reductions, coupled with a strong futureproof pathway
NOx
www.methanol.org/join-us
Methanol’s highly flexible production routes
Renewable CO2: from bio-origin and through directair capture (DAC)
Non-renewable CO2:from fossil origin, industry
Source: IRENA
www.methanol.org/join-us
Multiple pathways and sub-verticals…
Notes: MeOH = methanol. Costs do not incorporate any carbon credit that might be available. Current fossil methanol cost and price are from coal and natural gas feedstock in 2020. Exchange rate used in this figure is USD 1 = EUR 0.9.
Source: Based on data from MSA 2020, IRENA
…mean less price volatility and better visibility
www.methanol.org/join-us
• E-ammonia, blue ammonia and bio-methanol are the most promisingcarbon-neutral fuels in the long run ina decarbonization trajectory
• Fossil LNG gains a substantial sharefollowing the IMO ambitions.However, as regulations tighten in2030 or 2040, depending on thedecarbonization pathway, we see bio-LNG, e-LNG, bio-MGO and e-MGOused as drop-in fuel for existing ships,while bio-methanol, blue ammonia ore-ammonia are used for newbuildsand some retrofits
• In the Decarbonization by 2040scenarios, instead of a transition viaLNG, the fleet shifts directly tocarbon-neutral methanol orammonia, with bio-MGO and e-MGOas drop-in fuels for existing shipshttps://www.dnvgl.com/expert-story/maritime-impact/Prepare-for-a-decarbonization-pathway.html
Low carbon fuels could be 60% of bunker market by 2050
www.methanol.org/join-us
Heatmap of methanol applicability – ARA scenario
• Most midrange shipping markets havevessels with over-dimensioned tankcapacity, which allows them to bunkermethanol instead of HFO/MGOwithout serious adjustments to thebunker frequency, sailing pattern, ortank capacity/ship design
• For shipping markets with point-to-point sailing patterns and/or shortdistances methanol is certainlyfeasible, however it may compete withother alternative green fuel optionssuch as hydrogen
• Inland shipping appears promising formethanol, though this segment alsomay compete with e-diesel, hydrogenor battery-electric propulsion
Source: TNO Report 24 Sept. 2020 – Green Maritime Methanol – Operation aspects and the fuel supply chain
www.methanol.org/join-us
Methanol dual fuel standardized design: no range loss
Source: Hyundai Mipo Dockyard
www.methanol.org/join-us
Assumptions on methanol market share – ARA scenario
• Simulation based on Market share for small and large vessels persegment based on the data analysis outcomes of the vessel arrival datain Rotterdam and Amsterdam, and expert opinion
• For simplicity it links short sea to small and medium sized vessels anddeep sea to large and very large vessels
• With these assumptions, we can derive a first indication of possiblemarket share for methanol uptake in different markets, in line with themarket segment analysis for methanol use
• Overall methanol market share of 22% in the high scenario and 5% inthe low scenario
• Applying this methanol share to the forecasted bunker market in 2030results in a methanol demand in the range of 0.6 to 2.6 million m3 forRotterdam and 1.1 to 5.0 million m3 for the whole ARA-region
• Dutch demand of methanol for maritime transport in 2030 expectedto be 6.5 MMT or 2.3% of global capacity, while total Europeandemand reaches 25 MMT or 8.8% of global capacity
Source: TNO Report 2020
Classification: Public
Decarbonising shipping– the role of METHANOL
Jacob Sterling
Senior Director, Head of Decarbonisation Innovation
& Business Development
In 2018 we set a course
for getting to zero carbon
operations by 2050
|2
Relative reduction in CO₂
by 2030
Classification: Public
Biodiesel(advanced biofuels)
Methanol(bio-methanol and e-methanol)
Lignin fuels(New fuel based on lignin-alcohol blends)
Ammonia(green ammonia)
We have identified potential PATHWAYS TO NET ZERO
Classification: Public
KEY ADVANTAGES
➢ Already in operation as marine fuel and
engine is available
➢ Liquid at normal condition and well-known
handling
KEY LIMITATIONS/RISKS
➢ Bio-methanol: Limited availability of
biomass feedstock
➢ E-methanol: Availability of biogenic CO2
source
The case for METHANOL as a shipping fuel
Biomass
Gasification
Syngas
Methanol
synthesis
Biogenic CO2
source or
Direct air
capture (DAC)
Renewable electricity
Wind/solar
Green hydrogen
Syngas
Methanol
synthesis
E-methanol
Electrolysis
Bio-methanol
Green methanol
.
Biomass
Production
Products
Biomass waste
Treatment
Lignin
Methanol
Lignin alcohol
(methanol + lignin)
Lignin fuels
Classification: Public
How to solve the CHICKEN & EGG challenge?
?
Who will BUILD A SHIP with a
new type of engine, if there is
no fuel or fuel infrastructure?
Who will produce a GREEN
FUEL at large scale, if there are
no customers for it?
Classification: Public
We have decided to start our transition now:
First vessel in CARBON NEUTRAL OPERATION by 2023
WHAT WE KNOW
• Dual fuel engine – methanol and diesel
• 175 m long, 2000 twentyfoot containers
• Approx 10,000 ton green methanol per year
• To be put in operation in 2023
• To be trading in an intra-regional network
WHAT WE DON’T KNOW YET
• Where exactly will we get the fuel from?
• What will the fuel cost?
• Will customers (continue to) pay the
premium?
! ?
Classification: Public
▪ Build a methanol fuelled container vessel and get practical
experience on operating it
▪ Scale up production of green methanol through
partnerships with developers, so that we have fuel for the
ship
▪ Validate whether lignin-alcohols can be a viable fuel option
that can work in a methanol engine
▪ Continue to build understanding of the long-term
availability and prices of biogenic CO2, bionass residue (for
lignin and biomethanol) and renewable electricity
Next steps for methanol
Thank you!