The maritime sector is undergoing a transformative shift towards cleaner energy sources, with methanol emerging as a strong contender in the race to decarbonize shipping. A new white paper by Dr. Jeroen Dierickx for the Methanol Institute highlights how the EU’s FuelEU Maritime Regulation and Emissions Trading System (ETS) are driving the adoption of bio- and e-methanol as competitive alternatives to traditional fossil fuels.
Methanol: A Future-Proof Marine Fuel
With mounting regulatory pressure on shipowners to reduce their greenhouse gas (GHG) emissions, methanol offers a promising solution. The paper, titled “Economic Value of Methanol for Shipping under FuelEU Maritime and EU ETS,” underscores how the non-compliance costs for traditional fuels like Very Low Sulfur Fuel Oil (VLSFO) are becoming prohibitive. As a result, bio- and e-methanol are gaining traction as more viable, sustainable fuel options.
The FuelEU Maritime Regulation, which will be implemented from 2025, sets stringent emissions intensity targets, progressively increasing from a 2% reduction in 2025 to an ambitious 80% by 2050. This regulation, combined with the EU ETS, which gradually phases in from 40% coverage in 2024 to 100% by 2026, creates a compelling business case for switching to greener fuels.
Economic Benefits of Methanol
The white paper highlights how methanol’s pricing is aligned with the new regulatory frameworks. For example, the average maximum price of bio-methanol is projected at €1,193 per ton (2025-2050), while e-methanol is expected to be priced higher, at €2,238 per ton (2025-2033), before decreasing to €1,325 per ton from 2034 onward.
This pricing structure, when compared to the escalating penalties for non-compliance with EU regulations, positions methanol as an economically viable alternative. For instance, non-compliance costs for VLSFO could rise from €39 per ton in 2025 to a staggering €1,997 per ton by 2050. Additionally, the EU ETS will add an estimated €321 per ton to the cost of VLSFO, further incentivizing the transition to cleaner fuels.
A Growing Market for Methanol
The FuelEU Maritime and EU ETS regulations are expected to foster the growth of a sustainable methanol supply chain. Blending methanol with fossil fuels will be a key compliance strategy in the early years, but by 2050, the goal is to fully adopt bio-methanol (100%) and e-methanol (91%).
The white paper highlights how these regulations offer a stable framework for fuel producers and shipping companies to make long-term investments in sustainable fuels. By creating a level playing field, the EU regulations are poised to accelerate the transition to methanol-based fuels, allowing the maritime industry to make significant strides toward its decarbonization goals.
VURDHAAN’s Role in Supporting Sustainable Marine Fuels
At VURDHAAN, we are committed to helping maritime stakeholders navigate the complexities of these evolving regulations and fuel transitions. With our expertise in FuelEU Maritime, EU MRV (Monitoring, Reporting, Verification), and sustainable fuel adoption, we assist shipowners and operators in optimizing their operations for compliance, efficiency, and sustainability.
We work closely with clients to develop tailored strategies for reducing emissions, including transitioning to bio- and e-methanol as part of their long-term sustainability plans. By offering guidance on fuel compliance options and integrating the latest technologies, VURDHAAN ensures that maritime companies are well-equipped to meet future regulatory challenges while enhancing their environmental performance.
The Path Forward: Sustainable Methanol for a Greener Maritime Industry
As the shipping industry accelerates its efforts to reduce carbon emissions, the role of bio- and e-methanol will become increasingly important. The FuelEU Maritime Regulation and EU ETS provide a clear framework that not only encourages but actively supports the transition to sustainable fuels. Methanol’s economic potential under these regulations, combined with its ability to significantly cut emissions, positions it as a key player in the future of maritime fuel.
For shipowners and operators, this presents a unique opportunity to stay ahead of regulatory requirements, avoid non-compliance penalties, and contribute to a more sustainable future for the industry. The integration of methanol into the global fuel mix represents a major step toward decarbonizing maritime operations and achieving long-term environmental goals.
At VURDHAAN, we continue to support the maritime sector in adopting innovative, sustainable solutions like bio- and e-methanol, driving progress toward a cleaner, greener future for global shipping.