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As New Biofuels Rise Up, Which Ones Will Win Out in the Market?

As New Biofuels Rise Up, Which Ones Will Win Out in the Market?

The rise of renewable fuels means that we’re entering a very exciting era for research and technology. As science looks toward renewable resources to fuel our world, multiple potential solutions rise to the surface.

But how do you decide which renewable options are the most suitable for your needs? If you’re developing a decarbonization strategy, how do you know which fuels to invest in or adapt your infrastructure to support?

While there is no simple answer to these questions, you can understand the trends and developments impacting these markets.

In this post, we’ll examine one particular area where two competing options are in the running: marine fuels in shipping and freight. Methanol and ammonia are the current front-runners to replace fossil fuels in this industry. But which one will come out on top?

The Transforming World of Maritime Bunkering

The world of shipping and freight fueling is shifting very quickly. Bio-bunkering is gaining significant traction right now as the industry moves to stay in line with upcoming ESG and biofuel regulations. Accordingly, ship manufacturers, fleet operators, and other industry professionals are seeking the most “future-proof” fuel alternative to invest in.

Read More: EU Shipping Fuel Transition in Motion with Fuel-EU Maritime Agreement

Within this specific market sector comes two options with very high potential as a bio-based fuel alternative: methanol and green ammonia.

Methanol’s Renewable Potential in Shipping and Freight

Methanol is a type of liquid alcohol which is derived from various renewable sources:

  • Woody biomass from forestry
  • Agricultural waste products
  • Biogas
  • Sewage and municipal solid waste

Older forms of methanol are mostly obsolete due to the production costs and non-renewable feedstocks used to produce them. However, biomethanol is changing that status into one that’s a sustainable option for producing marine fuel within the shipping industry.

Methanol can serve as a marine fuel similarly to traditional fossil fuels with internal combustion. It can also be used as one of the feedstocks within fuel cells.

Methanol’s carbon burn is considerably lower than traditional fuels. When sourced from renewable materials, its overall carbon usage decreases even more.

Because of its history of usage, methanol provides a strong fuel alternative with infrastructure already in place to support it. This means the shipping and freight industry does not have to spend as much money and time to convert their infrastructure and fleet to use this fuel option.

Green Ammonia’s Rise as a Zero Carbon Biofuel Contender

Green ammonia is typically produced using renewable processes from solar, hydro, and wind power. Like methanol, it can be used in freight fuel in multiple ways.

Traditional combustion within ship boilers can produce steam that is strong enough to move ships. Green ammonia is also used in hydrogen-based fuel cells as one of the feedstock sources.

What separates green ammonia from the pack of other biofuels is its carbon content. It is a carbon-free source for fuel. What that means is that in terms of carbon emissions, it can outperform virtually every other biofuel source within the maritime industry.

This would seemingly make green ammonia an obvious choice as a fossil fuel alternative. The problem comes from the current level of technology and infrastructure.

Green ammonia is an emerging alternative within the biofuel sector, but cost still remains very high in its infrastructure and production. Adopting the fuel in an already established fleet could prove far too costly for shipping and freight companies to realistically accomplish.

Competing Fuel Options and Adoption in the Maritime Industry

In the battle for marine fuel dominance, which of these two fuels will come out as the winner?

In short, methanol carries a much longer, well-established history of technological adoption and usage. Green ammonia could still be classified as an “emerging” fuel alternative, meaning its adoption and accessibility are currently much lower than methanol’s.

This analysis leaves two options:

  1. The well-known, highly adopted, and short-term solution of methanol as a biofuel alternative which is affordable and scalable right now.
  2. The rising green ammonia option as a long-term solution, which could have greater potential for achieving decarbonization goals over time.

How the Market Decides a Biofuel’s Fate

In the above case study, the maritime fuel market is showing us how emerging technology interacts with the reality of current infrastructure. Where and how this so-called “fuel war” will inevitably go will come down to its market adoption. And that fate is decided by the companies who will use the fuel types.

While the verdict is still out on where fuel technology will move, those in this industry do have multiple viable options to help them successfully transition to lower carbon output.

The broader implications of this example reflect a concern that leaves most businesses hesitant to adopt new technology. For one, making the wrong decision now could lead to disastrous effects in both short- and long-term success potential.

What would happen if a company decided to outfit a fleet to use an emerging biofuel that inevitably loses in the market? How can due diligence and care properly follow through when technology and innovations are moving the biofuel market so rapidly?

All of these questions lead to one over-arching concern: how can businesses ensure that one fuel or another is a sound investment—especially given the cost to convert operations to accommodate it?

No business wants to move too hastily or decide impulsively on such a monumental undertaking. Yet the growing impetus to decarbonize now affirmed with looming regulatory scrutiny like biofuel mandates means that businesses must take decisive action.

Ultimately, several factors determine which options the world goes with:

  • Speed of Production: Timing is everything. As renewable fuel mandates and regulations begin enforcement, companies are looking for scalable biofuel solutions to immediately integrate into their operations.
  • Cost of Infrastructure Adaptation: Does a biofuel alternative require changes or upgrades to a fleet of ships? And is the same upgrade requirement needed at the production level?
  • Cost of Fuel: In the end, what is the price of the fuel per ton? When market position is tight and competition fierce, companies will have to go with the fuel that provides the most economical solution.

In the case of green ammonia and methanol, green ammonia carries immense potential. Wider adoption will require a serious leap of faith from some major freight and shipping companies to kickstart its usage.

By understanding the fuel as a longer-term investment, this could lead to greater benefits down the road for decarbonization. In the meantime, most companies will opt for the compromise of methanol as a fuel that offers some carbon reduction benefits at a price they can afford.

Get the Insights Your Company Needs to Decide with Confidence

The market motion between green ammonia and methanol reflects a broader issue within the biofuels market.

Technology and innovation are moving rapidly. The push to decarbonize is no longer a far-distant concern. No matter what industry a company operates in, everyone must start making changes to reduce their carbon footprints.

The challenge lies in understanding the market, identifying risks, and moving forward with the best possible option.

This is where data intelligence from ResourceWise can help. The Carbon Mitigator report provides insights, analysis, and key pricing data on all critical biofuels focused on pursuing net-zero carbon goals.

Carbon Mitigator report showing sustainable aviation fuel prices, available in Prima CarbonZero from ResourceWise.

With breaking reports on biofuel trends and award-winning data and analytics, you can count on these insights to guide you through an uncertain market.

The Carbon Mitigator report is only available through ResourceWise’s low carbon fuels and feedstocks analytics and pricing platform, Prima CarbonZero. Learn more about the report and schedule a demo to see how our solutions can take your business across the finish line of decarbonization.