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    How to ensure the profitability of Maersk's project in Spain

    November 28, 2022 - CE Noticias Financieras


      The project to invest 10,000 million dollars for the production in Spain of e-methanol from green hydrogen as a sustainable fuel for ships is a very positive initiative to advance in the ecological transition of one of the most polluting sectors in the world, maritime transport.

      Last November 3, the Moncloa announced the agreement with the Danish shipping company Maersk, one of the world leaders in the transport of goods by sea, to launch this ambitious operation, framed in the Government's Perte, which involves the creation of two e-methanol production centers in two ports in Galicia and Andalusia and the generation of a significant number of new jobs (estimated at some 4,500 constant direct jobs plus some 35,000 to 40,000 additional direct jobs during the construction of the industrial complexes and a further 40,000 indirect jobs).

      As announced, this plan will be developed in three phases: up to 2025 it is planned to generate 200,000 tons of e-methanol; then, in 2027, one million tons and in 2030 the figure will be doubled to two million tons. We welcome this initiative and hope that it will eventually become a reality.

      However, to ensure the viability and profitability of this relevant joint project of Maersk and the Spanish Government, it would be of vital importance to ensure the inclusion in the final text of the European Union's Fuel EU Maritime regulation of a sub-quota for renewable (electro)fuels of non-biological origin (Rfnbo) such as e-methanol, as proposed by the European Parliament. Here is why.

      FuelEU Maritime is the name given to the regulation on the use of renewable and low-carbon fuels in maritime transport to reduce greenhouse gas (GHG) emissions from this sector. It was proposed by the European Commission as part of the Fit for 55 legislative package in July 2021 and is currently in the final stage of its processing, i.e. the three-way negotiation phase between the Commission, the Council and the Parliament. Indeed, the European Parliament approved the inclusion of a 2% Rfnbo sub-quota for 2030 in its position on the proposed FuelEU Maritime regulation. While it would have been desirable for this percentage to be higher, the inclusion of this sub-quota in the final regulation is crucial in order to accelerate the necessary process of decarbonization of maritime transport.

      We have calculated that the European Parliament's proposal of a 2% Rfnbo subquota for all European maritime demand in 2030 could be exceeded by Maersk's investment in Spain alone. In other words, if only e-methanol were used to supply 2% of Rfnbo to shipping, the sector would need about 1.2 million tons of e-methanol in 2030. As we have seen, Maersk's project plans to produce 200,000 tons of e-methanol in 2025, one million tons in 2027 and 2 million tons in 2030. Therefore, the introduction of a sub-quota in the FuelEU Maritime regulation would serve as a legal guarantee for Maersk's investments, which in turn would secure Spain's position as an EU leader in the production and use of green e-fuels for maritime transport.

      In addition, Spain's leadership in the production of green e-fuels could generate considerable revenues, allowing Spain to become a major bunkering hub in Europe, and to export significant volumes of green methanol to other EU countries.

      For example, the Netherlands and Belgium have a large demand for marine fuel, and a sub-quota of Rfnbo would require them to use a certain amount of green e-fuels. However, their degree of self-sufficiency in this respect could be constrained by their limited renewable electricity production potential.

      If the effort to supply the demand for a 2% sub-quota of e-fuels were distributed according to current fuel sales by country, Spain would have to supply only 182,279 tons of e-methanol in 2030 for ships calling at Spanish ports. This is less than 10% of the production forecast by Maersk (2 million tons) at that date.

      In other words, the introduction of an Rfnbo sub-quota in the FuelEU Maritime regulation would allow Spain to guarantee the demand for green methanol exports to other countries such as Belgium and the Netherlands, which would need, respectively, 284,989 tons and 177,961 tons of green methanol in 2030 to meet their share of the Rfnbo sub-quota.

      In addition, Spain could use this opportunity to substantially increase its market share in EU fuel sales, and turn Spanish ports into the EU's main suppliers of green hydrogen and its derivatives for shipping. In summary, we believe that Spain's support for the inclusion in the final text of the FuelEU Maritime regulation of a sub-quota for Rfnbo would be very beneficial for Spain and for the environment, helping the decarbonization of maritime transport.

      Because of its almost total dependence on the use of fossil fuels as a source of energy, shipping's greenhouse gas (GHG) emissions, as well as various atmospheric pollutants and black carbon, are on the rise. Its 1,076 million tons of annual GHG emissions make international shipping as a whole the sixth largest emitter in the world, after China, the United States, India, the Russian Federation and Japan.

      To achieve full decarbonization of transport will require, in a form or scale that can be applied to large commercial vessels, especially those on transoceanic voyages, the use of the aforementioned Rfnbo.

      The simplest Rfnbo is green hydrogen (H2), i.e. that obtained by electrolysis of water (H2O) using only electricity from renewable sources, such as wind or solar energy. From green hydrogen, by reacting it with carbon dioxide (CO2) obtained by direct air capture, a wide range of other renewable fuels (synthetic hydrocarbons) can be generated for maritime transport, such as e-methanol. Green hydrogen can also be reacted with nitrogen by the Haber-Bosch process to produce renewable ammonia (e-ammonia or green ammonia), another compound with great potential as a marine fuel.

      When green e-methanol undergoes a combustion process in an engine, CO2 and H2O are emitted, as in the combustion of any hydrocarbon. The combustion of green e-methanol would be carbon neutral, as the CO2 released would be the same as that previously taken from the air for its manufacture. This is what differentiates Rfnbo electrofuels from fossil hydrocarbons, such as oil and its derivatives and natural gas. The combustion of the latter does contribute to global warming by adding new CO2 molecules to the atmosphere that had been trapped in their composition in previous geological eras.

      Carlos Bravo Villa is Head of Maritime Transport at Transport & Environment.


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