UNLIKE ethanol — the basis of all drinkable alcohols — methanol causes blindness in those “meth drinkers” who consume it habitually.

Given Maersk’s enthusiastic thirst for methanol, there was always a danger that such side-effects would result in negative headlines should things go wrong.

Maersk was, after all, quite vociferous in its pursuit of green methanol and proud of its first-mover status.

Careful handling of what amounts to an embarrassing U-turn on LNG for Big Blue — a company whose management had previously described LNG as borderline greenwashing — appears to have passed with a largely muted response and minimal damage to the green brand.

Partly that is a case of potential detractors being unable to penetrate the complexities of the chemistry, maths and market-based rationale behind this change of heart.

It is also an acknowledgement that the decision was an entirely pragmatic one based on factors outside of Maersk’s control.

But it is largely an acceptance that any point scoring amid such a volatile period of uncertainty on fuel choices is not going to end well for anyone.

Nobody is sure that the decisions that have been taken to date on fuel choices are the right ones. Anyone who says otherwise is delusional, lying or has had one too many shots of CH3OH.

Shipping finds itself at a critical juncture when it comes to the supply and demand of all future fuels and there are worrying signs of hesitancy when it comes to turning ambition into reality.

Only a few days after Maersk conceded that it would be spreading its bets away from methanol citing the need to remain competitive, Danish renewables giant Ørsted announced it had ceased the development of its pioneering FlagshipONE eMethanol project under construction in northern Sweden, citing slow market progress and an inability to sign long-term offtake contracts.

Ørsted continues to “believe” in the fuel, the company explained, but the commercial development of the offtake market have progressed significantly slower than expected.

It seems belief and faith are as much a market swing factor as economics or regulation.

The suggestion that regulatory uncertainty is driving all this seems wide of the mark.

Clearly there are many moving parts here, but as we wait the next round of negotiations inside the International Maritime Organization later this year, there is no new information on the policy side, no backwards steps, and if anything the regulatory future is more promising than it was when both Maersk and Ørsted were singing a very different tune.

For Maersk this is not strategic; it is a short-term hedge bet borne out of pragmatism and uncertainty.

Clumsy backtracking

What follows is a clumsy process of backtracking as its internal environmental experts reluctantly wipe the egg off their faces and perform what is known in British political circles as the ‘reverse ferret’.

Progress has been made on methane slip, both in terms of engine design and the supply chain, they will argue. The scaling problems can be overcome, they will say. Besides, they tried their hardest on the green methanol push, but realistically there is no way that 2030 targets are being met without bio-LNG, bio-methane or e-methane — however you are producing it — playing a significant role. The sums just do not add up.

And to be fair to Maersk, it is being open about the fact that this is a hedge bet against regulatory uncertainty and the commercial reality that its plans were diverging considerably from its competitors.

Environmentally, it is an embarrassment. Viewed commercially, it makes some sense.

The hazy detail about the sourcing and scaling of the bio-LNG that Maersk intends to use, whether it is really bio-LNG or mass-balanced paperwork, and why it will not rule out using so-called ‘fossil’ LNG in that mix, despite insisting that its policy has not changed — will all become clear as the ships hit the water.

Maersk’s marketing department and fuel procurement buyers are going to be demanding a bonus this year.

But this is not just a story about a Maersk U-turn. This is about the inherent uncertainty and nervousness in an industry that still does not have any confidence in what happens next and is defaulting to lowest cost and optionality as a default.

This is about economics, not environment.

To mature the methanol production that Maersk needs, you must mature hydrogen production and see fixed contracts for CO2 feedstock. That is still not happening.

New range does not mean new buyers 

Dual fuel optionality in the orderbook does not necessarily translate into market demand. Fuel procurement agreements are still very scarce and just because you have ordered a ship capable of burning bio-methane, it does not mean you will.

Squint, and in a good light viewed by an eternally optimistic observer, you could argue that the announced fuel projects out there will offer sufficient supply. But that is ignoring the reality that there is a significant call on those fuels from other sectors that shipping has, to date, never been able to outbid on price.

And thus we inevitably arrive back at the IMO, where, by next year, we will have something approaching carbon pricing adopted at the IMO. But anyone expecting that agreement to fully bridge the cost gap to zero-carbon fuels has clearly not been paying attention to the detail.

Shipping is going to need more. It will need more in terms of individual governments to step in with incentives. It will need more from the likes of sovereign wealth funds and viable green corridors scaling quickly with operational projects.

Shipping needs policy frameworks, financial incentives and industry-wide support to ensure that first movers are not just taking on the risks, but are also rewarded for their efforts.

As Maersk and Ørsted have made clear, for environmental sustainability to be a reality, economic sustainability has to come as part of the deal.