DNV Maritime chief executive Knut Ørbeck-Nilssen says that interest in methanol as an alternative fuel for ships has declined significantly as demand drivers have been scaled back.

“The methanol “happy hour” has come to an end. Very limited production is expected to be available as we head towards 2030, while 70% of planned methanol production facilities have not yet made it to final investment decision,” Ørbeck-Nilssen said as he presented DNV's latest Maritime Forecast to 2050 report.

He noted that some significant drivers for methanol seemed to have been pulled back, while the ordering of methanol dual-fuel ships had slowed in 2024.

“The euphoria around methanol has tapered off significantly,” said Ørbeck-Nilssen.

Ørbeck-Nilssen’s comments follow an announcement by one of methanol’s biggest advocates — Maersk — that it intended to order its first LNG dual-fuel containerships in what appeared to be U-turn from its policy of ordering only methanol dual-fuel vessels since 2021.

High costs for building new ships, limited yard space for retrofitting, strong freight rates and a lack of investment in alternative fuel production, in addition to stiff cross-industry competition for the limited supply of alternative fuels had all combined to reduce interest in methanol and other alternative fuels for ships, Ørbeck-Nilssen said.

He added that while half of the global newbuilding orderbook was for alternative fuel vessels this share had not risen in the past 12 months.

He said cost was the most significant factor in the slowdown of decarbonisation measures.

“Decarbonisation of shipping comes at a significant cost. The cost cannot be absorbed by the shipowner alone. For the container sector, costs could double and eventually this will move through the value chain to consumers as an increase in the price of goods.”

Meanwhile Ørbeck-Nilssen said that access for tramp commodities shipping sectors to alternative fuels would remain limited.

“As long as shipowners have a limited idea of where they will trade it will be a tremendous challenge to get access to carbon-neutral fuels. Tramp shipping has the biggest challenge to address in accessing alternative fuels.”

Ørbeck-Nilssen said that it made more sense for shipowners of bulk carriers and tankers to do whatever they can on the energy efficiency side, although should consider ordering ships with dual-fuel capability which will still permit the use of conventional fuels.

He believes vessel energy efficiency measures will have a greater role to play in reducing carbon emissions up to 2050.

Ørbeck-Nilssen said that the industry is now exploring more new technological energy efficiency solutions, such as hybrid battery systems, fuel cells, shore power expansion and the “great potential” for carbon capture and storage.

“Energy efficiency measures can reduce global fleet fuel consumption by 16% by 2030 and has the potential to go up to 30% by 2050.”

Onboard carbon capture systems had the capability to alleviate pressure for the limited supply of carbon-neutral fuels, Ørbeck-Nilssen added.

“The question is where can you deposit carbon? There are 96 projects planned for carbon storage, but none are targeted at maritime.”

“OCCS has a major role to play in all scenarios and major ports should take a leading role in establishing reception facilities. This is a responsibility of both ports and national governments to get the infrastructure in place — it’s important they step up.”

Ørbeck-Nilssen said that seafarers were at the heart of the path to safe decarbonisation and should be prioritised.

“We have to work with the seafarers on upskilling and training to deal with alternative fuels. Ships are becoming much more complex and the richer career opportunities provided by new technologies could help attract new talent to the sector as seafaring becomes more attractive as a career.”

“Decarbonisation is a good message to send to young people and to send to graduates across different nations,” he said.