Dusseldorf Liquid gas LNG cost a cheap 47 euros per megawatt hour last year – at the end of March 2022 it broke through the price mark of 120 euros. The energy service provider Meistro Energie from Ingolstadt warns of “potential gas supply failures” due to a possible freeze on imports from Russia. Without Russian gas, the enormously high prices could remain in the long term.
The cost explosion triggered by the Ukraine war is particularly affecting the maritime economy these days, including shipping companies such as Hapag-Lloyd, CMA CGM and Maersk. For almost three years they have been converting their ships from diesel to the more environmentally friendly liquid gas, which reduces sulfur and fine dust emissions to almost zero.
However, it is to be feared that the ecological conversion will now result in an unforeseen burden on business.
The enormous price level for LNG, however, means that it could now help climate protection to achieve an amazing breakthrough. Because of the price distortions, for the first time a largely CO2-neutral fuel is priced close to that of conventional ship propulsion systems: synthetically produced methane gas, so-called SNG, which is produced in special systems using electricity from wind power and solar systems, but which has so far lacked price competitiveness.
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A plant designed by Audi in Werlte, Emsland, has been successfully testing the manufacturing process since 2013. In a first step, it electrolyzes high-energy hydrogen from distilled water. She then puts it in a methanation plant using catalysts with carbon dioxide that she has brought in. However, the resulting “green” methane has to be cooled down to minus 162 degrees so that it remains liquid.
Larger plants for synthetic LNG in sight
So far, the plant has only produced synthetic liquid natural gas (LNG) on a six-megawatt scale. It will no longer stay that way, as Hermann Pengg, who acquired the plant in 2021 via a management buyout from Audi, assured the Handelsblatt. “The project for a plant in northern Germany will start this year,” he explained when asked. “From 2026, it should produce up to 90,000 tons of SNG per year.” In addition, the securing of further locations is progressing well.
Plants with a capacity of up to nine million tons are definitely possible in suitable locations with lots of sun and wind, for example in desert areas.
The increased world market price for conventional LNG gives the producers of the climate-neutral alternative fuel tailwind. Until recently, a ton of SNG cost nine times as much as the fossil liquefied gas LNG, but prices are now significantly closer. In 2029, Kiwi AG, managed by Pengg, announces that it will be able to offer climate-neutral methane for 2,000 euros a ton. According to calculations by the price information service ICIS, the same amount of LNG currently costs 1,531 euros.
“As a result of the attack on Ukraine, LNG prices have risen massively in recent weeks and are now at a similar level to SNG,” confirms Uwe Lauber, CEO of ship engine manufacturer MAN Energy Solutions. Lauber believes that if production capacities can be quickly built up and synthetic fuels made available to the market, SNG could be a climate-friendly alternative to fossil fuels in shipping.
Maritime shipping has been looking for this for a long time. It emitted 919 million tons of greenhouse gases in 2018 – 2.5 percent of global emissions. The international maritime organization IMO has therefore declared war on CO2 emissions. By 2030, according to the organization close to the UN, the amount should fall by 40 percent compared to 2008, and by 2050 even by 70 percent. Not an easy task, because electric propulsion systems are unsuitable due to the considerable energy requirements at sea.
Even the use of LNG, which is more environmentally friendly than marine diesel, improves the situation only slightly. The gas drive reduces fine dust emissions and sulfur oxides to almost zero. The CO2 emissions, which have been reduced by a third, are considered deceptive: Because LNG operation releases small amounts of methane, which is many times more harmful to the climate than carbon dioxide, the greenhouse gas effect is reduced by just seven percent compared to diesel engines.
First successful test drive on the Elbe and North Sea
In the past few days, inventors have shown for the first time that synthetically produced LNG produces far fewer greenhouse gases in comparison. “We were able to reduce emissions by 69 percent compared to diesel engines,” reported MAN employee Marcus Lodder last week. “With the use of further developed engines, a minus of 87 percent can even be achieved.”
In practice, the drive has been working for a long time. In September 2021, MAN Energy Solutions, together with the Elbdeich shipping company, put to sea a ship powered solely by synthetic methane for the first time. At Brunsbüttel on the Elbe, they filled the “Elbblue” freighter, which was built for 1036 standard containers (TEU), with 20 tons of SNG in order to send it on its journey to Rotterdam. “There were no technical hurdles to switch the engine, which was actually built for LNG drive, completely to SNG,” Lodder reported last week. 56 tons of CO2 were saved on the sea voyage.
At the same time, the Danish shipping group Maersk announced last week that it plans to build Asia’s first green e-methanol plant in Singapore together with five other companies, including Air Liquide. A memorandum of understanding has already been signed.
In the plant, which should be built by the end of 2022, the aim is to convert carbon dioxide into green e-methanol. The shipping company is aiming for a minimum production capacity of 50,000 tons per year.
The world’s second largest ship operator recently ordered 13 so-called dual-fuel container ships that can be operated with CO2-neutral methanol and are to be delivered between 2024 and 2025. Accordingly, Maersk is currently busy securing the global fuel supply for this new type of ship.
However, the two synthetic fuels are not really compatible. Green methanol and methane both have the sustainably produced hydrogen as a starting point, but differ in the further production. Methanol has the advantage of being a liquid at room temperature, which makes storage and refueling easier, but has a much lower energy density than liquid SNG.
According to Kiwi CEO Pengg, this competition should not delay investments. “Because the existing LNG infrastructure can be fully used for shipping and the renewable SNG can be continuously mixed in, the SNG path is ripe for rapid upscaling,” he says. “The investment costs for power generation and hydrogen electrolysis amount to more than 90 percent of the capital employed, methanation less than ten percent,” he calculates.
The energy expert explains that anyone who later decides to use methanol – or even ammonia – would only have to cope with a comparatively small depreciation.
The engine manufacturer MAN Energy Solutions, a subsidiary of VW, also sees itself adequately equipped for both drive technologies and wants to advance research on this. “The current global political situation underlines the role that synthetic fuels can play in future for a diversified energy supply,” says CEO Uwe Lauber. “They point the way to less dependence on raw material deposits, suppliers and price fluctuations.”
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