March 1, 2024

Lukmaan IAS

A Blog for IAS Examination




THE CONTEXT: As per the report of the International Energy Agency (IEA), Despite an upcoming crunch in available biogenic CO2 for e-methanol, extra costs for ammonia-fuelled vessels may swing the balance in the short term.


  • Green ammonia and methanol, derived from renewable hydrogen, are envisioned as potential fuels to reduce greenhouse gas emissions in the shipping sector.
  • Despite the perceived advantages of ammonia, such as lower production costs compared to methanol, there are several cost-related and logistical challenges influencing the preference for methanol in the short term.

Cost Disparities between Methanol and Ammonia

  • The International Energy Agency (IEA) reports that methanol has been predominantly used in maritime operations due to existing orders and infrastructure.
  • It can be significantly more expensive than ammonia—estimated to be 25-100% costlier.
  • The primary cost difference arises from the need for captured CO2 to ensure carbon-neutrality in methanol production.

CO2 Sourcing Challenges and Cost Implications

  • The sourcing of captured CO2 from biogenic sources or direct air capture directly impacts the cost of green methanol.
  • High-concentration biogenic sources like fermentation offer a more cost-effective supply compared to low-concentration sources like flue gases from biomass-fired power plants.
  • Capturing CO2 from industrial sources can add 25-40% to the cost of methanol production compared to renewable ammonia.

Availability and Limitations of Biogenic CO2

  • While there’s an existing supply of biogenic CO2 from sources like bioethanol plants, the projected demand for CO2 from shipping and other sectors exceeds the available biogenic sources.
  • This mismatch raises concerns about meeting the necessary CO2 supply for methanol production, potentially limiting the scale of e-methanol plants.

Challenges in Handling and Safety

  • Safety considerations also impact the choice between methanol and ammonia.
  • Handling ammonia requires additional safety measures due to its toxicity at lower concentrations, leading to increased costs for infrastructure and safety protocols aboard ships.
  • Methanol, while covered in safety guidelines, presents fewer challenges in this aspect.

Total Cost of Ownership and Retrofitting Challenges

  • The total cost of ownership for ships using either fuel, assuming low-cost biogenic CO2 sources, indicates a 75% increase compared to vessels using traditional fossil-based fuels.
  • Retrofitting ships to accommodate these new fuels involves substantial costs, and retrofitting feasibility depends on a vessel’s age and the specific fuel chosen.

Investment Needs and Market Share

  • Converting a significant portion of the shipping fleet to ammonia or methanol-powered vessels demands substantial investment.
  • Retrofitting costs and operational considerations dictate that only relatively newer vessels are suitable, posing a challenge to fleet conversion efforts.


  • Despite the higher production costs of green methanol compared to ammonia, factors like safety considerations, CO2 sourcing challenges, and retrofitting costs are influencing shipping companies to favour methanol in the short term.
  • The scale-up of e-fuel production, sourcing of CO2, safety considerations, and significant investments required for fleet conversion pose substantial challenges that necessitate careful planning and policy support for the maritime sector’s decarbonization efforts.


Spread the Word