Economic Value of Methanol
Key Findings
• Regulatory Penalties: FuelEU Maritime and EU ETS impose substantial penalties on fossil fuel use, such as VLSFO. • Rising Costs: Additional regulatory costs for non-compliance with FuelEU Maritime targets increase each five years, for example from 39 euro/ton in 2025 to 353 euro/ton in 2035 and 1,997 euro/ton in 2050. • EU ETS Implementation: Regulatory costs under EU ETS are phased in from 40% in 2024 to 100% in 2026. With a 100 euro market price for EU emission allowances, the additional cost for VLSFO is 321 euro/ton. • Compliance Pathways: Options include using bio- or e-methanol, blends of fossil and sustainable methanol, and wind propulsion (only up to certain GHG reductions). Pooling ships to balance GHG intensity reductions is also possible. • Pathway Analysis: Both the use of pure bio- and e-methanol and blends with fossil methanol are viable compliance pathways.
This supports the sustainable methanol supply chain and leverages existing fossil methanol capacity during the transition. • Economic Viability: Bio- and e-methanol have significant economic value under FuelEU Maritime and EU ETS, suggesting that the regulatory frameworks could effectively encourage the transition to sustainable fuels in maritime shipping. • Maximum Prices: Based on the assumptions made in this analysis, the average maximum price for bio-methanol under FuelEU Maritime is 1,193 euro/ton from 2025-2050. For e-methanol, this is 2,238 euro/ton from 2025-2033 and 1,325 euro/ton from 2034-2050, reflecting a reduction in the reward for using RFNBO after 2033. Including EU ETS, these prices increase by 150 euro/ton for both bio-methanol and e-methanol. Conclusions
The analysis concludes that the FuelEU Maritime and EU ETS regulations create a level playing field for sustainable fuels like bio- and e-methanol. With significant penalties for using fossil fuels, vessel operators are incentivized to switch to sustainable methanol. For fuel producers, these regulations provide a stable, long term framework from 2024 to 2050, facilitating secure investment opportunities.
