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On Thursday, Danish energy giant Ørsted and shipping A.P. Moller-Maersk announced an agreement to jointly develop a groundbreaking U.S. Power-to-X facility for the production of renewable shipping fuels. A joint statement from the companies said the project represents a landmark in the green transformation of international deep-water shipping and will set the standard for future large-scale production of green maritime fuels.
Ørsted says it plans to develop develop a 675 MW Power-to-X facility on the U.S. Gulf Coast that will produce approximately 300,000 tons of e-methanol per year, which Maersk will offtake for a newly ordered fleet of 12 methanol-powered vessels. The facility will be powered by approximately 1.2 gigawatts (GW) of renewable energy from new onshore wind and solar PV farms. The biogenic carbon needed to produce e-methanol will be extracted through carbon capture at one or more large point sources.
The project is targeted to be commissioned in the second half of 2025, making it by far the most ambitious project globally producing e-methanol at scale and a driving force in the decarbonization journey of the maritime sector. Final investment decision could be made in late 2023.
The 300,000 tons of e-methanol are the largest potential offtake agreement for green fuels in the maritime industry ever announced, and it is a testimony to the action taken to shape green ocean transport by both Ørsted and Maersk. The agreement also marks Ørsted’s entry into the U.S. Power-to-X market, a new strategic market for the company as it seeks to construct 50 GW of renewable energy capacity by 2030.
“We commend Maersk’s clear and ambitious action, which has made the company a leader in the difficult task of reducing the climate impact of the maritime industry,” said Martin Neubert, Ørsted Deputy CEO and Chief Commercial Officer. “Partnerships with large offtakers of green fuels like Maersk, is an important part of Ørsted’s strategic journey, as we broaden our Power-to-X footprint across the world to become a global leader in renewable hydrogen and green fuels. The project with Maersk is our first in the U.S., and we look forward to help accelerating the U.S. Power-to-X market while creating local jobs and economic activity, just as we’ve done in the growing offshore wind industry in the U.S.”
“To transition towards decarbonization, we need a significant and timely acceleration in the production of green fuels,” said Henriette Hallberg Thygesen, CEO of Fleet & Strategic Brands, at A.P. Moller-Maersk. “Green methanol is the only market-ready and scalable available solution today for shipping. Production must be increased through collaboration across the ecosystem and around the world. That is why these partnerships mark an important milestone to get the transition to green energy underway.”
“The Gulf states have an abundance of cheap renewable energy resources, both solar and wind, making the region a natural location for large-scale production of green fuels, which we expect there will be a very large demand for in the U.S. going forward,” added Ørsted Onshore CEO Neil O’Donovan. “The Power-to-X project with Maersk will expectedly be powered by approx. 1.2 GW of new onshore wind and solar PV, which in itself represent a significant investment in the region, while also helping Ørsted reach its target of 17.5 GW of installed onshore capacity in 2030.”
The Power-to-X project in the Gulf Coast is the second green fuels collaboration between Ørsted and Maersk to date, and follows the (estimated) 1,300 MW Green Fuels for Denmark project in Copenhagen, on which which the two companies are partnering with other large offtakers. Ørsted and Maersk will continue to investigate opportunities within green fuels together, as Maersk works towards its 2040 net-zero commitment.
In all, Ørsted’s Power-to-X development pipeline consists of 11 projects, including the 70 MW FlagshipOne project in Sweden, which Ørsted is developing together with Liquid Wind. FlagshipOne is targeted to be commissioned in 2024 and could become one of the world’s first large-scale sustainable e-methanol facilities. In addition to the project pipeline, Ørsted has entered into several strategic agreements with a variety of partners.
