Feasibility and Cost-Benefit Analysis of Methanol as a Sustainable Alternative Fuel for Ships

The amendment to MARPOL Annex VI, which limits the sulfur content in marine fuels to a maximum of 0.5 wt.%, came into effect in January 2020. This includes reducing sulfur oxide (SOX) emissions and establishing nitrogen oxide (NOX) emission standards (Tiers I, II, and III) based on the ship’s engine type and construction date. Furthermore, the regulations require oil tankers to control volatile organic compound (VOC) emissions and prohibit the installation of new equipment containing ozone-depleting substances. After a four-year exploration phase, global shipping companies still lack consistent evaluation criteria for the selection and use of alternative fuels, resulting in divergence across the industry. According to the latest data, methanol can reduce NOX, SOX, and particulate matter (PM) emissions by approximately 80%, 99%, and 95%, respectively, compared to traditional heavy fuel oil. Furthermore, green methanol has the potential for near-zero greenhouse gas emissions and can meet the stringent standards of Emission Control Areas. Therefore, this study adopts a cost-benefit analysis method to evaluate the feasibility and implementation benefits of two promising strategies: methanol dual fuel and very low-sulfur fuel oil (VLSFO). A 6600-TEU container ship was selected as a representative case, and the evaluation was conducted by replacing an older ship with a newly built one. The reductions in total pollutants and CO2-equivalent emissions of the container ship, as well as the cost-effectiveness of each specific strategy, were calculated. This study found that, in the first five years of operation, the total incremental cost of Vessel A, which uses 100% VLSFO, will be significantly lower than that of Vessel B, which uses a blend of 30% e-methanol + 70% VLSFO as fuel. Furthermore, compared to a scenario without any improvement strategies, the total incremental cost for Vessels A and B will increase by 69.90% and 178.15%, respectively, over five years. Vessel B effectively reduced the total greenhouse gas emission equivalent (CO2e) of CO2, CH4, and N2O by 24.72% over five years, while Vessel A reduced the CO2e amount by 12.18%. Furthermore, the cost-benefit ratio (CBR) based on total pollutant emission reduction is higher for Vessel A than for Vessel B within five years of operation. However, in terms of the cost-effectiveness of CO2e emission reduction, the CBR of Vessel A becomes lower than Vessel B after 4.7 years of operation. Therefore, Vessel A’s strategy should be considered a short-term option for reducing CO2e within 4.7 years, whereas the strategy of Vessel B is more suitable as a long-term solution for more than 4.7 years.