Examining Methanol as an Alternative Marine Fuel for Indonesian Domestic Ships

Abstract

The analysis in hand aims to provide insight and to explore the future usage of methanol as an alternative marine fuel for domestic ships in Indonesia. An overview of potential application, analysis of resources availability, and stakeholder readiness/overall views on the topic are provided; related challenges are also identified and further examined. The potential performance of methanol as a fuel is discussed and evaluated via two different perspectives (the ship-owner perspective and the government one), through case studies of two passenger ships owned by the shipping company Pelayaran Indonesia (PELNI): MV. Labobar and MV. Gunung Dempo. As ship-owners tend to look very closely at the economic aspects, a feasibility study is performed by developing a combinatorial scenario approach based on the combination of economic measures of merit (NPV and payback period) along with a technical scenario (main-pilot fuel set up); a few of the variables included in the calculation are: ship age, ship productivity, and macro-economy conditions. Regarding the government perspective, the issues of environmental protection and policy compliance are evaluated by examining six emission types (NOx, SOx, CO2, CH4, N2O, and PM). Additionally, since there is a trade-off situation in government subsidies between the government and ship-owner interests, an optimization and sensitivity analysis is performed by utilizing a combinatorial scenario model to determine optimum methanol price and external variables influencing the decision to support further use of methanol in the Indonesian market. An important finding was that Indonesia has certain advantages/drivers to introduce methanol as marine fuel. However, methanol competitiveness is mainly dependent on ship productivity and the price differences between methanol and marine diesel oil (MDO). Additionally, policy analysis (through an optimization approach) could be one of the government options in order to determine the optimum condition in establishing methanol as marine fuel. Finally, short, medium, and long term recommendations are also provided as the basis for future consideration.