Methanol has a wide range of uses including creating plastics, paints, and construction materials as well as being used as a fuel for transport.
Methanol production traditionally uses natural gas, but as the world races to reduce emissions there is a growing opportunity for green methanol.
Arguably the biggest growth opportunity for green methanol is as a new fuel for the shipping industry, an industry that is already looking to aggressively decarbonize.
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Methanol is widely used around the globe, with industrial applications for plastics, paints, car parts, and construction materials. It can also be used to fuel cars, trucks, buses, ships, fuel cells, boilers, and cooking stoves. While the fossil fuel-produced methanol industry is already well established, there is significant room for growth in green methanol. With governments and private companies racing to decarbonize, the production of green methanol could greatly support these aims. While greenmethanol is in the nascent state of development, several countries worldwide have already begun to invest in green methanol operations as part of a green transition, including India, Australia, and Egypt.
At present, most of the world’s methanol continues to be produced from carbon dioxide using natural gas, which releases carbon emissions. Some countries, including China, continue to use coal for methanol production, causing even higher emissions. The production and use of traditional methanol results in approximately 165 million mt/year of carbon emissions, or about 0.3% of the world’s total. But now, several companies worldwide are launching green methanol operations to support the green transition being undertaken across a wide range of industries.
Green methanol is methanol that is produced with little to no greenhouse gas emissions, typically using renewable energy feedstocks. Some clean energy sources include sustainable biomass, producing biomethanol, or captured carbon dioide and green hydrogen, producing e-methanol. As various industries look to decarbonize their operations, from manufacturing to transportation, they will require a diverse range of green fuels – including methanol – to achieve their transition away from fossil fuels. However, to date, producing green methanol is much more expensive than grey methanol.
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Analysts at S&P Global Commodity Insights stated: “Similar to ammonia, the international longer haul fleets will benefit most [from green methanol] but the infrastructure and scalability is holding this fuel back.” They added, “This fuel has potential and S&P Global believes it could have a good proportion of the alternative fuel landscape.”
Despite the underdevelopment of the green methanol industry at present, the market is expected to grow substantially over the coming decades. Green methanol will be used for a variety of applications, but the biggst market growth is expected to be seen in the maritime industry, which will gradually shift to using renewable fuels. Global methanol demand stood at around 88 million mt in 2022 and is expected to have a CAGR of 3% over the next five years. According to IRENA, green methanol production could increase to 250 million mt of e-methanol and 135 million mt of biomethanol by 2050.
Several countries around the globe are already developing their capabilities and preparing various industrial and transport hubs in anticipation of this rise in demand. This month, in India, the Minister for Ports, Shipping, and Waterways, Sarbananda Sonowal, announced the Harit Sagar Green Port Guidelines. These support the government’s Zero Carbon Emission Goal by 2070. The guidelines encourage the adoption of green energy sources in port operations, as well as focus on the development of storage, handling, and bunkering capabilities for green fuels, including green hydrogen, green ammonia, and green methanol.
Australia has also highlighted its bunkering potential with the Port of Melbourne having joined a consortium and signed a MoU feasibility study on green methanol. The project will assess the potential for transporting green methanol from production sites to the port for storage and bunkering services. If the study is successful, the port could become a ship refueling hub, bringing green methanol produced in Tasmania and western Victoria to use in shipping. The Executive General Manager at the port, Shaun Mooney, stated: “There has been a growing trend, almost a tsunami, in the interest for green methanol as a future fuel.”
The members of the consortium include ABEL Energy, which is currently constructing a green hydrogen and methanol plant in Tasmania; HAMR Energy, which is building a green methanol plant in Portland, Victoria; the Danish shipping group Maersk and its towage subsidiary Svitzer; the French-owned shipping line ANL; and the bulk liquids storage group Stolthaven Terminas.
Meanwhile, this month, in Egypt, the Alexandria National Refining and Petrochemicals Company (ANRPC) signed an agreement with Norway’s Scatec to develop the country’s first green methanol production project. The plant will cost around $450 million to construct and will be located in the Damietta Port. The facility is expected to produce 40,000 tonnes of green methanol annually, once in operation, which could eventually expand to 200,000 tonnes a year. The site will include renewable energy operations, including at least 40 MW of solar power and 120 MW of wind power. It will also have a 60 MW capacity green hydrogen analyser. A seawater desalination plant will also be developed, as well as green methanol production and storage sites.
With the global demand for green methanol set to increase significantly over the coming decades, thanks to its wide application potential, production of the fuel is expected to rise rapidly. With several countries beginning to develop their productio capabilities and prepare their ports for storage and bunkering, the competition is now on to become a major green methanol producer.
