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Government Mandates for Industries to Lower CO2 Emissions are Driving the Green Methanol Market
Published Date: 21 Sep 2022

Sustainable energy sources are becoming more & more important every day as climate changes rapidly. One of the extensively produced organic chemicals and a prominent raw material in the chemical industries worldwide, methanol, is pivoting from a carbon-intense chemical to an environmentally friendly solution. Unlike its conventional production that involves feedstock like coal or natural gas, the eco-friendly or renewable methanol is an efficient hydrogen carrier, which various industries may utilize. In addition, end customers can use it as fuel for mobility applications or for generating energy in fuel cells (DMFC, i.e., Direct Methanol Fuel Cell).

Having said that, renewable production of methanol has immense potential to transform different industrial operations & grey processes into eco-friendly solutions. With diverse applications, like as an energy carrier, energy storage, or maritime fuel, a flourishing growth of the Global Green Methanol Market is expected in the coming years, with around 4.9% CAGR during 2022-27. The most prominent drivers for the industry expansion are the emerging trends of sustainability worldwide and the already existing methanol market & its available infrastructure.

Moreover, the high energy density of green methanol, which makes it much more beneficial than liquefied hydrogen, especially in terms of long-distance transport and storing renewable energy for longer durations, is another crucial contributor to the industry's projected growth in the next few years. Besides, with strict norms in the maritime sector to minimize sulfur levels in marine fuels, many shipping companies worldwide are increasingly adopting renewable alternatives, i.e., another notable aspect that would augment the demand for green methanol in the years to come.

A Bright Future of Green Methanol as a Fuel in the Marine Industry

As the global marine industry is addressing numerous regulations to reduce its emissions, green methanol is emerging as an efficient & eco-friendly alternative to marine diesel. With massive carbon emissions & poor EAM (Ecological Assessment & Management), marine diesel-powered ships are refused entry to several ports in many countries as they do not comply with international climate targets.

Hence, major shipping companies are actively working on including methanol-driven vessels in their fleets or converting the existing ones to support dual fuel. With this, it is likely that the utilization of green methanol in this shipping industry will surge notably in the future. However, the extent of this surge is vague as investments will be based mainly on policies, which often change, just like its carbon-neutral targets. Although, long-term guidelines might enable the industry to invest significantly in procuring green methanol in the future.

Biomass as Feedstock for Renewable Methanol Production

While methanol is produced mainly from coal or natural gas, the production of its renewable variant relies on biomass feedstock (Municipal Solid Waste (MSW), agricultural waste, & forestry residues), captured CO2, and green hydrogen. As policy frameworks are directed at low-carbon solutions and corporations are implementing sustainability plans, green methanol solutions— bio-methanol (biomass-derived) & e-methanol (CO2- & green hydrogen-derived) are becoming increasingly popular.

Of both, bio-methanol production processes are more eco-friendly & cost-effective. As agricultural waste and forestry residues like leaves, woodchips, & branches are produced massively every year across several countries, a substantial amount of bio-methanol can be achieved without the need for additional agricultural land or hindering food availability or prices.

However, the high cost associated with bio-methanol production is a prominent barrier to the industry's expansion on a bigger scale globally. Industry experts are actively participating in finding ways to improve the conversion & treatment processes, which can gradually make bio-methanol available at affordable prices in the coming years and, consequently, aid in promoting the overall market growth.

Future Directions

It is evident from the facts above that green methanol holds immense potential to be used as a sustainable alternative to fossil fuels by both industries and end customers. However, many uncertainties still exist pertaining to its future demand & the economics of production. Across Europe, only a few green methanol plants are operating, but dozens of projects have been announced. Yet, it is unknown how they will change the market scenario once they become commercially available in the coming years.

It is likely that a few proposed green methanol projects across the region might substitute some fossil-derived methanol, while some may be for using it as fuel in the shipping industry across Europe, provided there's a strong demand.

Various shipping enterprises across Europe have started using methanol as fuel in their new fleets, and the existing ones are likely to get dual-fuel engines in the next few years. Hence, by increasingly adopting green methanol as a marine fuel, the shipping industry would be able to address international climate targets and reduce their carbon footprints, which, in turn, would bring lucrative opportunities for the key companies operating in the green methanol industry in the coming years.

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