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April 15, 2023Global Market Snapshot: Sustainable Methanol
The green production of methanol is currently driven by the production of a hydrogen and carbon monoxide synthesis gas from renewable resources.
Methanol is one of the largest petrochemical markets by volume, and has become a feedstock for two of the other key petrochemical building blocks; ethylene and propylene.
The methanol industry has transformed itself over the last 15 years, and methanol is becoming an ever more versatile and important molecule. The use of methanol can be divided into two categories: chemical-related and fuel-related applications. In 2005, chemical derivatives (acetic acid, formaldehyde, and others) accounted for almost all methanol demand. More than a decade later, chemical derivatives comprised three-quarters of methanol demand as fuel end uses (e.g., MTBE, gasoline blending, biodiesel, and DME), represent the remainder of methanol consumption. Demand into olefins production, the fastest growing of the chemical end-uses’ markets, is now the largest single outlet for methanol, an end use that has only been in commercial operation since 2010. More than one-third of the demand in methanol-to-olefins is captive in coal-to-olefins plants, so it is not “seen” in the methanol market. Overall, the growth in chemical derivatives and new fuel uses are more than matching the effect of reduced MTBE demand.
Methanol’s importance, but also it is simplicity as a one carbon molecule, makes it a prime target for more sustainable production processes. If green methanol can be scaled up successfully, it raises the prospect of new demand applications where methanol can replace current fossil fuel applications. Even before the widespread commercial success of green methanol, there are experiments and small-scale applications exploring the use of methanol in order to offer lower emission alternatives even when fossil fuel based.
There are two broad routes to make methanol production ‘greener’ and more sustainable:
- Biomethanol
- e-Methanol
Biomethanol involves harnessing biomass feedstocks, such as agricultural waste, forestry residues or even landfill garbage to produce methanol. The feedstock is initially gasified to produce a syngas which is then converted into methanol via a methanol synthesis loop and purified via distillation. Commercial scale up has been difficult to achieve however, as unique feedstock preparation is crucial. Another significant hurdle is securing a sustainable feedstock source at a competitive cost level. Bio-feedstock costs vary significantly by country and by type.
Many bio-methanol projects have been announced, but most are in the planning or feasibility stage and construction has not yet started.
E-methanol involves harnessing wind, solar or hydro power to produce hydrogen via the electrolysis of water. This can then be reacted with a carbon source, such as captured carbon dioxide, to produce methanol.
There have been many announcements of plans to build e-methanol plants. Similar to biomethanol, they have been largely focused in Europe, but there are now more being planned in other regions. To date the largest e-methanol plant to come online is in China, however it is unknown whether the plant is yet operating at full capacity.
If green methanol can be scaled up successfully, it raises the prospect of new demand applications where methanol can replace current fossil fuel applications. Even before the widespread commercial success of green methanol, there are experiments and small-scale applications exploring the use of methanol in order to offer lower emission alternatives even when fossil fuel based. Some of the most promising include marine fuel, heating and fuel cells.
Marine fuel has long been touted as the next application to drive demand in the methanol market. Interest and progress has fluctuated over the years, and as deadlines for new maritime fuels approached in 2020, methanol had seemingly missed its chance with limited announcements from shipping industry players. Since the 2020 maritime fuels targets there has however been renewed momentum for greener methanol.
Find out more…
Market Analytics: Methanol - 2023 provides analysis and forecasts to 2045 of supply and demand of the global methanol markets. This analysis identifies the issues shaping the industry as well as provide demand, supply and net trade data for 40 countries.
Market Scenario Planning: e-Methanol - 2022 report provides NexantECA’s scenario forecast for e-methanol demand out to 2050 by key region and application (marine fuel, other fuel and chemical derivative). Scenarios forecast demand based on low, base and high assumptions whereby underlying policy, cost learning curves and adoption of e-methanol evolve in fundamentally different ways. As well as the scenarios, detail on the current situation of the market and key market drivers are provided.
This report is part of our new Market Scenario Planning program which looks at emerging products, market events and end-use industries where scenario forecasting provides more value due to the higher uncertainty associated with the subject. Scenarios are defined as low, base and high and are informed by NexantECA’s expert knowledge of petrochemical markets.
About Us - NexantECA, the Energy and Chemicals Advisory company is the leading advisor to the energy, refining, and chemical industries. Our clientele ranges from major oil and chemical companies, governments, investors, and financial institutions to regulators, development agencies, and law firms. Using a combination of business and technical expertise, with deep and broad understanding of markets, technologies and economics, NexantECA provides solutions that our clients have relied upon for over 50 years.
