Methanol: Transitioning From Grey to Carbon-Negative/Green

The white paper “Scaling Up Hydrogen: The Case for Low-Carbon Methanol,” co-authored by BloombergNEF and the Climate Technology Coalition, reported that low-carbon methanol is poised to become a significant source of demand for clean hydrogen in the near term. It shows how hydrogen can be used to decarbonize the methanol industry. The maritime industry’s role is key for this transition away from carbon-positive (grey) methanol’s current dominance, and to remove its contribution to global CO₂e emissions.

To decarbonize methanol, the renewable green methanol production options are:

• bio-methanol: is carbon-neutral because the CO₂ released during its combustion is roughly equal to the CO₂ absorbed by the source plants during their growth. It is produced from biomass or biogenic waste materials e.g. agricultural waste, forestry residues, municipal solid waste. The gasification process converts the feedstocks into syngas which then produces bio-methanol through the conventional methanol synthesis.
• e-Methanol: is carbon-neutral when made using captured CO₂ and carbon-neutral (or green electrolysis) hydrogen. e-Methanol is carbon-negative when made using feedstocks bio-CO₂ (captured from bio-genic in contrast to industrial sources) and carbon-negative hydrogen (due to atmospheric CO₂ being permanently removed from the atmosphere, usually as bio-char or carbon powder). Conventional methanol synthesis is also used here.

e-Methanol lags in cost parity with its carbon-positive variant, due to the higher cost of carbon-neutral (electrolysis) hydrogen. However, carbon-negative (plasmalysis) hydrogen has narrowed this cost gap, as it can already reach cost parity with blue hydrogen (grey hydrogen production with added CO₂ capture).

Regulations from the European Union (EU) and the International Maritime Organization (IMO) are pressuring the maritime industry to adopt cleaner fuels. Presently, 225 methanol dual-fuel ships had been ordered and is projected to increase further. Thus, demand could outstrip the currently planned supply pipeline of clean methanol by 2028.

Conversely, the chemicals sector, which is the largest consumer of grey methanol, is slow to adopt low-carbon alternatives due to a lack of incentives.

The report identifies that decarbonization based consumption mandates and supply-side incentives, are both necessary for meaningful business decarbonization to succeed. At the same time, clear regulatory frameworks need to be in place to give producers and buyers the certainty needed for long-term supply contracts.