Green methanol at its initial stage of development

China methanol production is mainly based on coal as feedstock, due to the fact that China is rich in coal resources, but lacks petroleum and natural gas. As of end-May 2023, China methanol capacity has reached 104.40 million mt/yr, and the capacity based on coal totaled 79.21 million mt/yr, accounting for 75.87%. During 2018-2022, the annual growth rate of methanol capacity fed by coal averaged at 6.54%.

In recent years, the route of methanol production based on carbon dioxide hydrogenation has make progress and it is called "green methanol". It uses electricity generated by renewable energy such as solar energy to electrolyze water to produce "green" hydrogen energy, and converts carbon dioxide into "green" methanol and other liquid fuels.

This technology is an effective means to reduce carbon dioxide emissions in coal-to-methanol, synthetic ammonia and other coal chemical industries, as well as thermal power generation, iron and steel, cement and other industries. It is of great strategic significance to promote the large-scale integrated development of renewable energy hydrogen production and coal chemical industry, realize the transformation of coal chemical industry to zero-carbon green chemical industry, and alleviate the problem of national energy security.

Economic benefits of green methanol:

(1) Improve the utilization efficiency of renewable energy. The production of methanol from surplus energy (electric power, surplus hydrogen, etc.) through a special process can avoid the waste of energy, and also the product is easy to transport and store. While improving the utilization efficiency of renewable energy, it can make economic benefits and reach carbon neutrality.

(2) Reduction of greenhouse gas emission. Compared with methanol production from traditional fossil energy sources, green methanol can relatively reduce carbon dioxide emissions by 4 tons per ton. Taking the annual production of 50, 000 tons of methanol as an example, it can directly reduce carbon dioxide emissions by 75,000 tons per year, 200,000 tons less compared with traditional coal-to-methanol.

Projects of green methanol in China

In Feb 2023, Anyang Shunli (jointly invested by Henan Shuncheng Group and Geely Technology) started the new 110kt/yr methanol and 70kt/yr LNG project. This is the largest green methanol production project based on carbon dioxide hydrogenation. In the future, there will be more plants producing green methanol.

At present, China's green methanol project is being carried out on a pilot basis in various places. Due to the high production cost and the initial stage of technology, the capacity is relatively small. IHS Markit survey shows that green methanol currently accounts for less than 1 per cent of the global methanol market. Even if all announced green methanol projects are completed and put into production on schedule, they will only be able to meet 50% of the potential demand for green methanol as fuel by 2027. However, with the introduction of relevant policies, green methanol is expected to have a certain competitive advantage before 2050.