METHANOL PRODUCTION IS TURNING GREEN AND SHIPPING IS TAKING NOTE

Economics of methanol production

The pricing of sustainably produced methanol means that its uptake as a bunker fuel will likely need the social and political mandate that is already building towards 2030 and 2050 deadlines. A technology transition will also be required for greener methanol, and it will be required at scale. A recent report, Innovation Outlook: Renewable Methanol by the International Renewable Energy Agency (IRENA) and the Methanol Institute recognises this but maintains a positive outlook because of the many benefits methanol has over competing future fuels.

As a marine fuel, methanol emits no sulphur, very low particulate matter and, according to data from MAN Energy Solutions, it results in carbon dioxide emissions around 20% lower than conventional marine fuel oil. To meet IMO NOx Tier III requirements, methanol can be blended with water, negating the need for expensive exhaust gas after treatment. It is also miscible in water and readily biodegradable, characteristics that the Methanol Institute says make it ideal for use in polar waters.

“Methanol provides considerable retrofit potential as an IMO compliant bunker, being very close to a drop-in fuel for most 2 or 4-stroke marine engines. As such, some vessels may be cost effectively repurposed, extending their useful lives in the process,” says Chris Chatterton, COO of the Methanol Institute. “Methanol’s share of the marine market may be difficult to predict today, but it seems that it will steadily increase the closer we move to 2030 as experience with it as a compliant fuel is shared, pricing visibility is maintained and availability is proven up.”

The cost of producing fossil-fuel based methanol is currently in the range US$100-250, and it is already a competitive option, at least for Emission Control Areas, states the IRENA/Methanol Institute report. By 2050, the cost of bio-methanol (produced using waste biomass streams) could be US$220-560, and the cost of e-methanol (produced using green hydrogen and CO2 captured from renewable sources) could be between US$250-630 per tonne.

It’s still not clear how methanol prices will compare to key competitors such as hydrogen and ammonia, but it is likely to be cheaper to move, store and to repurpose existing infrastructure to accommodate its use as a bunker fuel. Ammonia is likely to take five to 10 years to be cost competitive and available at scale for shipping. For hydrogen, it will probably take 15 to 20 years.

Supply/demand balance

Current global demand for methanol at close to 100 Mt per year and growing. The report estimates that by 2050, there could be 135Mt of methanol produced from biomass, 250Mt produced from green hydrogen and captured CO2 and 115Mt from fossil fuels. Demand from land and marine transport will be a key driver for the production of renewable methanol due to increasing regulation of GHG emissions.

The top five methanol producing countries are China, Saudi Arabia, Trinidad and Tobago, Iran and Russia. Methanol (CH3OH) is typically produced from fossil-fuel based natural gas by reforming the gas with steam to produce syngas (hydrogen and carbon monoxide) and then converting and distilling it to produce methanol (steam methane reforming).

Less than 0.2Mt of renewable methanol is produced annually, mostly as bio-methanol. Green production alternatives include using the pyrolysis of biomass to produce the syngas, the use of electrical heating from renewable power sources for the energy-intensive reforming step or the auto-thermal reforming of methane where an extra exothermic step, typically partial oxidation, is used to generate the necessary heat to complete the reformation.

Producer BASF, for example, is now producing methanol as a biomass balanced product, replacing the fossil resources needed with biogas or bionaphtha. This means that BASF reduces greenhouse gas emissions by at least 50% compared to methanol produced from fossil raw materials.

Methanex, the world’s largest producer of methanol, is currently involved in a number of green methanol initiatives including in Iceland where the company has invested in Carbon Recycling International (CRI). CRI operates the world’s first renewable methanol plant which uses emissions-to-liquids technology, converting renewable energy and recycled CO2 emissions to renewable methanol. In Canada, Methanex produces low-carbon methanol through sequestration and injection of CO2 into the production process.

Greener production routes

A study led by the University of the West Indies evaluated the cost and sustainability of multiple different future technologies for producing methanol. The researchers found that both pyrolysis and auto-thermal reforming (ATR) were the premiere climate-smart choices for production when based on circular CO2 utilisation and storage. ATR proved to be the least energy demanding technology, mainly due to the high energy recovery from the partial oxidation that powers the reformation.

Solar-powered electrolysis was also a sustainable solution, but one that was determined to be significantly less profitable than pyrolysis. “The problem with renewables is the economies of scale issue,” says Dr Keeran Ward, study co-author. “Although the technology is getting cheaper, it can’t compare with large scale or even normal scale production capacity. For example, a 5,000 MTPD methanol plant requires about 50 tonnes/h of hydrogen while large scale electrolysis can produce 50 tonnes/day.”

He foresees a gradual transition away from cheaper, non-sustainable fossil fuel-based production, although ATR technologies are already mature enough for new projects. “And it has been shown that ATR is cheaper than steam methane reforming at large scale production capacities (5,000MTPD and higher), so logically it will be the winner.”

Methanex also considers it the most economically viable technology when there is excess hydrogen from the purge gas of its existing steam methane reforming plants. The company is developing a project in the US based on ATR.

Construction of a growing number of renewable and bio-methanol plants have been announced globally including in China, the US and numerous EU states, and for e-methanol, new production can be readily sited close to renewable power capacity, with access to both water and CO2.

This significantly broadens the potential for new production hubs. For example, in January, Germany-based energy and chemical provider Mabanaft and Chile-based Highly Innovative Fuels (HIF) announced a Memorandum of Understanding in relation to the purchase and sale of up to 500 million litres of carbon neutral e-fuels per year from HIF’s projects located within Chile including a project that will use wind power to produce hydrogen which will be combined with CO2 extracted from the atmosphere to produce methanol. The methanol will then be converted into gasoline.

Swedish energy supplier Övik Energi is providing access to one of its biofuel-based energy facilities to Sweden-based Liquid Wind so that the facility’s carbon dioxide emissions will be captured and combined with renewable hydrogen to form methanol using wind power. Once operational in 2024, the fuel facility will upcycle 70,000 tons of CO2 into 50,000 tons of carbon neutral fuel annually and make it available as a shipping fuel.

Liquid Wind’s plant will include technology from partners such as Axpo, Carbon Clean, Haldor Topsoe and Siemens Energy. Having secured crowdfunding partners in Europe, Liquid Wind is now crowdfunding in Canada, a country it says could be a prime location for e-fuel production, as it is growing in both hydrogen and carbon capture industries. Liquid Wind is planning 500 facilities by 2050, providing 25 million tons of fuel.

Haldor Topsoe has announced the construction of a facility to produce solid oxide electrolyzers (SOEC) with a total capacity of 500MW per year with the option to expand to 5GW per year. With Topsoe’s SOEC electrolyser, more than 90% of the renewable electricity that enters the electrolyser is preserved in the green hydrogen it produces, compared to around 70 % for alternatives such as PEM and alkaline electrolysis technologies. The high operating temperature of SOECs offers more favourable thermodynamics and faster kinetics, and the technology uses abundant raw materials such as nickel, zirconia, and steel.

The SOEC technology can be thermally integrated with a range of chemical synthesis processes enabling the efficient production of future fuels such as methanol and ammonia. The company says that electrolysis technologies play a central part in power-to-X solutions, and to meet the future needs for decarbonization globally, electrolysis technologies must be deployed at a massive scale.

Methanol as marine fuel

Methanol is already available in around 100 ports around the world and is being used on around 20 large ships. There is more coming, with Proman Stena Bulk expecting to take delivery of a methanol-fuelled 49,900dwt vessel in early 2022. Waterfront Shipping Company, a wholly-owned subsidiary of Methanex, has announced eight new methanol fuelled dual-fuel ships to be built at Hyundai Mipo Dockyard and delivered between 2021 and 2023 in partnership with Marinvest, NYK, Meiji Shipping, KSS Line and Mitsui O.S.K. Lines.

Fredrik Stubner, Director Ship Management at Marinvest Shipping, says it is difficult to predict the future economics of using bio-methanol and e-methanol. “What will the carbon taxes be? What incentives will contribute towards paying a premium for de-carbonized fuels? With stricter regulations and the cost to comply with them, it is expected it will tilt the balance in favour of greener solutions.”

He says that LNG is a cheaper fuel source, but the cryogenic technology required is expensive compared to methanol, a stable liquid at ambient temperature that is easy to store onboard. “I can’t say methanol will be a winner, but it is definitely one very good alternative. One has to keep in mind that the alternative greener fuels have less energy value, meaning larger amounts are required to meet the required cruising range for a specific vessel type and trade. So how to store the fuel whilst maintaining an equivalent cargo volume as before needs to be considered.”

A white paper from Chevron Marine Lubricants notes that a vessel would need to burn about twice as much methanol to produce the energy equivalent of MGO. This raises concern about the size of bunker tanks, but as it is biodegradable, methanol can be stored in ballast tanks in some cases. As a low flashpoint fuel, there are fuel system design requirements such as double-walled piping to the engine, but the white paper concludes that the premium for upgrading a newbuilding to be dual-fuel methanol is typically less than five percent.

Maersk’s methanol-fuelled liner

A.P. Moller – Maersk is accelerating its efforts to decarbonise with the planned launch of the world’s first carbon neutral methanol-fuelled liner in 2023 – seven years ahead of its initial 2030 ambition. However, a spokesperson for the group says: “At the moment, there is no at-scale production of carbon-neutral e-methanol or sustainable bio-methanol with net-zero emissions across the lifecycle. There are a number of pilot projects and projects under development, and we are engaging with these projects so that they can advance to ensure we have carbon-neutral fuel available by the start of the feeder operation.”

One project is a partnership with Copenhagen Airports, DSV Panalpina, DFDS, SAS and Ørsted for the development of a hydrogen and e-fuel production facility in Copenhagen which could start producing hydrogen by 2023 and methanol by 2027. When fully scaled-up by 2030, the project could deliver more than 250,000 tonnes of sustainable fuel annually. Production would potentially be based on a total electrolyser capacity of 1.3 gigawatts, making it one of the world’s largest facilities of its kind, and a large-scale supply of renewable electricity could be obtained from offshore wind power produced at Rønne Banke off the island of Bornholm.

Investing in the methanol feeder is anticipated to stimulate development further. “If we – through commitment from customers – can create a real market at a reasonable price point, we believe that the combined effort and collaboration of developers, manufacturers, financers and carriers can accelerate the supply quite fast.”

For Stuart McCall, Head of Global Marine Fuel, Market Development at Methanex, it too early to tell what production volumes from new sources will be in 2050 with any degree of certainty. “All we can say at this stage is that the green methanol market, like most alternative fuels, is small but growing.”

The most important future development, he says, “is simply to encourage the shipping industry to use the dual-fuel technology we have today to start the transition to a lower-carbon economy. We can’t let perfect get in the road of good. Conventional methanol will immediately offer up to a 15% reduction in in-sector CO2 as well as complying with the strictest air emission standards in place today. Methanol dual-fuel technology is proven; it’s globally available; it’s cost-competitive with conventional fuels and is lower emission. We just need regulations to encourage the use of cleaner fuels. Methanol is also future-proofed as it offers a clear pathway to 2050 decarbonization goals.”