The growth of sustainable alternatives to traditional methanol production sources likely will shape the market over the next several years, industry leaders said this week at the Argus Methanol Forum.
Driven by low-carbon policies and regulations, the transportation sector — especially the marine fuels industry — could be a source of heightened demand.
"The aim is to be net zero by 2050 but [those solutions are] expensive today and one of the main challenges to build e-methanol or bio-methanol plants is a huge queue for these pieces of equipment that aren't available," Anita Gajadhar, executive director for Swiss-based methanol producer Proman, said.
Bio-based and e-methanol plants of commercial scale, like Proman's natural gas-fed 1.9 million metric tonne/yr M5000 plant in Trinidad and Tobago, are not ready today.
"But that's not to say 10 years from now they won't be there," Gajadhar added.
Smaller projects are popping up. Dutch fuels and gas supplier OCI Global announced plans last week to double the green methanol capacity at its Beaumont, Texas, facility to 400,000 t/yr and will add e-methanol to production for the first time. Production will use feedstocks such as renewable natural gas (RNG), green hydrogen and biogas.
The globally oversupplied methanol market will not get any major supply additions starting in 2024 until 2027. But that oversupply will not last long, Gajadhar said.
Global demand has slowed this year, driven by stagnate economic growth and higher interest rates, according to industry observers.
As much as half of methanol demand is tied to GDP growth, with total methanol demand estimates at 88.9mn t globally in 2023. This is essentially flat from 2022, but up from 88.3m t in 2021 and 87.7mn t in 2020, Dave McCaskill, vice-president of methanol and derivatives for Argus Media's consulting service, said.
Demand is not expected to rebound to 2019 levels of 89.6mn t until 2024 or 2025, he added.
The period of oversupply combined with lackluster demand places methanol in a transition period, Gajadhar said, which opens the door for sustainable feedstock alternatives to shape market growth.
Danish container shipping giant Maersk and French marine logistics company CMA-CGM announced earlier this week a partnership to drive decarbonization in shipping. The partnership seeks to develop fuel and operations standards for bunkering with alternative fuels. The companies will develop net-zero solutions, including new technology and alternative fuels.
Maersk has previously ordered dual-fuel methanol-powered vessels and CMA-CGM LNG-propelled vessels.
The demand for alternative feedstock-derived fuels is there, but the ability to scale-up such production lags. Certified lower-carbon methanol produced using carbon capture and sequestration — also known as blue methanol— can ramp up much more quickly, according to Gajadhar.
