Development status and prospect analysis of green methanol industry

In 2023, green methanol suddenly jumped into the "window" and detonated the global investment market. Abroad, the EU Innovation Fund funded Sweden with 97 million euros for large-scale development of sustainable green methanol technology; Maersk, the global shipping giant, plans to invest 15 billion US dollars to build a green methanol production and filling network in the Suez Canal, and at the same time, it has signed a long-term green methanol procurement agreement with Goldwind Technology with an annual output of 500,000 tons to support its 12 methanol dual-fuel container carriers to achieve low-carbon operation. Domestically, central enterprises such as Datang Group and China Energy Construction Group have rapidly entered the green methanol industry by establishing joint ventures or strategic alliances. By the end of 2023, there were 24 green methanol projects planned and under construction in China, with a total annual production capacity of about 8 million tons and an investment of about 150 billion yuan.

1. The global green methanol industry enters the fast lane of development.

1.1 EU leads the green methanol certification standard

At present, there is no uniform standard definition of green methanol in the world. The general view is that the "green" of methanol depends on the properties of its raw materials. In 2021, the EU took the lead in releasing the world's first green methanol certification standard. The standard is relatively strict, which holds that only biomass-based methanol, green hydrogen and renewable carbon dioxide-based methanol (electricity-based methanol) can be recognized as green methanol, and emphasizes that renewable carbon dioxide can only come from biomass or direct air capture; Making methanol from carbon dioxide captured at the industrial discharge end is not a green category. China is actively exploring the establishment of its own green methanol standard, but it has not yet formed a mature and unified certification system.

1.2 Green methanol production capacity is expected to expand rapidly in the short term.

In 2023, the global annual methanol production capacity is about 180 million tons, of which the annual green methanol production capacity is only 500,000 tons, accounting for less than 1%. In 2028, the global annual methanol production capacity is expected to reach 200 million tons. According to the information of 131 biomass-based methanol and electricity-based methanol projects counted by the Global Methanol Industry Association (MI), it is estimated that the annual green methanol production capacity will rapidly expand to 19.5 million tons, accounting for about 10%, and the development prospect of green methanol production capacity is expected.

1.3 Electro-methanol will become the mainstream production mode of green methanol in the future.

There are three main technical routes for green methanol production at home and abroad-biomass to methane, bio-gasification and electricity to methanol. Restricted by the storage radius, business model and other factors, the large-scale supply of biomass raw materials is unsustainable. In the case of small demand for green methanol, compared with electric methanol, the cost advantages of biomass methane production route and biomass gasification route are relatively obvious, the industrial barriers are relatively low, and the demonstration application is relatively mature. The hydrogenation and synthesis process of carbon dioxide in electro-methanol is very mature. Considering comprehensively, with the decreasing cost of clean electricity in the future, the hydrogen production technology by electrolysis of water and the composite adsorption technology by direct capture of carbon source air are becoming more and more mature, in the long run, electro-methanol will become the mainstream production mode of green methanol in the future.

Globally, methanol is almost entirely produced from coal (China mainly uses coal as raw material to produce methanol) and natural gas, which account for about 35.2% and 64.5% of global methanol production respectively, while green methanol accounts for less than 1%. Influenced by raw materials, technical route, production capacity, product purity and other factors, the production cost of green methanol varies greatly.

There are some obstacles in the large-scale production of methanol from biomass. On the whole, although the global biomass resources are huge, it is not feasible to reduce the cost by promoting the large-scale production of methanol from biomass through the sustainable supply of raw materials.

The process of methanol synthesis from hydrogen and carbon dioxide, which is mainly based on thermal catalysis, is very mature, and the cost of methanol production by electricity depends largely on the acquisition cost of hydrogen and carbon dioxide.

The rapid development of renewable hydrogen sources has laid the foundation for reducing the cost of methanol production by electricity. Green hydrogen is gradually developing into a deterministic mainstream hydrogen production path. The annual output of hydrogen production from electrolyzed water is expected to increase exponentially from 40,000 tons in 2021 (accounting for 0.04% of the total hydrogen production) to 61.7 million tons in 2030 (accounting for about 34%); The cost of renewable electricity, such as wind energy and solar energy, has a certain competitive advantage, and there is still great potential for tapping in the future; The gradual improvement of utilization efficiency and economies of scale brought about by the technological innovation of electrolytic cells also help to reduce the cost of green hydrogen. Generally speaking, the rich and cheap renewable hydrogen source in the future is the main driving force for reducing the cost of green methanol.

The potential of direct carbon capture by air is the greatest, and there is a certain expectation of medium and long-term cost reduction. Direct air capture is aimed at decentralized, low-concentration carbon sources, with high energy consumption and low efficiency in the production process. The capture cost is about 200-250 USD/ton, which is 60% lower than that of five years ago, but still higher than that of centralized carbon sources such as coal chemical industry and natural gas, which is 20-40 USD/ton. Restricted by liquid, solid, electrochemical and other adsorption materials and technologies such as temperature change, pressure change and humidity change, it is difficult for direct air capture to meet the demand of carbon source for large-scale methanol production in a short period of time. Foreign scholars have controlled the cost of direct carbon capture by air at $94 ~ 232/ton through solid-state conversion technology in demonstration plants, and there are certain expectations for medium and long-term cost reduction. Biomass carbon source is affected by many factors such as sustainable supply of raw materials and imperfect supporting facilities, which is suitable for small-scale demonstration projects and has little potential for large-scale application.

1.4 Low-carbon transformation provides a guarantee for the application prospect of green methanol.

At present, marine fuel is the biggest application scenario of green methanol. In 2023, there were 298 new alternative (dual) fuel ships in the world, including 138 methanol alternative fuel ships, which was more than liquefied natural gas (LNG) alternative fuel ships for the first time, and far exceeded the 35 ships in 2022. From the actual effect of carbon reduction, whether it is to reduce the speed of navigation, energy-saving technical transformation and promote the application of shore power and LNG clean fuel to meet the ship energy efficiency indicators (EEXI and EEDI), it can basically meet the strategic goal of the International Maritime Organization (IMO) that the carbon emission intensity of the shipping industry will decrease by 40% by 2030 (compared with 2008). But in the long run, further fuel substitution is the only way for the shipping industry to achieve a 70% reduction in carbon emission intensity in 2050.

Limited by the safety risk of liquid hydrogen storage and transportation, liquid ammonia is not mature in the application technology of high-power and low-speed marine engines, and there is still a long way to realize large-scale commercial application of the two. If the economic problem of green methanol is effectively solved, it will become the most effective or even long-term substitute for green ammonia and green hydrogen before large-scale application in marine fuel field. Otherwise, the key technologies of green ammonia and green hydrogen brought by the accelerated pace of technological innovation may promote the transition of shipping industry from LNG fuel to green hydrogen and green ammonia directly.

Using renewable power such as wind power and photovoltaic power generation to prepare green methanol can be stored and transported in the existing liquid infrastructure, which not only reduces the transformation cost of energy infrastructure, but also effectively solves the problem of consuming huge renewable energy such as solar energy and wind energy.

2. The development of green methanol industry in the future is promising for a long time, but there is uncertainty in the short term.

2.1 EU green methanol certification standards are too strict, and it is too early to directly pursue "zero carbon".

In 2023, considering the practical factors such as decarbonization process and cost control, the European Union will no longer force biomass-based methanol and electricity-based methanol to be the only way of green methanol in the short term, but will also identify methanol prepared from non-renewable carbon dioxide with carbon emissions not exceeding 28.2 grams per megajoule captured by industry and thermal power. Nevertheless, the certification standard of green methanol in EU is still high, and most existing methanol preparation processes in China with "grey carbon+partial/complete green hydrogen" as the main route still need further carbon reduction to meet the certification standard.

The preparation process of green methanol is negative carbon emission, and the combustion process releases carbon dioxide. From the whole life cycle, green methanol belongs to "zero carbon" fuel. Combined with the implementation process of China's "double carbon" goal, it is too early to make large-scale investment in pursuit of "zero carbon" at this stage.

2.2 There may be a market risk of oversupply in the short term.

In 2028, the global annual production capacity of green methanol is expected to reach 19.5 million tons, including 8 million tons in China and 11.5 million tons abroad. According to the investment intensity and operation arrangement of shipping giants such as Maersk and CMACGM on methanol dual-fuel container ships, it is estimated that the consumption of green methanol in the shipping industry will be about 10 million tons in 2030. Under the background that the application scenario of green methanol is only limited to marine fuel substitution, and other application scenarios are not clear, and the certification standards have not been unified, geopolitical risks and other factors, the green methanol industry may have market risks of staged oversupply.

2.3 Shipping giants pay a very high premium for green methanol fuel, or it is unsustainable.

The European Union Carbon Emissions Trading System (ETS) has officially covered the shipping industry, and since 2024, carbon quotas have been imposed on the shipping emissions of large ships with a gross tonnage of more than 5,000 tons entering and leaving Europe. According to the EU carbon quota transaction price of 70 euros/ton and the unit price of green methanol of 7,000 yuan/ton, the unit energy prices of marine fuel oil and green methanol are 170 yuan/Ji Jiao and 315 yuan/Ji Jiao, respectively, and the latter is about twice that of the former. Under the same assumptions, if the unit energy price of marine fuel oil is to be reached, the price of green methanol should be reduced from 7000 yuan/ton to 3777 yuan/ton (the price of traditional methanol is about 2400 yuan/ton); If the price of green methanol remains unchanged, the two fuels will have the same unit energy price when the transaction price of EU carbon quota rises to 318 euros/ton.

Source: https://mp.weixin.qq.com/s/MeWk2qwk8qw_h0YrKe_4Uw