Over the past couple of years, I’ve reached the end of my first set of scenarios for marine decarbonization through 2100. My bets are on batteries for all inland and two-thirds of short-sea shipping, and biofuels for the rest. It took me years to work through the aspects of synthetic and biologically fossil fuel alternatives, publishing things like my 2019 assessment of Carbon Engineering’s intended plug-compatible synthetic fuels using CO2 from direct air capture. The first synthetic fuel workup I did in that assessment was for methanol.
Why is that relevant? Well, Methanex subsidiary Waterfront Shipping just sailed a ship across the Atlantic burning methanol. The company claimed it was carbon neutral, but I don’t buy its claims, or the assertion that methanol is a viable replacement marine fuel. Methanex, as I found out a few years ago when I was talking with them in their head office about a major IT transformation, is the 800-pound gorilla in methanol globally. More than any other vendor, Methanex sets the market price. Its business model is to mostly buy existing chemical plants in countries geographically close to major demand, convert them to turn natural gas into methanol, and avoid having to ship lots of methanol long distances. Clearly with its subsidiary Waterfront Shipping, the company also has at least some vertical integration.
Methanol is just an alcohol, although it’s not recommended that you drink it, or for that matter inhale it or get it on your skin. After all, it’s toxic and even absorption through the skin can cause permanent organ damage. It’s the simplest of the alcohols and is an interesting counterexample to the maxim, keep it simple, stupid. It’s an industrial feedstock for plastics, paints, car parts, and construction materials. It burns, of course, and is used in some applications where the burning temperatures and characteristics are suitable. Unsurprisingly, the world’s largest methanol producer has been promoting it as a vehicle fuel to supplement or even replace gasoline and diesel for years. You clearly don’t want to be pumping this stuff into your car, however, as it’s more problematic than gasoline, which, by the way, still sucks to breathe, ingest, or leave on your skin too. It is safer than ammonia too, another alternative marine fuel people are considering.
The global methanol market is about 170 million tons a year. The manufacturing process uses high temperature steam to reform natural gas into a synthetic gas which is then distilled to make pure methanol. Steam reformation has high CO2 emissions, and of course the methane in natural gas has a high global warming potential, and outside of best of class Norwegian facilities has a high upstream leakage rate. In the US the median leakage is about 3% of delivered methane, as an example. The methanol industry likes to assert that manufacturing methanol is relatively low carbon, at 20 grams CO2e per MJ or 400 grams CO2e per kg, but independent modern assessments put it at 110 grams CO2e per MJ and about 1.4 kg CO2e per kg methanol. So that’s problem one with methanol as a shipping fuel, or even as an industrial feedstock. It’s not nearly as bad as pure hydrogen, but still more CO2e to manufacture than is created of useful product.
And, of course, when you burn it, CO2 is released into the atmosphere. It only creates about 43% of the CO2 that diesel does when equivalent masses are burned, so that seems good. And as an alcohol it burns much more cleanly than diesel with a lot fewer pollutants, so that seems good too. And it’s a liquid at room temperature, and in fact at any temperature range that it’s likely to be used as a fuel on earth or sea, which is also a useful characteristic.
But there’s a catch there, as well. The energy density by mass is lower as well, with about 45% of the energy density of diesel. So when you burn it, you have to burn over twice as much to get the same energy. And that means that burning it results in virtually the same CO2 as diesel, about 97%. Doesn’t seem so good after all, does it?
And methanol is about the same price as diesel per gallon or liter in normal times, about $1.80 per US gallon or $0.48 per liter, although spiking recently with the energy crisis. At 45% of the energy density, you need more of it, so the actual cost for the equivalent of diesel is about $4.00 for the equivalent of a gallon and about $1.07 for the equivalent of a liter. More than doubling the price of fuel seems a bit problematic, and that’s for the cheapest form of methanol, stuff that’s produced from natural gas with the atmosphere used as an open sewer. Everything lower carbon costs more, sometimes a lot more.
Let’s take the Carbon Engineering case study linked above that I did in 2019. I worked up the base costs of methanol from DAC CO2 and electrolyzed hydrogen then. At the time, I used data with an optimistic price per kg of green hydrogen of US$5 at large scale. Given work I’ve done on green hydrogen, it can be green but it won’t be cheap. I project that wholesale it will likely be in the $6-$8 per kg range, and so the $5 is at least in the ballpark, unlike the absurdist projection of $1 per kg that some fantasists are using. To paraphrase Michael Liebreich from our discussion this past week, if the experience curve applies bet on it, but if you have to break the second law of thermodynamics, don’t.
The math in 2019 worked out to synthetic methanol made from green hydrogen being 2.5 times the bulk cost to purchase methanol when that commodity was at its most expensive. That’s before adding distribution, marketing, administration, and profits. Yes, synthetic methanol made with green hydrogen is likely 3-4x the most expensive case for basic methanol prior to the 2022 natural gas price spikes. As a replacement marine fuel, things are looking worse and worse.
It’s easy to see why Methanex would love methanol to be a new shipping fuel. If my projections for marine shipping fuels which can’t be electrified are in the ballpark, perhaps 150 million tons of bunker fuel energy has to be replaced at peak and 90 million tons annually in 2100 (16,000 tons of fuel for trans-Pacific freight liners aren’t going to be replaced by batteries this century, in my opinion). At 45% energy density, that’s about 330 million tons of methanol as a potential market just for shipping. And remember, the current global methanol market is only about 170 million tons. If methanol becomes the fuel of choice, Methanex as the largest global manufacturer stands to see its volumes at least triple. And, of course, it won’t be selling gray methanol, so it will have a lot more costs and will be passing those on with profit to its customers, so a much bigger growth in revenue.
The cost workup of basic methanol and green methanol should make it clear that this isn’t a likely pathway. 2.2 times the volume of fuel for the same distances cuts into cargo load, and at multiples of the cost of bunker fuel, you get a basic economics equation which looks very bad per ton of freight. With the toxicity, these are the reasons my projections don’t give methanol a marine market in the future.
But there are other pathways to lower carbon methanol. Methanex claims that the methanol in its demonstration crossing was carbon neutral. The way that they counted that was interesting, but unlikely to withstand much scrutiny. What the company did is source biomethane that it claims would have been vented to the atmosphere for part of the feedstock for its methanol manufacturing process. Then it claimed the benefit of the high global warming potential methane not being vented but instead turned into methanol as a carbon win, at a lowball 100-year GWP of 25 times that of CO2 when IPCC 6 has it at 29.8. Then they mixed the biomethane with natural gas, reformed the mixture into syngas, and distilled that into methanol.
Even given their ratio of 25 to one for methane to CO2, that probably means they mixed 4% to 5% biomethane with natural gas. This isn’t a win, it’s greenwashing. At that ratio of biomethane to natural gas, of course, the resulting methanol isn’t much more expensive than the nasty gray methanol. Which is to say well over doubling the cost of fuel, which was already unlikely to be tenable.
As I said to the Redefining Energy hosts, European investment bankers Laurent Segalen and Gerard Reid, about their interview with a European biomethane generation leader in episode 87 of their podcast, biomethane is a climate change problem. Job one is to reduce emissions of it as much as possible through food supplements and the like. If job one is turning it into an energy commodity, we have a problem, as we will then have every small farm feeding biomass to biodigesters to make methane instead of burning it, burying it, or putting it in better biofuels processes. That would create an incredibly leaky and dispersed industry that spews high global warming potential methane at a tremendous rate. Intentionally maximizing biomethane is the exact opposite of a rational course of action. There’s unavoidable biomethane and we have to deal with that, but cow burps, manure emissions, rice emissions, and crop burning have to be minimized, not maximized.
Methanex isn’t the only company betting on methanol, although it’s certainly easy to see its motivations. As Lynn Loo, CEO of the Global Center for Maritime Decarbonization and I discussed recently, Maersk is big on green methanol as well. The company has bought several dual-fuel ships which could burn green methanol if they could source it in sufficient volumes, and signed several sourcing agreements with firms promising to build green methanol capacity. When I assessed their initial announcements in 2021, I put the increased fuel costs at four times that of diesel. At the time, they’d committed to purchase green methanol sufficient for half of one journey for one of the eight ships once a year, well under 1% of the annual fuel requirement. They’ve bought more ships and committed to more green methanol since, but the ratio hasn’t improved that much.
Meanwhile, plug-compatible biofuels which are increasingly carbon neutral and will trend rapidly to full carbon neutrality with agricultural changes and which have eight feedstock pathways when stalk cellulosic alone is sufficient, are only about 30% more expensive than fossil fuels. Oh, and they have exactly the same safety and operational characteristics as fossil fuels used today, have higher energy density, and burn a bit more cleanly. Cheaper, simpler, more convenient, safer, and actually having an economical pathway to carbon neutrality. Synthetic ammonia, another marine refueling contender, has the same problems as methanol, by the way, except that it’s even more hazardous to human health, especially when exposed to water.
The interest in methanol as a shipping fuel leaves me scratching my head. There’s no way to square this circle. The methanol process globally at 170 million tons is emitting in the range of a quarter of a billion tons of CO2e annually. Methanol is a climate problem to be cleaned up, not a decarbonization solution for shipping.
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