With COP30 now underway in Belém, Brazil, it can feel as though the world is backsliding when it comes to curbing emissions. Since the last climate summit, major oil companies have scaled back their climate goals, the U.S. has cancelled billions in clean-energy grants, and even Bill Gates has called for a new approach to countering climate change. But those headlines don’t reflect the inexorable progress that is being made across a variety of clean energy sectors, even if the rate of growth in some areas may be slowing.
Some of the most striking developments underway at the moment are in the “hard-to-abate” sectors where governments, industry, and climate advocates appear to find common purpose. One notable example of this progress is the rise of e-methanol, a clean fuel designed to help decarbonize the transportation and chemicals sectors. While it has been around for decades, 2025 was a breakout year for the technology as it finally transitioned from pilot schemes and small-scale projects to the first commercial plants coming online.
What Is E-Methanol?
E-methanol, a type of renewable or green methanol, is a low-carbon alternative to conventional methanol, which is used as a chemical feedstock and fuel. Instead of being derived from fossil fuels, e-methanol is synthesized from captured or biogenic carbon dioxide and green hydrogen (hydrogen produced via electrolysis using renewable energy). With these inputs, e-methanol can achieve net-zero or, in some cases, net-negative carbon emissions over its lifecycle. E-methanol is distinct from but similar to biomethanol, which produces its hydrogen directly from biomass.
As it is liquid at ambient temperature and compatible with existing storage and transport infrastructure, green methanol is seen as a practical route to decarbonize both the chemicals industry and transport segments that are difficult to electrify.
The shipping industry, in particular, has emerged as an early adopter of green methanol, with over 60 methanol-capable vessels in operation, 300 more on order, and bunkering available at around 20 ports around the world.
The chemicals sector, which makes up roughly 70% of global methanol consumption, is a major demand source for green methanol. Roughly 35% of green methanol was consumed by the chemical and petrochemical industry in 2024, and major brand-name buyers include LEGO, Novo Nordisk, and SABIC. More than 70 of the world’s top 100 chemicals producers have committed to carbon neutrality by 2050, highlighting the growth potential in the green methanol space.
In aviation, synthetic methanol can technically serve as a precursor for sustainable aviation fuels (SAF), with companies such as ExxonMobil working on the technology. While the space is largely dominated by biofuels, methanol-to-jet represents a promising future market for e-methanol once it scales up.
The E-Methanol Breakthrough
While e-methanol has been pursued as an alternative fuel since the 1970s energy crisis and saw several pilot projects in the early 2000s, it wasn’t until the 2020s that it began to be considered as a credible clean energy solution.
Perhaps the first major breakthrough for the fuel came in November 2021 when Maersk issued a 10-year, €500 million green bond to fund vessels capable of using methanol. This move came on the back of the IMO 2020 sulfur cap coming into effect, which limited the sulphur content in the fuel oil used on board ships.
Over the next couple of years, regulation and funding milestones helped to accelerate the rise of e-methanol. In 2022, the U.S. Inflation Reduction Act was passed and included credits for both green hydrogen production and carbon capture. In 2023, the IMO tightened carbon-intensity regulations and revised its net-zero goals to accelerate the adoption of low-carbon fuels. At the same time, the EU implemented major reforms to its Emissions Trading System under the Fit for 55 package, increasing the pressure on the chemicals sector to shift toward greener feedstocks such as green methanol. Then, in 2024 and 2025, the EU further tightened regulations on ships arriving at European ports and strengthened carbon-pricing rules.
In this period, the world’s first methanol-enabled container vessel was christened, and Maersk formally ordered six more mid-sized dual-fuel methanol vessels. The future for e-methanol was looking increasingly bright, but financing and bringing sufficient supply online remained a major limitation.
The World’s First Commercial-Scale E-Methanol Plants
On Tuesday, the 13th of May, 2025, the world’s first commercial-scale e-methanol site began operations in Kassø, Denmark. The plant has a capacity of 42,000 tonnes per year of e-methanol, and its off-takers include Maersk, LEGO, and pharmaceutical firm Novo Nordisk. The project uses solar power from a neighbouring solar park for electrolysis and sources biogenic CO? from a local biogas plant.
Just two months later, a second e-methanol plant came online, this time in China. The project at Taonan, Jilin Province, built by Shanghai Electric, uses wind power for electrolysis and biomass conversion to produce e-methanol. This first phase of the project has a capacity of 50,000 tonnes per year of e-methanol, but its second phase is expected to boost that capacity up to 250,000 tonnes annually.
And those two projects are only the beginning.
3 Green Methanol Projects to Watch
Going forward, the project pipeline in this space is remarkable, with the Methanol Institute projecting that the world’s total renewable methanol capacity will climb to between 7 and 14 million tonnes by 2030. Of the e-methanol projects the institute is tracking, 23 have now passed feasibility and are either in the engineering phase or are already under construction. Of those projects, five are in the Americas, eight are in Europe, one is in Saudi Arabia, and nine are in Asia.
In China, the Liaoyuan Tianying project, which is currently under construction and projected to come online in 2026, is set to be the world’s largest green methanol plant with a capacity of 170,000 tonnes per year. The project is being developed by CNTY with Iceland’s CRI as the tech provider. It will use a combination of wind and solar for electrolysis and then combine the resultant hydrogen with biogenic CO2 from the direct combustion of biomass.
In Spain, the La Robla Green project is set to come online in 2028 with a capacity of 140,000 tonnes. As well as claiming to be Europe’s largest e-methanol plant, La Robla is unique for its integrated design, which includes both a biomass plant and a green hydrogen unit on site. The biomass plant, which will be run by Tresca Ingeniería using DP Cleantech technology, is set to be the world’s first green biomass plant with a negative carbon footprint. Meanwhile, the green hydrogen unit is set to be operated by Siemens Energy, and the e-methanol technology will be supplied by Johnson Matthey.
In Canada, StormFisher’s recent acquisition of the Varennes Carbon Recycling plant has set the stage for North America’s first large-scale e-methanol plant. The company will capture carbon from local emitters and produce hydrogen from hydropower for a total capacity of 72,000 tonnes of methanol per year. The acquisition of a struggling waste-biofuels project and its pivot to producing e-methanol marks a strong signal of confidence in the space. The plant, which is currently under construction, is slated to come online in 2028.
Headwinds Remain
Despite the excitement and progress in the green methanol space, there is still a long way to go before the green methanol movement truly becomes mainstream. To begin with, green methanol is still far from cost-competitive compared to fossil-fuel-derived sources. While prices are dropping, e-methanol was still two to three times the price of its fossil counterpart as of 2024, although those prices are expected to tumble as the industry scales. Furthermore, regulations like those implemented by the EU are increasing the cost of burning oil-based fuels.
As well as overcoming difficult economics, the broader clean investment environment has seen energy majors pulling back or altering commitments in the sector. Most damningly, Orsted scrapped its FlagshipONE project in 2024 due to slower-than-expected demand growth. Its partner in that project, however, has since picked it back up and is also committed not only to a FlagshipTWO project but last month announced the commercialization of its FlagshipTHREE project.
Just as with the broader energy transition, there may be doubts regarding the pace of development, but it seems the e-methanol sector is only going to grow from here.
By Josh Owens for Oilprice.com
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