COP30 and the Future of E-Methanol
As COP30 unfolds in Belém, Brazil, it’s hard not to feel like we’re regressing in our efforts to combat climate change. Since the previous climate summit, there have been significant setbacks. For instance, major oil companies have dialed back on climate commitments, the U.S. has canceled billions in clean energy subsidies, and Bill Gates himself has called for new methods to tackle climate issues. Yet, despite these headlines, progress is still evident in various clean energy sectors, even though some growth rates are plateauing.
Interestingly, a lot of movement is happening in areas that are typically resistant to change. One standout development is e-methanol, a clean fuel aimed at decarbonizing both the transportation and chemical sectors. This technology, while not new, is approaching an important milestone in 2025 when we should see the first commercial plants move beyond pilot projects.
What is E-Methanol?
E-methanol, also referred to as renewable or green methanol, serves as a low-carbon substitute for traditional methanol, which is commonly used in chemicals and fuel. Unlike conventional methanol sourced from fossil fuels, e-methanol is created from captured carbon dioxide and green hydrogen—generated via electrolysis with renewable energy sources. This process allows e-methanol to not only achieve net-zero emissions but, in some cases, even net-negative emissions throughout its lifecycle. Although similar, it’s different from biomethanol, which derives hydrogen directly from biomass.
Being a liquid at room temperature and easily integrated into existing storage and transport systems, e-methanol is viewed as a viable option for decarbonizing sectors, especially those that are tricky to electrify, like shipping and chemicals.
Speaking of shipping, this industry has been quick to embrace green methanol, with over 60 vessels currently operational and around 300 more on order, all able to refuel at approximately 20 ports worldwide.
What’s more, around 70% of global methanol consumption now comes from green methanol. By 2024, about 35% of this green product will be utilized by major chemical and petrochemical companies, including well-known names like LEGO and Novo Nordisk. Notably, over 70 of the top 100 chemical producers are aiming for carbon neutrality by 2050, which bodes well for the future of green methanol.
In aviation, e-methanol is also aspiring to play a role as a precursor for sustainable aviation fuel, with companies like ExxonMobil looking into it. While biofuels currently dominate the market, converting methanol to jet fuel could become a big opportunity if the industry scales up.
E-Methanol Breakthrough
The push for e-methanol as a fuel alternative began in earnest during the energy crisis of the 1970s, but it took until the 2020s for it to be viewed as a reliable clean energy option. One of the significant leaps forward happened in November 2021 when Maersk issued a €500 million green bond, aimed at financing methanol-powered vessels. This was, of course, against the backdrop of the IMO 2020 sulfur limit that aims to reduce sulfur content in marine fuels.
Recently, regulatory changes and funding initiatives have bolstered the expansion of e-methanol. The U.S. Inflation Reduction Act passed in 2022 provided credits for both green hydrogen production and carbon capture. The IMO tightened its net-zero targets in 2023 to boost low-carbon fuel adoption. Concurrently, the EU has introduced reforms in its emissions trading system, increasing pressure on the chemical sector to adopt cleaner inputs such as green methanol.
During this transition phase, the world’s first methanol-capable container ship debuted. Maersk has since ordered six additional dual-fuel methanol containers. While the outlook for e-methanol appears promising, the challenges of funding and scaling up production continue to loom large.
World’s First Commercial-Scale E-Methanol Plant
The world’s first commercial-scale e-methanol facility opened on May 13, 2025, in Casso, Denmark. With a production capacity of 42,000 tons per year, its clients include major companies like Maersk, LEGO, and Novo Nordisk. This plant uses solar energy for electrolysis, utilizing CO2 sourced from a local biogas facility.
Just two months later, a second e-methanol plant became operational in China, built by Shanghai Electric Power in Jilin province. This facility uses wind energy for electrolysis and to produce e-methanol from biomass, starting with a capacity of 50,000 tons per year, which could eventually rise to 250,000 tons.
These two projects mark just the beginning of an expanding field.
Three Green Methanol Projects to Watch
Looking ahead, there are several exciting projects in the pipeline according to the Methanol Research Institute. Global production of renewable methanol is projected to double from 7 million tons to 14 million tons by 2030. Of the e-methanol projects currently tracked, 23 have made it past feasibility studies and are making headway in engineering or construction. These projects span across the Americas, Europe, Saudi Arabia, and Asia.
For instance, in China, the Liaoyuan Tianying project is set to become the largest green methanol plant globally with a projected capacity of 170,000 tons annually, expected to commence operations in 2026. Meanwhile, in Spain, the La Lobra Green project is aiming for a 140,000-ton capacity by 2028, while also featuring an integrated design incorporating biomass and green hydrogen units. Canada’s StormFisher plans to establish North America’s first large-scale e-methanol plant by 2028, capitalizing on local emitters for carbon capture and utilizing hydroelectric power for hydrogen production.
Headwinds Remain
Despite all this optimism and forward momentum, the shift toward green methanol has challenges. For one, it isn’t quite cost-competitive with fossil fuel derivatives just yet. Although prices are dropping, e-methanol is still projected to be 2 to 3 times higher than fossil fuel prices as of 2024. Regulations introduced by the EU may also further increase costs for petroleum-based fuels.
On top of this, the broader investment climate for clean energy has seen some major players retreat from their commitments. A notable example is Ørsted, which scrapped its FlagshipONE project slated for 2024 due to slower than expected demand growth. However, project partners have picked up the pieces and are pursuing new initiatives, including the FlagshipTWO and FlagshipTHREE projects.
As with many aspects of the energy transition, the e-methanol sector appears poised for growth, although questions linger about how quickly it will develop.
