The global renewable methanol market is slated to expand at a CAGR of 6.6% during the forecast period surpassing US$ 398.1 million by 2033. Increasing sales of daily items, including plastics, paints, cosmetics, and fuels, fuel the demand for liquid chemical methanol (CH3OH).
Synthesis gas, a mixture of hydrogen, carbon dioxide, and carbon monoxide, is used to create liquid methanol. These basic elements are obtained from a variety of feedstocks and by employing various technological techniques.
Natural gas, coal, and biomass are some of the most preferred feedstocks for the production of methanol. Methanol produced using biomass as feedstock is termed renewable methanol or bio-methanol. In compliance with the growing trend of sustainability and high growth in recycled and bio-based chemicals, the global renewable methanol business is anticipated to witness a surge in demand over the forthcoming decade.
What are the Key Trends Boosting the Renewable Methanol Sector?
Bio-Methanol – A Superior Liquid Motor Fuel for Transportation
The application of methanol in internal combustion engines reduces greenhouse gas emissions by 15-20% compared to gasoline. It also burns with clean fumes and is used in spark ignition port-injected gasoline engines without any modification. This makes renewable methanol suitable for use as a superior liquid motor fuel.
In addition, government regulations in countries such as the USA, India, China, and European countries to use over 10% of renewable fuels in motor fuels by the end of 2025 is expected to drive demand for second-generation biofuels such as renewable methanol over the forecast period.
Since low greenhouse gas emissions and renewable feedstocks, methanol emerged as a next-generation fuel solution that complies with strict governmental norms tightening their noose over various vehicle manufacturers regarding emissions.
Fuel Cell Technology to Create Growth Prospects in Renewable Methanol Industry
Another key application of methanol includes fuel cell technology, which opines FMI. Fuel cell technology is trending owing to booming global electric vehicle sales. Demand for Electric vehicles has surged exponentially over the past few years. According to a study, the market is expected to follow this trend over the upcoming assessment period.
Electric vehicles draw their power from high-performance batteries instead of fuel. Renewable methanol, which is environment-friendly and cost-effective, is used in fuel-cell vehicles. Also, renewable methanol fed directly to the fuel cell without being reformed with hydrogen.
Such technologies that have the potential to reduce greenhouse gas emissions from road transport offer strong growth potential. Thus, key players in the renewable methanol business target fuel-cell technology to capitalize on increasing growth opportunities in terms of revenue.
2018 to 2022 Renewable Methanol Industry Outlook Compared to 2023 to 2033 Forecast
As per Future Market Insights (FMI), demand for renewable methanol grew at a CAGR of 6.8% during the historical assessment period of 2018 to 2022. Growth in the market is attributed to rising awareness of carbon emissions and global environmental protection. Hence, growing sustainability trends, recycling, and bio-based chemicals have been witnessing a heavy surge in demand.
Methanol, a key blending agent in conventional fuels to reduce emissions, is witnessing rapid growth. However, methanol is mostly produced using natural gas and coal, which provides a setback in the growth of renewable products. On the other hand, renewable methanol produced using renewable feedstocks is expected to gain traction in the market. Further, the rapid implication of strict regulations over emissions from vehicles and industries is anticipated to be the key factor driving the growth in the market.
Category-wise Insights
Which is the Primary Source in the Renewable Methanol Industry?
Biomass feedstocks are the most preferred feedstocks to produce renewable methanol across the globe. Low treatment cost and pre-treatment methods are some factors that provide biomass an edge over its alternatives. According to FMI, biomass feedstocks are used as feedstock in the production of more than 42% of the renewable methanol produced across the globe.
Production of methanol using biomass feedstocks solves two of the key environmental concerns which are the treatment of waste and reduction of vehicle emissions, owing to which various environment protection agencies, regulatory bodies, and regional governments provide various benefits and aids in the set-up of production lines and production of renewable methanol.
Which is the Leading Application in the Renewable Methanol Sector?
Formaldehyde producers are the key consumers of renewable methanol across the globe. Formaldehyde is a precursor of a wide spectrum of vital chemicals across the globe. About 25% of the renewable methanol produced across the globe is consumed in the manufacturing of formaldehyde.
Apart from chemical synthesis formaldehyde also finds its applications in a wide range of industries including paints and coatings, food, medicine, disinfection, and various others. Owing to such immense uses of chemicals in some of the rapidly growing industries, formaldehyde manufacturers are anticipated to create ample opportunities for methanol manufacturers over the upcoming assessment period of 2023 to 2033.
What is the Demand Outlook in the United States Renewable Industry?
As per FMI, the United States is one of the leading consumers of renewable methanol globally. High awareness and strict government regulations regarding the country’s carbon footprint compel the use of methanol in fuel and other products to decrease their emission levels.
On the back of these aforementioned factors, the United States is likely to account for a significant share, approximately more than 22.4% of the global market. Stringent regulations imposed by the government and robust sales of electric vehicles in the country are anticipated to boost the United States market.
Competitive Landscape
Manufacturers of renewable methanol are positively engaged in the expansion of their production capacities to cater to the rising demand for the product. Key manufacturers are engaged in the expansion of production facilities and acquisitions/mergers of regional small – medium-level players to achieve domination in the market. However, nimble growth in new market entrants owing to various governmental aids has maintained fragmentation in the market.
For example: To boost the capacity of the world’s green methanol production, Maersk engaged into strategic alliances with six businesses in March 2022. The company aims to source at least 730,000 tonnes of green methanol annually by 2025.
