As industries and end-markets face increasing pressure to cut emissions, renewable methanol is emerging as a scalable and efficient low-carbon alternative to conventional fossil fuels. Methanol can be made from feedstocks such as electrolytic hydrogen, biomass, municipal waste, and biogenic or atmospheric CO₂. As a result, methanol – a simple alcohol, CH₃OH – could play a role in reducing greenhouse gas (GHG) emissions while integrating into existing industrial, transport and energy infrastructure.

Renewable methanol can be produced through two primary pathways. One, e-methanol, can be produced by capturing CO₂ from industrial emissions, biogenic CO₂ or direct air capture, which is then combined with green hydrogen from electrolysis to create methanol. In Johnson Matthey’s eMERALD process, e-methanol is produced by feed compression, a methanol synthesis loop, hydrogen recovery and distillation.

Alternatively, bio-methanol is derived from biomass or organic waste through gasification. This process can convert renewable feedstocks such as forestry residues, agricultural waste and municipal solid waste into synthesis gas, which is then catalytically transformed into methanol. Biomass gasification involves converting solid biomass into syngas. Biomass-derived syngas contains different contaminants than fossil-based syngas, such as sulphur and chlorines, which creates additional challenges in gasification and methanol synthesis. After the gas is cleaned, it is catalytically converted into methanol.

Johnson Matthey works with various gasification companies to integrate their gasification process with its bio-methanol catalytic synthesis technology.

These innovations are not only reducing reliance on fossil fuels but are also accelerating the development of ‘circular economies’ by turning waste into a valuable energy source.

Renewable methanol is well positioned to take advantage of low-carbon energy sources such as hydroelectric, solar and wind. The integration of green hydrogen into methanol synthesis, whether through direct CO₂ hydrogenation or biomass gasification, creates a low-carbon fuel that can replace fossil-derived methanol across multiple sectors. The challenge remains in scaling green hydrogen production due to current barriers around cost, which ranges from $4–12/kg today, although this is expected to decrease to $2.50–8.50/kg by 2030, according to BloombergNEF’s Hydrogen Levelised Cost Outlook Report. Power costs make up the majority of these figures. As electrolyser efficiency improves and renewable energy capacity expands, the economic feasibility of e-methanol is expected to continue to strengthen.

Decarbonising hard-to-abate sectors 
Renewable methanol plays a crucial role in decarbonising sectors where electrification is not viable. In aviation, methanol-to-jet (MtJ) pathways enable the production of sustainable aviation fuels (SAF) that meet the sector’s stringent energy density and performance requirements. These processes must ensure high purity and energy content while remaining cost competitive. Ongoing innovation in process efficiency and feedstock flexibility is key to meeting these specifications at scale.

In maritime shipping, methanol-fuelled engines are commercially available, providing a practical decarbonisation solution with minimal infrastructure changes.

Road transport can also benefit from methanol through direct use or via methanol-to-gasoline routes, supported by mandates like the 1% e-fuels quota under the European Union’s Renewable Energy Directive III (RED III) by 2030.

Beyond transportation, renewable methanol’s role as a hydrogen carrier supports decarbonisation in chemical industries and energy storage, aiding grid stability in renewable power systems.

Policy drivers and markets 
Although very few sustainable methanol plants currently operate, the global fossil-derived methanol market demand today is around 110mn t/y. It is used to manufacture plastics, paints, adhesives, synthetic fabrics and many other products. Methanol made from natural gas is reformed and then the syngas is cleaned and fed into a methanol synthesis loop. Roughly 40mn tonnes of methanol is made from natural gas. Methanol made from coal first involves a coal gasification step, followed by methanol synthesis loop. Roughly 70mn tonnes of methanol is derived from coal and it is primarily made in China.

Governments and industries are accelerating the adoption of sustainable fuels through ambitious decarbonisation policies. The EU RED III establishes targets for renewable fuels of non-biological origin, encouraging investment in sustainable methanol as alternatives to fossil-based fuels.

In the maritime sector, the International Maritime Organization (IMO) has set decarbonisation targets, aiming for a 20% reduction in shipping’s total annual GHG emissions by 2030, 70% by 2040 (compared to 2008), and net zero emissions by 2050.

Aviation decarbonisation is also supported by mandates such as ReFuelEU, which includes a 10% power-to-liquid SAF sub-target by 2040 and 35% by 2050. These regulatory measures, combined with carbon pricing mechanisms, subsidies and tax incentives globally, can accelerate the growth of renewable methanol markets.

Growing markets 
In North America, interest in renewable methanol is growing as methanol and its derivatives can provide an attractive economic opportunity for fuel supply into a global energy market. The region’s potential for large-scale production, abundance of biogenic CO₂, and the potential to valorise agricultural waste feedstocks further supports methanol’s commercial viability and scalability.

China is also emerging as a key player, with its commitment to achieving carbon neutrality by 2060 and significant investments in renewable energy and alternative fuels.

There are also emerging markets in Asia, Latin America and the Middle East, which face both waste management and energy transition challenges. Renewable methanol offers an opportunity to address both issues. By converting waste into fuel, industries can reduce emissions while generating economic value, making methanol an attractive option for nations looking to transition away from fossil fuels.

In line with this global momentum towards renewable methanol, large-scale projects are emerging to accelerate market growth. For example, e-fuels supplier HIF Global is developing the largest e-methanol plant in South America, located in Paysandú, Uruguay. This facility leverages Johnson Matthey’s eMERALD technology and is planning to produce about 700,000 t/y of e-methanol using electrolytic hydrogen and waste CO₂ from an ethanol plant. The project could provide a significant step in decarbonising the marine and automotive sectors, with output supporting the shipping industry’s shift to low-carbon fuels and capacity also able to facilitate the production of e-gasoline for over 150,000 vehicles.

Large-scale e-methanol projects are also advancing across Europe. An example is the La Robla Nueva Energia e-methanol project in Spain. This project, led by Reolum with European Investment Bank support, will combine CO₂ captured from a biomass plant with green hydrogen to produce up to 140,000 t/y of e-methanol, supporting the decarbonisation of the chemicals and transport industries. The initiative, which also features eMERALD, aligns with Spain’s ‘Just Transition Zones’ strategy, repurposing a former coal-mining and thermal power plant site into a hub for green energy innovation.

• Further reading: ‘Real possibilities for synthetic e-fuels’. Synthetic or e-fuels will be one of the key enablers of the energy transition away from fossil fuels towards more sustainable alternatives. However, identifying cost-effective pathways from legacy fossil fuels into low-carbon alternatives is proving to be quite a challenge for the incumbent energy players.
• Find more about Germany’s largest green hydrogen electrolyser, recently launched by BASF, and the world’s first large-scale commercial e-methanol facility brought into production by European Energy and Mitsui.