Methanol in China: a case study
China is both the largest global consumer of methanol and also the largest manufacturer of the liquid alcohol, which is primarily made by oxidising methane. In the first eleven months of 2017, the country consumed 49.3 million tonnes of methanol, and usage of the fuel continues to grow.
Today, China is responsible for 54% of the world’s total methanol demand as a chemical feedstock, because of three main demand drivers in particular:
1. To manufacture olefins
2. For vehicle fuel (an area which the Chinese government is keen to extend) and
3. For domestic use, such as for cooking.
Methanol benefits to Chinese society
These three particular benefits of methanol are the most important for the Chinese government:
1. Air pollution: Much has been written about China’s escalating problem with air pollution, particularly within large cities. Methanol as a fuel offers several advantages here, as methanol emits no dust particles at all during combustion, is less polluting overall and will support China’s drive to become a cleaner and greener economic power.
2. Economic benefits: As a locally-produced fuel, methanol allows the Chinese economy to benefit from a secure and steady fuel supply, without the risk and cost of imports. By producing 85% of the country’s own demand, economies of scale offer further economic benefits. There are also add-on gains for the broader supply chain and employment benefits at Chinese production plants.
2. Flexibility: Methanol can be used in a wide range of applications and can be used domestically, as a transportation fuel and in industrial contexts. One key destination for methanol in China is for gasoline blending, and there is a strong desire to increase this fuel usage. As an example, China’s CAS Holdings is progressing a project on the U.S. West Coast that will see $2 billion invested into the transformation of natural gas into methanol, to help drive forward its adoption in China as a transport and industrial fuel. Once built, the Kalama project could offer a vital low-carbon fuel and an additional choice in fuel diversity to the world’s second-biggest consumer of oil.
The need for government support
There is no doubt that the production of methanol is of strategic and economic importance to the country and secure, consistent supply must be maintained accordingly. The government’s support has been vital in ensuring that the industry can operate successfully and profitably and this continuing support must be maintained. One of the ideas being progressed at a public policy level is the installation of methanol bases across China. This would provide emergency fuel storage for long, cold winters — especially in rural areas — and help to support pricing stability.
The challenges of methanol production
The majority of this fuel is still produced from non-renewable sources. In 2011, China produced around 22.2 million tons of methanol; around 63% was produced from coal, 23% by natural gas and 11% by coke-oven gas. With China working hard to rebrand itself as an environmentally friendly global power on the world stage, this need to adopt more sustainable and renewable fuel sources for methanol production offers companies such as Silent-Power an exciting opportunity to bring their new technologies to market.
In conclusion
The methanol industry is expected to continue to see growth in the coming five years, offering plenty of scope for China as both a consumer and producer of the fuel. China is a focal point for the energy markets, due to its vast population, geographic diversity, rapid industrialisation and the changing political, social and global economic position. It provides a fascinating case study for energy production and consumption alike and offers hints to policy-makers, analysts and energy businesses of how the global energy situation may well evolve in the coming decades. It also demonstrates that, not only is an economy fuelled by methanol entirely possible, but that it actually is desirable, as it unlocks several benefits to society. Especially the methanol economy is the best answer to the drive to move away from damaging fossil fuels and to embrace cleaner, greener fuels which have the potential to be produced from sustainable sources as technology continues to evolve.
