Greg Dolan
Executive Director, Americas/Europe
Methanol Institute
Washington/Singapore/Brussels
Will Politics Push the Gas or Brakes on
Methanol Fuels
Methanol Forum – September 11-12 2013
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About MI
• Members include:
– World’s leading methanol producers
– Distributors
– Technology companies
• Provides market support:
– To traditional markets & derivatives
– Leads the development of new emerging
markets and applications
– Delivers safe handling tools to global
distribution chain
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2013 Members
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Underlying Policy
Drivers
Three main factors are a part of
policies created to encourage the
use of alternatives to oil-derived
gasoline across the globe
Governments are pragmatic by
nature, and especially in the
current global economic crisis
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Achieving Transportation Energy Policies
Transition Timetable to Sustainable Fuels
Fuel mixtures that perform like E85 in an E85 FFV
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Courtesy Gordon Taylor, GT Systems
Polygeneration
Methanol
Natural Gas
Gasoline
Coal
Fuels
Biomass
Synthesis Gas
MTBE
Methanol
Olefins
Chemicals
CO2
DME
Ethanol
Formaldehyde
Acetic Acid
Fuels
Chemicals
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Production routes – Future
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© MAHLE
Methanol is a Global Energy Resource
Out of the ~60 million metric tons of methanol sold globally in
2012, energy and fuel uses represent ~50% of total demand.
• MTBE
• TAME
• Low blends
• High blends
• Biodiesel
• DME
• MTG/MTO
• Diesel blends
• Fuel cells
From 2008-2012, direct methanol fuel blending has increased at
an annual rate of nearly 25%.
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Methanol Basics
Transportation Fuel Applications
Direct Fueling
• 8 million metric ton annual demand (2.6 billion gallons)
• Blended with gasoline (M3 – M85)
• BioMethanol is 2nd Generation biofuel
Dimethyl Ether
• 4.5 million tons methanol demand
• Can be used neat or blended with propane
• Low-carbon, no-sulfur, diesel replacement
• Transport market is emerging with partners like
Volvo and Nissan. Pilots in EU, Japan and China
Biodiesel
• Key ingredient in esterfication, with 1.5 million tons of
methanol demand
• Renewable methanol can make ultra-clean biodiesel
• Roughly 15-20% of oil source by mass
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Methanol Basics
Transportation Fuel Applications
MTBE/BioMTBE
• Global markets with 8.2 million tons methanol demand
• Up to 15% MTBE content allowed in EU, compliance with
Renewable Energy Directive with BioMTBE attractive
• The US government did NOT ban MTBE
Methanol-to-Olefins
• MTO represents 5 million tons of methanol demand
• A 600,000 tonnes/year MTO project requires 1.8m
tonnes/year of methanol
• MTO eases burden of petroleum supply by diversifying
feedstocks for light olefins
Methanol-to-Gasoline
• ExxonMobil MTG technology produces sulfur-free 92
Research Octane drop in gasoline
• Better yields than Fischer-Tropsch fuels at lower costs
• G2X Energy announced $1.3 billion MTG plant for Lake
Charles, Louisiana
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Methanol Fuel Basics
 The simplest of all alcohols CH3OH
 A pure clean burning liquid fuel with the highest available hydrogen
to carbon ratio
 A high octane blending component for gasoline that allows for higher
engine compression, decreases hydrocarbon, toxic, and carbon
monoxide emissions
 A globally marketed commodity with a distribution system similar to
gasoline
 A fuel made from non-petroleum feedstocks such as natural gas, coal
and residue/biomass/renewable
 A fuel with has a long history of use in racing vehicles, that is rapidly
expanding in China, and being tested in various parts of the world
 A much less flammable fuel than gasoline
 A fuel competitive with gasoline. A biofuel competitive with ethanol
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US Policy Drivers
• Open Fuel Standard
Act
• Renewable Fuels
Standard versus
Domestic Fuel
Standard
• Corporate Average
Fuel Economy
• Bonus
• Methanol Messaging Pros:
– Shale Gas Revolution leading a
resurgence of domestic
methanol production
– Methanol offers consumers
savings at the pump
• Methanol Messaging Cons
(Falsehoods):
– Methanol is corrosive and will
damage vehicles
– Methanol is toxic and will hurt
people and environment
– Methanol burns with invisible
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flame and is dangerous
U.S. Shale Gas Revolution Driving
Methanol Resurgence
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U.S. Shale Gas Revolution Driving
Methanol Resurgence – 2
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US Energy
Secretary Ernie
Moniz
• Nominated by
President Obama,
Confirmed by US
Senate on 97-0 vote
• Massachusetts
Institute of
Technology physics
professor and
seasoned veteran
of Washington
• MIT Study on the Future of Natural
Gas, chaired by Moniz:
– “With deployment of plants
using current technology, on an
energy-equivalent basis,
methanol could be produced
from U.S. natural gas at a lower
cost than gasoline at current oil
prices.”
– “The U.S. government should
implement an open fuel
standard that requires
automobile manufacturers to
provide tri-flex-fuel operation in
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light-duty vehicles.”
Open Fuel Standard
Act -- 112th Congress
• Required starting in
2014, 50% of all new
cars warranted to
operate on nonpetroleum fuels
• Goes up to 80% by 2016,
and 95% by 2017
• Includes alcohol FFVs,
and vehicles running on
CNG, propane, plug-in
battery electrics, and
fuel cells
Supporters: MI, RFA, US Energy
Security Council, Growth Energy,
National Biodiesel Board
 Detractors: Chamber of Commerce,
American Petroleum Institute, Alliance
of Automobile Manufacturers
“At a time when many policy makers
are questioning the costs of ethanol
to taxpayers, the environment and
the food supply, effectively imposing
a tax on consumers for a car that can
run on ethanol and methanol –
regardless of consumer demand and
fuel availability – makes no sense.”
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OFS – 113th
Congress
Limits requirement to:
- 30% new cars 2016
- 50% new cars 2017
- 50% new cars
subsequent years
• Assume OFS met with A85 FFVs
produces fleet of 85 million A85 FFVs
over ten years
• Assume 30% on M70 in 2015,
increasing to 50% on M70 in 2017 and
beyond, Methanol demand could
reach 23 billion gallons by 2026
• Assume US regular gasoline at $3.62
per gallon and M) at $3.22 per GGE
• Cumulative M70 pump savings to
consumers between 2016 and 2026 of
$55 billion
• Incremental vehicle costs, plus fueling
distribution would be $10 billion
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Renewable Fuel Standard vs.
Domestic Fuel Standard
• The RFS calls for 36
billion gallons of
renewable fuels by 2022
• By law, cellulosic ethanol
requirement for 2013
was one billion gallons,
EPA knocked that down
to 6 million gallon
• Easier to buy a unicorn
than a gallon of
cellulosic ethanol
• Legislation has been introduced in
both the House and Senate to
modify or repeal the Renewable Fuel
Standard
• Congressional hearings have been
held raising questions about RFS
implementation
• Several states pushing to rescind RFS
requirements
• API and AFPM suing EPA to kill RFS
• MI argues that Congress needs to
repeal and replace the RFS with a
Domestic Fuel Standard opening
door to the use of domestic natural
gas for methanol fuel production.
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Bonus: UPS Class 8
Methanol Trucks
• United Parcel service
operates 17,000 trucks
in U.S. consuming 400
million gallons diesel fuel
per year
• Emission requirements
add $20,000-$30,000 to
cost of truck
• LNG trucks incremental
cost of $70,000$120,000
• The Methanol Institute is working
with UPS on Capitol Hill seeking
funding of $25 million for DOE
program to demonstrate natural gas
and natural gas-derived fuels in
heavy-duty engines
• Based on UPS demo with EPA,
believe methanol/diesel duel-fuel
trucks can achieve emission
reductions, lower fuel costs, and
lower vehicle costs
• Looking to launch demo program for
methanol trucks in California
running side-by-side with LNG trucks
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Bio-methanol and the FQD
EU Policy Drivers
Fuel Quality Directive
•
•
•
•
•
Allows for 3% methanol fuel
blending with stabilizing
agent
6% reduction of life cycle
GHG emission per unit of
energy by 2020 compared
with 2010
Biofuels must be sustainable
Potential ILUC issue
Varying incentives and
mandates across MS
Bio-methanol
 A feedstock for
 biodiesel
 bio-MTBE
 A blend component for gasoline
 Showing ~73% life cycle GHG
emission reduction compared to
gasoline
Currently no RVP waiver for bioemethanol in the FQD
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Bio-methanol and the RED
EU Policy Drivers
Bio-methanol
Renewable Energy
Directive
• Renewable energy to
represent 10% of the energy
used in transport by 2020
•Biofuels must be sustainable
•Potential ILUC issue. 5.5% first
generation cap proposed by EC
 Produced from residues & waste, biomethane and CO2
 Energy content counts double towards
RED target, quadruple counting proposed
by EC
 1 Ton bio-methanol = 1.5 Ton bioethanol
 No concerns over iLUC
 No competition with food
 Made from residues; no competition with
food and no iLUC concerns
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EU Challenges
CEN-TC19-WG21_draft_WG_38_text (1) - 2012-10-15 [2]:
“However, methanol is toxic, it has a very high heat of vaporisation, it
is strongly hydroscopic and contributes strongly to the formation of
azeotrope and thus high vapour pressure, and it may require a cosolvent to prevent separation and can be aggressive towards certain
metallic and non-metallic materials in the fuel systems. Thus its
volume should be severely limited.”
• The Methanol Institute recently received Technical Liaison status
with WG 38 on EU Future Fuels
• For several years, MI has been Technical Liaison for WG 21 on
European fuel standards
• MI has engaged MAHLE Powertrain to serve as our Technical
Liaison
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China Policy Drivers
12th 5 Year Plan
•Seeks to capitalize on
infrastructure development
and promote domestic
consumerism
•Focus on energy security and
economics, creating more
pragmatic path forward
 Methanol determined to be energy security
priority for China to reduce oil imports
• Abundance of coal as feedstock
 Methanol represents 7-8% of China’s
transportation fuel pool
• Primarily in inner provinces/coal regions, not
yet widespread in largest cities
• Central government developing standards for
methanol fuel
• Methanol capacity built with expansion of
chemicals manufacturing industry
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Methanol Economics
Competitive Pricing in China
China Domestic Methanol Prices + Methanol Energy
and Volume Equivalences for Gasoline Blending
10,000
9,000
Prices (CNY / metric ton)
8,000
7,000
Methanol in Gasoline Blending: Volume-EquivalentBasis
6,000
(Gasoline properties updated)
5,000
Methanol in Gasoline Blending: Energy-Equivalent Basis
4,000
3,000
2,000
1,000
East China Domestic Price
South China Domestic Price
Methanol Equivalent Price - Volume Basis
Methanol Equivalent Price - Energy Basis
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Source: MMSA
Global Methanol Fuel Developments
China Provincial Fuel Blending Standards
Provincial Standards main driver for China fuel
blending demand growth
M15,
M30
M15
Heilongjiang
M15
M5, M15, M85 & M100
M15,
M30
Jilin
Liaoning
M15, M25
Inner
Mongolia
Xinjiang
M15
Beijing
Hebei Tianjin
Gansu
Shandong
Shanxi
Ningxia
Qinghai
Tibet
M45
Henan
Shaanxi
Jiangsu
Hubei
Sichuan
Shanghai
Anhui
Zhejiang
M10
Chongqing
Hunan
Jiangxi
Fujian
Guizhou
Guangxi
Guangdong
Yunnan
M15 ~ 7 - 8 % China Gasoline pool
M15
M15, M30
& M50
Hong Kong
Macau
Hainan
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Example: “M15” = 15% methanol, 85% gasoline
Source: Methanex, China PDRC’s, Shanxi Methanol office
Newer Model Year Vehicles Can Manage Higher Alcohol Blends
Oxygen ( Hydroxyl) Equivalent Alcohol Fuel Blends
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CRC - E20 performed well for Model Year 1997+ Vehicles
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China Introduced M15 starting in 2005
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E15 Waiver for Model Year 2000+ Vehicles
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China Introduced
M15 in 2005
E10 Gasohol since 1978
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E5 in EU
2
5
M3
M5
0
0
4
5
M7
M10
10
M14 M15
15
Oxygen in Fuel, Wt%
Ethanol in Fuel, Vol%
30
0
20
Methanol in Fuel Vol %
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China Vehicle Sales by Source
10,000
2005
2006
2007
2008
2009
2010
2011
2012
German
56.4
72.8
95.5
103.8
145.9
199.7
239.1
63.2
Japanese
76.8
103.8
145.7
169.3
216.8
269.8
281.7
71.1
US
42.9
59.6
69.9
65.0
101.9
142.5
159.9
41.8
South
Korean
35.0
41.1
34.1
45.0
86.2
111.7
121.9
30.1
Local
Brands
89.9
112.4
139.2
133.9
247.0
349.0
349.6
88.4
Others
17.3
23.6
23.2
18.5
28.5
39.0
41.6
11.1
Share
2005
2006
2007
2008
2009
2010
2011
2012.Q1
German
17.7%
17.6%
18.8%
19.4%
17.7%
18.0%
20.0%
20.7%
Japanese
24.1%
25.1%
28.7%
31.6%
26.2%
24.3%
23.6%
23.3%
US
13.5%
14.4%
13.8%
12.1%
12.3%
12.8%
13.4%
13.7%
South
Korean
11.0%
10.0%
6.7%
8.4%
10.4%
10.1%
10.2%
9.9%
Local
Brands
28.2%
27.2%
27.4%
25.0%
29.9%
31.4%
29.3%
28.9%
Others
5.4%
5.7%
4.6%
3.4%
3.4%
3.5%
3.5%
3.6%
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Shanxi Setting the Pace
• China’s Shanxi Province has been
demonstrating methanol fuels for 30 years
• Methanol capacity at 6 million tons, by end
2015 could be 20 million tons
• Over 1500 stations selling M15 (650 Sinopec
branded), and 60 dispensing M85-M100
• 80,000 methanol flexible fuel vehicles, mainly
taxis
– 15,000 taxis consume 120,000 tons M85/year
providing operators with 100 million RMB in
annual fuel cost savings
• Building 7 blending centers, each blend 1.5
million tons methanol gasoline/year
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China Methanol Standards Development
•China national M15 standard may be issued
in 2013
•Sinopec leading the drafting and focused
on environment and health
•Limited near term impact on growth,
important long term
•Global methanol industry providing
technical support and guidance
documents
•M85 vehicle tests underway in Shanxi,
Shaanxi, and Shanghai
•Two year trial began in 2012
•Serves as the basis for M85 vehicle
standard
M15 truck loading in Shaanxi province
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Global Methanol Fuel Development
Other Markets
• Methanol fuel development activities:
–
–
–
–
–
–
–
–
–
Israel
Australia
Iran
Pakistan
Uzbekistan
Azerbaijan
Trinidad
New Zealand
Vietnam
• Interest in utilizing domestic feedstocks, reducing
government fuel subsidies
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Global Methanol Fuel Developments
Low blends and racing in UK and NL
• UK & NL fuel blenders supply RON95
EN228 gasoline containing 5% ethanol
and (bio-)methanol with interest in
other member states increasing; tests
ongoing
• Bio-methanol offers double counting
benefit at low cost
• Further opportunities in combination
with E10 identified
• EC awarded Euro 199 mio NER300
subsidy for woodbased methanol
project
• MI, Methanex and BioMCN support use
of GEM Fuels in Junior World Rally
Championship
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Global Methanol Fuel Developments
Iceland M50 Demo
• Favourable government support
and complies with European fuel
directives
• World’s cleanest methanol,
supported by Nobel Laureate,
George Olah
• Synergies between renewable
methanol and conventional
methanol (cost & environment)
• World class Environment, Health
and Safety standards
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Global Methanol Fuel Development
Israel Methanol Fuels Demonstrations
• Israel fundamentals
– Large gas finds in Israel
– Strategic need to reduce oil dependence
– Technology focus
• M15 demonstration underway
– Lab testing in Northern Italy
– Demo complete H1 2013. Commercialize 2014?
– Government, academia, industry involved
• M70 demonstration launched
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Global Methanol Fuel Developments
Australian Methanol Fuel Blending Background
•Most fuel requirements imported
•Australia is gas and coal rich
•Methanol is easier to integrate
into the fuel distribution system
than natural gas
•Ethanol supply limited in Australia
•Local refinery capacity declining
AER, State of the Energy Market (2010)
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Global Methanol Fuel Developments
Australian Fuel Blending Demonstration Overview
• Led by Coogee Energy. Methanex
and Methanol Institute support
• Using E85 Flex Fuel Vehicle (FFV).
• ‘A15’ or 15% alcohol: Methanol
with ethanol co-solvent
• Methanol excise tax free status
for 10 years (~A38c/litre, ~$US
480/t)
• Engagement with government,
independent fuel retailers and
commercial partners
Methanol / gasoline pump at Coogee plant site
Holden Commodore E85 FFV
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Product Stewardship – Fuel Blends
 Communicates
best practices
to handle
methanol at
fuel blending
locations
 Supports the
growing use of
methanol in
energy
applications
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Methanol
Fuels Can
Achieve Policy
Drivers
• There are no technical hurdles to using
methanol as a tranportation fuel.
• There are significant economic advantages to
methanol fuel use.
• Methanol fuels increase octane, and can help
global auto manufacturers improve vehicle
efficiency and reduce greenhouse gas
emissions.
• Global methanol fuel use is increasing rapidly.
• Methanol has a wide range of feedstocks,
natural gas, coal, biomass (non-food), and CO2
making methanol a long-term sustainable fuel
option.
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Greg Dolan
Executive Director,
Americas/Europe
Methanol Institute
Thank you for your
time and attention!
gdolan@methanol.org
www.Methanol.org
01-703-248-3636
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