Europe Renewable Methanol Market Size Analysis Report - Market Share, Forecast Trends and Outlook (2024-2032)

Europe Renewable Methanol Market Overview

Methanol is critical in the low carbon transition for hard to abate industries, such as shipping, aviation, and chemicals. The European Union is a significant producer of low-carbon methanol, globally. In 2023, Europe represented approximately 30% of the global production capacity for renewable methanol, totaling around 180 KMT.

Renewable methanol plays a key role in CO2-neutral aviation and is suitable as a feedstock for Sustainable Aviation Fuels (SAF). This is because the aviation industry is required by mandates to use an ever-increasing proportion of Sustainable Aviation Fuels. For instance, ReFuelEU initiative requires EU airports and fuel suppliers to supply SAF as at least 2% of aviation fuels in 2025, 20% in 2035, 34% in 2040, 42% in 2045, and 70% in 2050.

Carbon capture and utilisation (CCU) is an emerging technique for methanol production. By capturing carbon dioxide (CO2) from industrial sources and using it as a feedstock for methanol production, CCU reduces the dependence on fossil fuels and offers a potential means of mitigating greenhouse gas emissions, thereby supporting the growth of the Europe renewable methanol market.

In February 2024, the European Commission adopted the industrial carbon management strategy to scale up carbon management and enhance investment appeal for industrial carbon management technologies.

ReFuelEU Aviation promotes the increased use of sustainable aviation fuel (SAF) to reduce CO2 emissions of the aviation sector. The initiative is a component of the Fit for 55 package, which aims to reduce emissions by 55% by 2030. It imposes obligations on aviation fuel suppliers to progressively raise the proportion of SAF blended with the regular aviation fuel delivered to airports in the European Union.

Table: Targets for SAF Share (%) in EU and UK, 2025-2050

The European Union is the world’s biggest trading block. Some of the key trading partners of EU-27 include the United States, the United Kingdom, Turkey, and China. In 2023, marine transportation contributed around 47% (by value) of goods traded between the EU and the rest of the world.

As per the Europe renewable methanol market analysis, methanol produced from natural gas represents a 10-15% reduction in carbon dioxide emissions compared to traditional marine fuels, and renewable methanol from sustainable sources such as waste, bio-mass or renewable energy reduces CO2 emissions by over 90%, making methanol a truly future-proof shipping fuel.

Figure: CO2 Emissions (Million Tonnes) in Key Ship Owning Countries in Europe, 2022

Europe Renewable Methanol Market Trends

Favourable government initiatives supporting bio-methanol adoption

The presence of favourable government initiatives in Europe is supporting the market for bio-methanol. Bio-methanol, produced through processes such as gasification and pyrolysis, has low flammability, and low emissions, increasing its adoption in the transition towards environment-friendly methods. The government of the United Kingdom has set targets to achieve net zero greenhouse gas emissions by 2050. In May 2024, the European Parliament approved Net Zero Industry Act to improve the net zero technology production within the EU. Through the act, Europe aims to produce 40% of its net zero technology requirements by 2030 and capture 15% of the global market for these technologies.

Growing adoption of sustainable fuels in the aviation sector increasing the demand of Europe renewable methanol market

Initiatives are being laid out to support the decarbonisation of the aviation sector in Europe. In September 2023, the EU Parliament voted to increase the use of sustainable aviation fuels (SAF) at EU airports. Through the legislation, the adoption of sustainable fuels in the aviation sector is projected to rise from 2% in 2025 to 70% in 2050. The government of the United Kingdom is planning to introduce a SAF mandate in 2025, requiring about 10% of jet fuel to be from SAF by 2030.

Major European airline groups, including International Airlines Group (IAG), Air France-KLM, and Lufthansa Group, have established targets to enhance their utilisation of sustainable aviation fuel (SAF). IAG has set a goal to achieve 10% SAF usage by 2030.

Industry News

January 2024

Danish energy solutions provider Topsoe signed a licensing and engineering agreement with Preem to provide its HydroFlex technology at Preem’s Lysekil refinery to produce SAF and renewable diesel. The refinery is scheduled to start operations in 2027 and is expected to become one of Northern Europe’s biggest producers of SAF. At the Lysekil refinery, the HydroFlex technology will be utilised in Preem’s IsoCracker which will have a capacity of 1.2 million cubic metres per year (22,000 barrels per day) of SAF and renewable diesel production.

June 2023

TotalEnergies reached final investment decision (FID) to increase SAF production at the Grandpuits platform to 285,000 tonnes/year (tpy), up from an originally planned target of 170,000 tpy announced in 2020.

Opportunities in Europe Renewable Methanol Market

Green methanol as a marine fuel reduces CO2 emissions significantly, expanding its application as a future-proof shipping fuel. Methanol complies with International Maritime Organization (IMO) regulations, supporting vessel owners and operators to reach IMO 2030 and IMO 2050 CO2 reduction goals. There is a growing demand for methanol-fueled ships resulted by the maritime sector’s efforts to reduce emissions. It is estimated that using methanol as a marine fuel can reduce greenhouse gas emissions by up to 15%, compared to traditional marine fuels, thus increasing the demand of Europe renewable methanol market.

In July 2023, the EU adopted FuelEU Maritime Regulation (Regulation (EU) 2023/1805), as part of the Commission’s Fit for 55 legislative package, to lower EU greenhouse gas emissions by at least 55% by 2030. The regulation promotes adoption of renewable, low-carbon fuels and clean energy technologies for ships, which are essential to support decarbonisation in the sector.

Europe Renewable Methanol Market Restraints

The renewable methanol production cost depends on the feedstock cost, especially on the cost of hydrogen and CO2, investment in technology, and the efficiency of the conversion processes. As a result, renewable methanol is, by far, more expensive than fossil-derived methanol, which hinders the Europe renewable methanol market development.

Methanol has lower energy content than marine gasoil (MGO), requiring ships to have cargo tanks 2.5 times larger, leading to storage and operational challenges. Additionally, with a low flash point of around 11°C and an invisible blue flame, methanol requires specially designed ships for crew safety and operational protection.

Europe Renewable Methanol Market Dynamics

Surge in Adoption Sustainable Aviation Fuel (SAF)

The use of SAF is crucial for the EU to reduce the aviation sector's carbon footprint. The European Union Aviation Safety Agency (EASA) is supporting the scaling of sustainable aviation fuels (SAF) through the EU SAF Clearing House to help reduce aviation emissions and increasing the renewable methanol demand. The Clearing House serves as a one-stop platform for fuel producers, offering resources for ASTM D4054 standard evaluation, including pre-screening, and partial funding for testing.

The production of power-to-liquid (PtL) fuels, a key component of the SAF mix, can easily be used for combustion engines in aviation, shipping, and heavy-duty haulage. By 2050, PtL fuel generation is expected to account for 5.5% of the EU's renewable electricity.

Hydroprocessed Esters and Fatty Acids (HEFA), Alcohol-to-jet (ATJ), and Power-to-Liquid (PtL) are some of the prominent Sustainable Aviation Fuels (SAF) production technologies in Europe. Prominent SAF manufacturers such as Total Energies SE, Eni S.p.A, and Repsol SA apply HEFA technology in the production of SAF. By 2030, it is projected that over 60% of Europe’s SAF supply will come from HEFA and Alcohol-to-Jet pathway fuels, with additional contributions from imports and Power-to-Liquid (PtL) fuels.

Key feedstocks will likely include used cooking oils, animal fats, waste oils, cover crops, and other sustainable biomass sources.

Europe Renewable Methanol Industry Segmentation

“Europe Renewable Methanol Market Report and Forecast 2024-2032” offers a detailed analysis of the market based on the following segments:

Market Breakup by Feedstock

• Biomass
• CO2 and Hydrogen

Market Breakup by Processing Technique

• Gassification
• Reformer-Based Production from Biogas
• Production During the Pulping Process
• Production From CO2 and Hydrogen

Market Breakup by Application

• Dimethyl Ether (DME)
• Methyl Tert-Butyl Ether (MTBE) 
• Combustion and Fuel Blending
• Others

Market Breakup by Country

• Germany
• France
• United Kingdom
• Nordics
• Others

“United Kingdom Renewable Methanol Market Report and Forecast 2024-2032” offers a detailed analysis of the market based on the following segments:

Market Breakup by Feedstock

• Biomass
• CO2 and Hydrogen

Market Breakup by Processing Technique

• Gassification
• Reformer-Based Production from Biogas
• Production During the Pulping Process
• Production From CO2 and Hydrogen

Market Breakup by Application

• Dimethyl Ether (DME)
• Methyl Tert-Butyl Ether (MTBE) 
• Combustion and Fuel Blending
• Others

Nordics Renewable Methanol Market Report and Forecast 2024-2032” offers a detailed analysis of the market based on the following segments:

Market Breakup by Feedstock

• Biomass
• CO2 and Hydrogen

Market Breakup by Processing Technique

• Gassification
• Reformer-Based Production from Biogas
• Production During the Pulping Process
• Production From CO2 and Hydrogen

Market Breakup by Application

• Dimethyl Ether (DME)
• Methyl Tert-Butyl Ether (MTBE) 
• Combustion and Fuel Blending
• Others

Europe Renewable Methanol Market Share

By Feedstock Insights

Renewable methanol is an ultra-low carbon chemical produced from sustainable biomass. In 2022, 3% of the EU chemical production was bio-based. The REPowerEU Strategy of 2022 aims at producing 10 million tonnes and importing 10 million tonnes of renewable hydrogen by 2030, providing the feedstock for renewable methanol production and supporting the Europe renewable methanol market.

Biomass and municipal solid waste (MSW) are crucial raw materials for renewable methanol production. Biomass feedstocks for renewable methanol include forestry and agricultural residues, black liquor, wood and chips/pellets. In 2022, 513 kg of municipal waste per capita was generated in the EU.

In May 2024, Sumitomo SHI FW, Finland signed an agreement with Capwatt to provide FEED services for a syngas production plant in the Mangualde Renewable Methanol project in Portugal, aiming to produce 80,000 tons of renewable methanol annually from local biomass residues.

As per the Europe renewable methanol market analysis, renewable methanol synthesis using carbon dioxide and hydrogen is the easiest and most mature method for its production. The approach involves producing hydrogen through the electrolysis of water with renewable electricity, which is then reacted catalytically with CO2 to create methanol.

In December 2023, Cepsa and C2X set up a joint project to develop the largest green methanol plant in Europe, with an annual production capacity of 300,000 tons. The project supports Spain's green transition goals and will leverage green hydrogen produced in the Andalusian Green Hydrogen Valley.

By Processing Techniques Insights

Production of biogas via anaerobic breakdown of organic matter by microorganisms contains CH4 (50%-75%), CO2 (25%-50%), and other compounds of biogas such as H2O, O2 and traces of sulfur, H2S, and NH3.

In September 2023, Maersk and Equinor signed an agreement to supply green methanol for Maersk’s new methanol-enabled feeder vessel during its initial operation from September 2023 to mid-2024. The biomethanol is produced from biogas derived from manure. In July 2024, Lhyfe a producer of green hydrogen announced a partnership with Elyse Energy, to produce e-methanol from green hydrogen, to decarbonise maritime transport and support the Europe renewable methanol market.

In July 2023, the German government updated its national hydrogen strategy, to integrate hydrogen-based energy in industrial manufacturing or chemical production. Due to limited domestic production capacity, Germany expects that up to 70% of its hydrogen demand needs to be met through imports by 2030. The strategy considers a list of hydrogen derivates, such as ammonia and methanol.

By Application Insights

In 2023, the EU adopted proposals to align its climate, energy, transport, and taxation policies with a goal of reducing net GHG emissions by at least 55% by 2030 compared to 1990 levels. This will enable the EU to become the first climate-neutral continent by 2050.

In comparison to traditional fuels, renewable methanol can lower carbon dioxide emissions by as much as 95%, decrease nitrogen oxide emissions by up to 80%, and completely eliminate sulfur oxide and particulate matter emissions. As a result, renewable methanol is expected to play a crucial role in helping the EU meet its emission targets and also support the Europe renewable methanol market. In October 2023, Mitsui O.S.K. Lines and Hy2gen Deutschland signed an MoU to explore e-methanol as a fuel for ships. The e-methanol is synthesized using green carbon dioxide (CO2) and hydrogen produced from renewable energy. The MOL Group aims to have 90 LNG/methanol-fueled vessels in service by 2030.

Europe Renewable Methanol Market Country Insights

According to 2024 data from aireg, the Competence Centre for Sustainable Aviation Fuel in Germany, the country is the largest aviation market in Europe, the center for aviation research, and a hotspot for aircraft production. aireg's target is to make Germany a pioneer for sustainable flying through high SAF usage.

By 2030, aireg aims to achieve SAF utilisation rates of 10% compared to ReFuelEU targets of 6%. Similarly, by 2050, the target for Germany is set at 100% by aereg compared to 70% of ReFuelEU.

As per the Europe renewable methanol market report, by 2030, France aims to reduce its emissions to 270 mtCO2e compared to 408 million tonnes of CO2 equivalent (mtCO2e) in 2022.

In September 2024, TotalEnergies and Air France-KLM signed an agreement to supply up to 1.5 million tons of more sustainable aviation fuel (SAF) to Air France-KLM Group airlines over a 10-year period, until 2035.

In October 2024, Maersk launched the "Alexandra Maersk," a dual-fuel methanol container vessel operating on green methanol. It is the fifth of 18 such vessels scheduled for delivery in 2024 and 2025, each with a capacity exceeding 16,000 TEU.

In April 2024, the UK Government unveiled its Sustainable Aviation Fuel Mandate, launching a consultation on a revenue certainty mechanism to attract private investment in SAF projects. From 2025, SAF must comprise 2% of total jet fuel, increasing to 10% by 2030 and 22% by 2040.

In December 2023, ANDRITZ and SSE Suomen Säätöenergia Oy partnered to develop a renewable methanol production plant in Nurmes, eastern Finland. The "Hybrid Refinery Nurmes" project will produce high-quality renewable methanol using gasification syngas from biomass and green hydrogen, with operations set to begin by the end of 2026. This will significantly support the Europe renewable methanol market.

Compared to the EU average of 530 kg per capita, Denmark has one of the highest annual amounts of municipal solid garbage in the EU (786 kg per capita as of 2021), aiding opportunities for renewable methanol production.

Competitive Landscape of Europe Renewable Methanol Market

In the Europe renewable methanol market, companies strive to maintain a low-cost structure to stay competitive. They also focus on timely product delivery, forming partnerships with logistics firms, and ensuring a consistent supply of renewable feedstocks.

Key Industry Players

Methanex Corporation is one of the world’s leading producer and supplier of methanol to major international markets in Asia Pacific, North America, Europe and South America. The company has methanol production sites located in the United States, New Zealand, Trinidad and Tobago, Chile, Egypt and Canada. In 2023, the company produced 6.6 million tons of methanol, an increase of 0.5 million tons as compared to 2022.

Proman AG. is primarily engaged in dealing with natural gas derived products and services. Founded in 1984, The company has methanol and fertilizer production facilities located across Trinidad and Tobago, the United States and Oman and is also expanding into Mexico. Proman operates 17 petrochemicals facilities globally, in addition, the company operates 16 vessels, out of which 5 are methanol powered.

Saudi Basic Industries Corporation was founded in 1976 and is headquartered in Riyadh, Saudi Arabia. SABIC is one of the leaders in chemical manufacturing. The company operates across multiple business verticals which comprises of chemicals, polymers, specialties, agri-nutrients, and metals.

OCI N.V. is a leading producer and distributor of nitrogen, methanol and hydrogen products founded in 2013.  The company operates with three different verticals which include OCI Nitrogen, OCI Methanol, and OCI corporate. In September 2024, Methanex Corporation announced to acquire OCI methanol business in a USD 2.05 billion deal.

Other Europe renewable methanol market players include Mitsubishi Gas Chemical Europe GmbH, Mitsui & Co., Ltd, and LyondellBasell Industries N.V., among others.

Recent Developments

September 2024

Methanex Corporation announced to acquire OCI Global’s international methanol business for USD 2.05 billion. The acquisition includes OCI’s stakes in two large methanol facilities located in Beaumont, Texas, one of which also produces ammonia. The company will acquire OCI’s low-carbon methanol production and marketing business, along with a currently-idled methanol plant in the Netherlands.

July 2023

Japan's Mitsui & Co., Ltd. partnered with European Energy to advance green energy initiatives in Denmark. This collaboration will see Mitsui acquire a 49% stake in European Energy’s substantial solar and e-methanol production project in Kassø, Aabenraa municipality. The venture involves a 304 MW solar park linked to an e-methanol production facility, marking the largest transaction in European Energy’s history.

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Europe Renewable Methanol Market Report Snapshots

Europe Renewable Methanol Market Size

Europe Renewable Methanol Market Trends

Europe Renewable Methanol Companies

Europe Renewable Methanol Market Regional Analysis