| Work Detail |
Hard-to-abate segments in the energy transition, such as the chemical industry and marine transportation, require electricity-based e-methanol in large quantities. The transport costs could be a key factor in determining the best locations for future green e-methanol projects. As the world intensifies efforts to cut greenhouse gas emissions and expand renewable energy, industry and long-range transportation are under increasing scrutiny. Green e-methanol is emerging as a promising alternative fuel and chemical, particularly for long-distance shipping and the chemical industry. While feedstocks and production costs often dominate discussions, an important factor – transportation and storage infrastructure – are often overlooked. New research from LUT University assesses the cost of transporting e-methanol from solar-rich regions like Morocco and Chile to energy-demanding European countries such as Germany, Finland, and Spain, offering insights into the competitiveness of imports versus local production. The study, titled “Analysis of green e-methanol supply costs: Domestic production in Europe versus imports via pipeline and sea shipping,” examines e-methanol production costs across various regions, revealing significant differences. In Germany and Finland, production costs are considerably higher than in Spain, Morocco, and Chile. The primary reason for the disparity is the availability of high-quality solar resources, which enable lower electricity generation costs in the south, whereas in the coming years until the 2030s sites with very good wind energy resources remain competitive. By 2050, e-methanol production costs decrease across all regions, but the gap widens as solar PV costs decline faster than compared to wind power. Projections suggest that by 2050, e-methanol could be produced for as little as €50-55 ($51.5-56.7)/MWh (€279-308/tMeOH) in optimal locations such as northern Chile, Morrocco, and Spain. The research provides a detailed analysis of transportation costs for green e-methanol imports to Europe from 2030 to 2050, comparing pipeline and shipping options. Pipelines are cost-effective for distances up to 420-475 km, but beyond this range, shipping becomes a more economical choice. For example, shipping e-methanol over 1000 km could cost around €2.1/MWh (€12/tMeOH), while pipeline costs may reach €3.6/MWh (€20/tMeOH) over the same distance. By 2030, e-methanol imports from Morocco to Europe could cost €113-208/MWh (€631-1161/tMeOH), whereas imports from Chile may be slightly cheaper at €106-165/MWh (€592-921/tMeOH). Over time, import costs are expected to decline significantly. The study suggests that domestic production in Germany and Finland – based on a mix of solar and wind power – remains more expensive than imports from solar-rich regions. Spain’s excellent solar potential makes local production highly competitive. With solar PV costs continuing to fall, importing e-methanol from solar-rich regions to Central and Northern Europe could yield significant savings of up to 22% for Germany and up to 37% for Finland. Earlier studies have also shown that many countries in the Sunbelt region may opt for exports or self-supply of e-methanol whereas Canada, many parts of Europe, and Eurasia will likely import. One challenge in green e-methanol production is securing a sustainable CO2 source. This study assumes the availability of large-scale CO2 direct air capture (DAC) units and projected reduction in their investment costs. However, some regions may have access to more cost-effective CO2 sources from sustainable and unavoidable point sources of CO2, such as pulp and paper mills, cement plants, and waste incinerators. This study explores the potential benefits of using bio-CO2 captured from Finland’s pulp and paper industry instead of DAC-derived CO2. This approach could lower production costs by 7-14% and make domestic production more attractive in the short term. However, in the long run, imports from Morocco and Chile may still remain the most cost-effective option due to their low solar electricity costs. Nevertheless, the access to available bio-CO2 may place Finland in a favorable position to become an exporter of e-methanol, despite not being a sunbelt country. This competitive edge is based on the lower cost wind power in the earlier periods with higher full load hours as this opens a window of opportunity for competitive green e-methanol from the Nordics while infrastructure challenges are manageable to link the sites of bio-CO2 and the wind-rich regions. On top of this advantage in having CO2 as a raw material, Finland, together with Spain, has available land area with a potential of up to 1000 TWh of wind-based electricity and, thus, can offer solutions to European partners for reaching a high energy sovereignty within Europe in a world of increasing international geopolitical tensions. The findings align with an earlier study on green e-ammonia trading, which also benefits from relatively low transportation costs. By contrast, hydrogen transportation remains significantly more expensive due to the need for either hydrogen liquefaction or very high compression rates. The complexities and costs associated with hydrogen handling along with other insights from energy system transition studies raise questions about the feasibility of the concept of a Hydrogen Economy. Instead, methanol’s versatility and its potential to be converted into gasoline, dimethyl ether, and various bulk chemicals, positions it as a more important energy carrier, making the Methanol Economy a more appropriate term within the broader concept of the Power-to-X Economy. The most important energy carriers in future energy systems will be electricity, hydrogen, and methanol, whereas most of the hydrogen will be used as an intermediate energy carrier to produce methanol, kerosene jet fuel, and ammonia. The steel industry may be among one of the largest direct hydrogen demand segments with some further final hydrogen demand across industries. In the future, whether a country imports, exports, or becomes self-sufficient in its e-methanol supply will largely depend on the cost of renewable electricity. This will likely favor sun-rich regions, positioning them as key suppliers of bulk e-methanol to global markets. |
