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Methanol: A Future Transport Fuel based on Hydrogen and Carbon Dioxide?

European Union
Complete with results
STRIA Roadmaps
Transport electrification (ELT)
Low-emission alternative energy for transport (ALT)
Transport mode
Road icon
Transport policies
Deployment planning/Financing/Market roll-out,
Environmental/Emissions aspects,
Societal/Economic issues
Transport sectors
Passenger transport,
Freight transport


Background & Policy context

One of the main reasons for considering the widespread use of methanol as an alternative fuel for transport is that of mitigating carbon dioxide emissions by means of conversion and fixation in value-added products. The possible use of carbon dioxide for methanol production contributes to the currently increasing perception that carbon dioxide can be considered as an abundant and renewable source for several applications in chemical synthesis.

Methanol can be efficiently produced from a wide variety of sources including still available fossil fuels (coal, oil shale, tar sands, etc.) by improved methods, as well as from agricultural products (municipal and industrial wastes, wood, among others varied biomass). Additionally, methanol can also be produced in a new route from chemical recycling of carbon dioxide based on the utilisation of high concentrations of CO2-rich gas streams derivate from fossil fuel burning power plants or exhausts of cement, fermentation, and other industrial plants such as: aluminium and iron ore smelters, etc.

Promising new technologies for effective conversion of atmospheric CO2 to methanol that need to be addressed and evaluated in this study are currently under development, not only for recycling of the greenhouse gas but also for an efficient production of fuel alternatives.

Finally, the use of methanol in the transport sector also requires a series of changes, among other things to vehicles (internal combustion engine or fuel cell) and the distribution chain, which have to be taken into account for an overall evaluation of the suitability of methanol use.

Although methanol is already commercially used for some transport application, for example in the production of biodiesel, the greatest future demand is expected to come from fuel cell vehicles. In this context, it has to be kept in mind that methanol is toxic and inflammable, a fact that needs to be adequately considered during storage, handling and final use.


The study is focused on the following areas of investigation:

Methanol Production
Here the study aims at identifying what are the current methods of production and what new production methods which are currently being planned for the future, and which are the most promising ones which should be explored in the longer term considering on the latest scientific and technology advances.

The study will then compare the advantages and the drawbacks of the different production methods. For the most advanced technologies which are based on the latest scientific developments, a special focus should be put on the long term prospects regarding their feasibility from an industrial production perspective for both for limited strategic use and for massive rollout purposes.

Use of methanol in the transport sector
The study will analyse what are the technical implications of the use methanol for transport purposes as a possible substitute or an add on for gasoline and diesel. The study should identify to what extent Methanol can be used with the current generation of engines designed for operating with gasoline and diesel. It should also identify what are the technological options to adapt the current generation of engines to operate partially  or totally with Methanol. The study will also look at the possible advantages and drawbacks of using Methanol in hybrid electrical engines.


The study is divided into three phases:

  • a first phase, dedicated to the analysis and elaboration of the state of the art on production, distribution and exploitation technologies for methanol in the transport sector
  • a second phase, in which an expert panel will be conducted in order to obtain a qualitative assessment of the different research approaches with regard to product maturity, cost, timeframes for market introduction and other relevant parameters to be identified by the experts ( such as security, safety, engine compatibility and performance, end user behaviour and resistance to change).
  • a third phase that, also on the basis of the expert panel conclusions, will carry out the economic analysis of the methanol use for transport purposes. A final study report will be released, including the policy options for the exploitation of this fuel.


Funding Source
Funded by STOA (Science and Technology Options Assessment), branch of EU Parliament


What is obvious is that no single powertrain can fully meet all the key criteria through which it can be classified on the base of consumer expectations and the environmental requirements (cost, performance and environmental characteristics). What can be expected and confirmed by all road transport scenarios analysed, is that this sector moves from the use of a single technology to a portfolio of powertrains in which BEVs and FCEVs play a complementary role.

Policy implications

The market driven approach - Since there is no clear picture for the moment as to which alternative fuels and powertrain technologies will ultimately prevail in the market, the option of creating a “level playing field” for all technologies – as proposed by the promoters of the Open Fuel Standard Act in the US – is appealing, as it would oblige the car industry to put a substantial number of vehicles in the market, which can run on natural gas, hydrogen, biodiesel, methanol, as well as flexible fuel or plug-in electric drive vehicles, among others. Proponents argue that this legislation would leave the decision on the type of car and fuel used to the final customer. The US methanol producers support this initiative, but some shortcomings of this policy initiative should be considered (as discussed in the final report)

Regulatory push for CCU - Should Europe choose to set very clear rules for competition between different types of fuels and vehicle technologies, based on a comprehensive and comparable well-to-wheel life-cycle analysis and considerations of security of supply, this would favour CO2 recycling. It would also imply embracing the idea of CO2 as an important future prime material and setting up a powerful CCU industry, similar to the Chinese approach, once CO2 capture costs can be brought down to a competitive level (estimated at around 20€/t of CO2 captured) and once the environmental and energy balance of methanol production from CO2 has been considerably improved. The advantage of this strategy lies in the opportunity of exploring additional potential markets for captured CO2 – not only road transport – and the chance for European technology leadership and exports. The risks associated to this strategy are the need for sustained investment in R&D and the uncertainties about the time to market of CO2-derived and competitive products.

Methanol islands - Both the IRENA (2013) experts and the methanol industry agree that under very specific circumstances, such as in Iceland with its very low electricity prices, methanol produced from CO2 is already competitive with gasoline. The analysis carried out in this project has identified further key elements for bringing down production cost for methanol from CO2, such as using electricity from wind farms that cannot be evacuated to the grid or employing solar electricity generated in isolated, but sun-rich regions for hydrogen and methanol production. Another key

Other results

The total quantity of methanol required for each scenario haw been calculated, corresponding to respectively 41.8 million tons for the Reference Scenario and 64.8 million tons for the Ambitious Scenario. Starting from these figures,  also the quantity of CO2 required to produce this fuel was calculated, in the hypothesis that the CO2 is sequestrated from power plants (sequestration efficiency of 88%, see the first interim report).


Lead Organisation
EU Contribution
Partner Organisations
EU Contribution


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