Global Low-carbon Methanol Market 2025 – 2034

Reports Description

As per the Low-carbon Methanol Market analysis conducted by the CMI Team, the global Low-carbon Methanol Market is expected to record a CAGR of 34.7% from 2025 to 2034. In 2025, the market size is projected to reach a valuation of USD 2.5 Billion. By 2034, the valuation is anticipated to reach USD 27.7 Billion.

Overview

Low-carbon methanol is a new type of fuel synthesized from capture and utilization of carbon (CCU) processes, gasification of biomass, and synthesizing renewable hydrogen. Different from conventional fossil fuel-derived methanol, low-carbon methanol’s lifecycle greenhouse gas emissions are markedly lower. It is gaining acceptance in the chemicals sector along with marine shipping and transportation because it helps meet net zero emission targets as well as supports stringent global emission cuts.

The market for low-carbon methanol is expanding rapidly due to the global shift toward cleaner energy sources. Governments, as well as private companies, are scaling construction expenditures alongside innovation in advanced technologies and strategic alliances for efficient production at lower costs. Low-carbon methanol strengthens its position due to its multifunctional uses as both fuel and chemical feedstock, supporting the shift towards a low-emission economy. Its adoption is supported by appropriate policies, including but not limited to carbon pricing mechanisms or sustainability goals established by companies.

Key Trends & Drivers

The Low-carbon Methanol Market Trends have tremendous growth opportunities due to several reasons:

• Developments in CCU and Electrolysis Technology: This concern includes the advancement in carbon capture and utilization (CCU) alongside water electrolysis technologies aimed at producing green methanol from CO₂ emissions and renewable hydrogen. These processes are critical towards achieving a near-zero emission target for the fuel and chemical industries. The advancements made in CCU along with electrolysis continue to improve both the efficiency and scalability of low-carbon methanol production. Recently, CRI launched its flagship CO₂-to-methanol plant in China in 2022. Just a year later, Oxylus Energy partnered with Element 1 to utilize CO₂ derived methanol in their hydrogen systems by 2025. Such advancements result in improved emissions and enhanced cost-effective production methods, refining the global net-zero targets for methanol emissions.

• The Enhancement Of Green Hydrogen Infrastructure: Refers to the expansion of existing systems used for storage and production, as well as the distribution of green hydrogen, which is one of the key components utilized to create low-carbon methanol. enhancing infrastructure for hydrogen increases input economy decreases costs while improving supply consistency. The deployment contracts ITM Power issued launched NEPTUNE V 5MW electrolyzer set for use April 2024 further boosting efficient hydrogen generation, creating new access zones for renewable subsidized European Japanese regions, expanding functionality, and serving as support systems aid subsidized fossil sourced hydrogen. Reliant on these, foster consistent growth directly benefiting investment, lifting goal fuel-emission chemical globalization calculus acceleration.

• Investments from Energy Majors and Start-ups: This driver is characterized by increased funding from existing energy operators as well as new businesses to scale low-carbon methanol. It indicates increasing certainty for its acceptance as a sustainable fuel. In 2025, Honeywell and AM Green signed an MoU to explore green methanol production from captured CO₂ in India. In 2024, GAIL entered into a contract supplying 350 ktpa of CO₂ with AM Green for methanol production. These initiatives exemplify strategic sponsorship by both utility giants and green innovators. Accelerated development, testing, and commercialization are made possible through this financial support. Inflow of capital into the sector encourages innovation in competitiveness and accelerates the global rollout of projects.

• Supportive International Collaborations and Research Initiatives: International Collaboration and Research Activities aimed at Scaling Low Carbon Methanol Production involves collaboration across borders towards development, commercialization, and technological advancement of applicable processes or methods toward low carbon emission systems. Focused collaborations lead to lower costs, more knowledge resources, speedier timelines and enhanced deployment potential. Some agreements include AD Ports together with Transmar and Orascom devising plans for Storage & Export Hubs for the Green Methanol in Egypt or CRI’s GAMER project advancing high-temperature electrolysis towards CO₂ methanol conversion (efficiency). These are all examples showcasing interregional commitment efforts as well as interdisciplinary diversity incorporating multiple sectors into one definable objective group globally referred to as supply chains market access alongside technical prowess which defines the world’s cooperation needed tare integration on standardisable scalable systems on which such created low carbon methanol can be produced flexibly without restrictions.

Key Threats

The Low-carbon Methanol Market has several primary threats that will influence its profitability and future development. Some of the threats are:

• Technical Hurdles of Carbon Capture and Purification: Efficiency in carbon capture and purification remains an intricate industrial challenge, particularly for CO₂ extraction needed for methanol synthesis. Technical limitations continue to present bottlenecks to both efficiency and scale. Orsted’s cancellation of its 55 ktpa e-methanol project in Sweden in 2024 sheds light on the pilot-stage technologies’ commercial viability gap. Stranded infrastructure, excessive energy consumption, and strict purity standards constitute major impacts for separated streams of CO₂ that need captured refinement. Without significant advances, these projects may have difficulty obtaining funding or may face stalled progression toward other critical milestones. There is relentless compression towards advanced systems for commercialization which dampens optimism and erodes confidence along with stifling market targeting.

• Competition from Other Alternative Fuels: This threat encompasses low carbon methanol having to compete with alternative eco-friendly fuels like ammonia, SAF, and hydrogen, all of which are aimed at garnering investment while trying to obtain a slice of the market share pie. These alternatives often garner greater attention because of well-established supply chains or regulatory favors lean toward them more strongly than ever before. In 2023 MAN Energy Solutions made progress with ammonia-based propulsion for marine vessels So too did government policies geared toward SAF in aviation markets. Accessible capital alongside supportive policy will then allocate fewer resources towards methanol. Methanol must sharpen a clear defining rationale to distinguish itself distinctly among competing alternatives if it hopes to remain relevant within the space otherwise risk being overshadowed entirely. This competitive landscape accelerates the race for appealing cost structures alongside faster innovation cycles.

• Possible Ecological Concerns of Biomass Methods: This threat relates to the ecological effects that may come from using biomass as a feedstock for methanol production, such as deforestation or loss of biodiversity. While renewable carbon is a significant advantage, there are problems surrounding its availability. Cultivating land solely for energy crops can endanger ecosystems. Moreover, sustainably supplied biomass is regionally inconsistent. These factors could lead to stricter environmental policies and laws. At the moment there are very few commercial scale biomethanol plants that operate owing to these risks. Tackling the sustainability of feedstock is critical in regaining the credibility and future of methanol produced from biomass.

Opportunities

• Blending with Fossil Methanol for Transition to Lower Carbon Fuels: This opportunity involves blending low-carbon methanol with fossil fuel-derived methanol which allows for less emission while using the existing infrastructure. This provides a low-risk, low barrier opportunity for users and producers to make the transition to lower-carbon fuels and capabilities. Hapag-Lloyd announced their agreement to purchase 250 ktpa of blended bio- and e-methanol from Goldwind in 2024. This hybrid opportunity allows ships to continue to move goods while reducing shipping emissions without having to upgrade the current infrastructure. It also allows shippers space to become comfortable with green fuels while making the transition. Blending allows for time to ramp up before fully committing to a green methanol operation, and allows for volumes to ramp up across supply chains as these supply chains develop.

• Collaborating with Hydrogen Providers for Contract channel partners: This opportunity highlights a relationship between methanol producers and hydrogen product providers, as they are leveraging a partner to secure continuous access to renewable feedstock, stabilizing supplier and buyer site operations and minimizing price volatility. In January 2025, AM Green and DP World made an agreement for concurrent exporting of 1 Mtpa of green methanol and ammonia. Furthermore, GAIL partnered with AM Green for a CO₂ supply contract in October 2024. Contracting as a part of supply agreements are very important to build an industry for green methanol, while establishing long-term, strong supply chains, guaranteeing investor confidence and ensuring stable plans to disclosure and made plans around. Cooperation is key to ensure long-term sustainability of a project.

• Research and Development (R&D) of Methanol Synthesis Using Captured CO₂ and Renewable Energy: This opportunity focuses on developing systems that capture carbon dioxide(CO₂) alongside renewable electricity in order to synthesize methanol, therefore achieving a circular carbon economy. It includes both removing atmospheric carbon and generating clean fuel. In 2022, CRI’s Shunli plant in China started supplying 110 ktpa of synthetic methanol produced from waste CO₂ capture. The GAMER project sharpened their focus on high-efficiency methods which further improved electrolytic processes. These successes provide corroborating evidence for the claim regarding the feasibility of synthetic methanol’s production. Further refinements of ongoing R&D work are expected to reduce costs and increase application range. With this approach, a scalable fuel cornerstone solution aligned with climate targets is achievable.

Category Wise Insights

By Type

• Biomethanol: Biomethanol emerges from renewably sourced biomass like agricultural residues, organic waste, or forestry byproducts, providing a replacement to fossil-based methanol. It has been increasingly useful for emission reductions in marine fuels as well as chemical and energy industries. This fuel aligns with practices that promote clean circular economies and is also gaining attention in the more challenging sectors to decarbonize. In March 2025, Dutch LowLands Company biomethanol supplied major shipping clients under a supply contract of $0.18 billion, which marked considerable progress toward the commercialization of low carbon marine fuels. Investments biomaterials continue to receive from transport and industrial sectors underscores their importance.

• E-Methanol: E-methanol, often referred to as electro methanol, utilizes green hydrogen, captured CO₂ emissions, and renewable electricity to produce an ultra-low carbon fuel. This makes it well suited for the shipping and aviation industries as well as the chemical sector. Furthermore, its production helps in storing excess power generated renewably while recycling emissions, hence e-methanol aids both decarbonization efforts and energy transition objectives concurrently. Mitsui & European Energy established the world’s first commercial scale e-methanol plant in Denmark, which supplied Maersk in May 2025 thus marking a significant milestone towards scalable e-methanol production viability was achieved by this plant construction was powered by wind turbines and solar panels, which supported resourceful cross industry partnerships needed for future synthetic fuel pathways integration.

By Production Route

• Power to Methanol: Power-to-methanol processes utilize renewable energy to electrolyze water into hydrogen, which is then integrated with captured CO₂ to yield methanol. This form of technology sequesters intermittent renewable energy as well as reduces dependence on fossil inputs while enabling energy grid balancing and carbon recycling. The scaling approach meets the sustainable fuel policy objectives and provides flexibility for system integrations. In December 2024, eFining Rotterdam Power2X’s green methanol to aviation fuel plant showcased leading adopted technologies for emission capture auxiliary to flight operations powered by Honeywell Technologies. This further emphasizes the potential toward decarbonization of flight emissions, supporting Europe’s acknowledging initiative in progress thus far.

• Biomethane Reforming: Biomethane reforming relies on biogas sourced from organic waste to produce syngas that will subsequently undergo methanation. It utilizes pre-existing biogas infrastructure, making it very efficient while fostering local energy loops and agricultural circularity systems alongside reducing waste methane emissions. SunGas Renewables announced plans for a Louisiana plant producing 500,000 tons of biomethanol annually employing Johnson Matthey’s technology in May 2025. This project showcases noteworthy large-scale industrial interest in bio-reforming. Such production is poised to emerge as a key pillar in the renewable methanol landscape.

• Biomass Gasification: Biomass gasification is the process of converting solid biomass, such as wood chips and crop by-products into syngas through partial oxidation, which can then be used to produce methanol. This process enables diversified feedstock use while also promoting decentralized production. It reduces landfill burdens and helps develop rural bioeconomies, making it particularly useful in forestry abundant areas. Perpetual Next, for example, secured infrastructure and land for a gasification-to-methanol plant in Delfzijl, Netherlands. That facility Perpetual Next is building marks a new stage in sustainable chemical feedstock development and highlights that biomass gasification has potential for broader adoption throughout Europe.

• Waste to Methanol: Waste-to-methanol is the processing of municipal solid waste or some forms of industrial waste for methanol production, thus making fuel from waste. Its application is favorable in circular economies as it mitigates reliance on landfills and incineration while also curbing lifecycle emissions. Advanced urban sustainability programs make use of this invention, like Quebec’s Enerkem, where their Varennes facility approaches completion, set to annually process 200,000 tons of waste into 125,000 tons of methanol per year. This project stands as North America’s largest dedicated waste-to-fuel initiative, reinforcing public-private clean conversion technology collaboration.

By End Use

• Chemical: Within the chemical sector, methanol is an important ingredient for formaldehyde, acetic acid, and olefins. Furthermore, green methanol helps support decarbonization in the chemical supply chain. Its role in creating solvents, adhesives, and plastics is still very crucial. Switching to bio/e-methanol also lessens scope 3 emissions. BASF and ICODOS developed World’s first fully automated e-methanol pilot plant, which began operations in January 2024 in Germany. This plant captures CO₂ and green hydrogen, supporting clean chemistry innovations in e-methanol plants, which integrate low-carbon pathways through green methanol.

• Fuel: Currently in use, methanol serves as fuel for marine vessels and commercial automobiles, as well as a potential alternative to SAF (sustainable aviation fuel) jet fuel. In addition to pre-existing uses such as powering modified combustion engines, changes only need to require minimal hardware modifications for enhanced efficiency on energy dense fluids. Methanol’s clean burning combustion makes it pivotal during heat transitions, coupled with high energy density, it makes its tank friendly to the environment. Landmark milestones were marked by Maersk with the “Laura Maersk” completing voyages using green methanol e-fuel powered by e-methanol from Denmark’s Kassø plant, addressing headway toward the mainstreamity of marine aviation fuel.

By Feedstock

• Biomass: Within the broader classification of fuels, biomass feedstocks encompass certain herbaceous and woody plants, as well as specific agricultural by products, residues from forestry and milling activities, which are utilized in gaseous fuel production or fermentation methanol processes. From an environmental viewpoint, biomass has its advantages, it is cleaner than fossil fuels, and from a socioeconomic standpoint, it holds value to rural communities. Utilizing biomass as feedstock considerably mitigates carbon intensity. It is the foremost biomass feedstock anticipated in the EU decarbonization roadmap. Biogas-to-methanol plants operated by Politecnico di Milano converted agricultural residues to cleaner energy in Italy in June 2023 while supporting the nation’s emergent biogas-to-methanol facilities. Europe continues to spearhead innovations aimed at boosting methanol productivity from biomass.

• Carbon Capture & Utilization (CCU): Methanol synthesis using CCU technology employs captured industrial emissions of CO₂ alongside hydrogen as inputs for low-carbon methanol production, thus transforming emissions into fuel of value. This approach also enables climate goals as well as circular carbon economy objectives, hence it is critical for industrial decarbonization efforts. In October 2022, CRI commissioned Asia’s largest CO₂-to-methanol facility in Anyang, China, which recycles 160,000 tons of CO₂ annually, which centralizes CCU methanol within the carbon neutrality frameworks, forming mature stages of carbon-to-fuel pathways.

• Renewable Hydrogen + CO₂: Green hydrogen produced via renewable energy electrolysis can be paired with captured CO₂ to produce e-methanol fuels. This process helps sustain hydrogen economies while providing carbon loop integration, thus enabling conjugate fuel utilization in heavy-industry and long-haul transport. Innovation is greatly improving the industry. Recently, in June 2024, a NiZn catalyst for solar driven CO₂-to-methanol conversion was developed, which moves us closer toward solar fuels, thus allowing the future production of carbon-neutral synthetic fuels. Low-emission fuel potential remains an area of active research.

• Natural Gas with Carbon Capture: Methanol made from natural gas becomes low-carbon when paired with carbon capture technologies that trap and store CO₂ emissions. This transitional route leverages existing infrastructure while reducing environmental impact. It is cost-effective for short-term decarbonization. In April 2025, Ørsted received $0.1 billion in U.S. funding for a Texas plant producing e-methanol using natural gas reforming and CCS. The facility will supply 300,000 tons of green methanol annually. It represents a hybrid path between fossil and green methanol.

Impact of Latest Tariff Policies

The recent tariff increases from the U.S. and EU have heightened the costs associated with importing key raw materials for low-carbon methanol technologies. This has exacerbated supply chain bottlenecks, increased expenditures, and postponed the completion of significant clean fuel initiatives. Import-dependent nations are now struggling with affordability challenges, other countries, like the shipping and energy sectors, are accelerating their transition to methanol fueled engines. Unreliable policies are posing a greater risk for investment recovery.

Policy responses in the US and Germany aim to stimulate local production through tax credit allocation, subsidies, and infrastructure grants. Domestic companies are establishing modular plants and forming coalitions aimed at decreasing reliance on imports. These actions are creating robust supply chains while simultaneously fostering green employment opportunities. The acceleration of clean fuel adoption is also being facilitated by surpassing restrictions imposed by acts such as the Inflation Reduction Act or in-built flexibility within border tax adjustments, which would further smooth policy uncertainties – further concentrating on vertical integration to augment output stability.

Report Scope

Regional Perspective

The Low-carbon Methanol Market can be divided across different regions such as North America, Europe, Asia-Pacific, and LAMEA. This is a cursory overview of each region:

• North America: The region that includes the United States, Canada and Mexico is emerging as a continental leader in green methanol production due to rigorous policy incentives, growing sources of overabundant CO₂, and increasing demand from the maritime shipping industry. In 2023, SunGas Renewables announced plans for a green methanol marine fuel supply project in Louisiana. Enerkem Canada’s ongoing construction of a biomass-to-methanol plant in Louisiana demonstrates North America’s commitment to waste-to-fuel technologies, as it is expected to produce 125 tpa by 2025. In 2024, GAIL joined AM Green to acquire the necessary CO₂ for methanol synthesis. USA-based Carbon Sink is also expanding modular plant capacity under IRA initiatives. These trends illustrate how quickly the region is commercializing technologies in parallel with government-supported growth.

• Europe: Europe’s regulatory policies, climate objectives, and cross-border green energy initiatives are accelerating low-carbon methanol production. In 2024, White Summit Capital announced a $280 million green methanol project in Spain aimed at supporting shipping decarbonization which further demonstrates this trend. Germany has made large investments into the electrolyzer industry and intends to increase the integration of green hydrogen into methanol usage, further driving demand. France and the Netherlands are considering upgrading ports for the distribution of green fuels. In 2023 Thyssenkrupp Uhde, together with some industry partners piloted CO₂-to-methanol synthesis technology. Italy and the UK are formulating industrial cluster methanol blending plans. Russia is starting research on biomass-to-methanol using forestry residues. Europe’s transition towards hydrogen economies is advancing regional low-carbon networks and the adoption of methanol technologies.

• Asia Pacific: Asia Pacific which includes China, India, Japan, and South Korea, leads innovation in methanol technology use through significant adoption as well as integrated supply chains. In 2025, China marked a milestone in marine fuel technology by deploying the world’s largest ship engine powered with methanol. In 2023, India’s GACL and NTPC REL green signed an MoU on renewable fueled green methanol production. Japanese companies are looking into the import of low-carbon methanol for decarbonization of chemical processes that are already being produced. Australia is piloting the solar-hydrogen driven synthetic methods toward the production of solar fuels. South Korea has governmental consortiums sponsoring R&D activities on methanol fuel cells for automobiles. Taiwan is proposing the use of methanol on its roadmap towards decarbonization of heavy logistic transports.

• LAMEA: In the LAMEA region, there is an increasing number of projects on low-carbon methanol production utilizing renewable resources driven by export aspirations. In 2024, Brazil’s Suzano and Eletrobras began pursuing solar-hydrogen e-methanol plants utilizing pulp mill CO₂ emissions. That same year, HIF Global commenced construction on their green methanol plant located at Port of Açu in Brazil with a projected output of 800,000 tons per annum. Oman and the UAE are also starting feasibility studies for solar powered electrolysis to produce methanol. Egypt and other African nations are beginning projects in collaboration with EU ports to set up green methanol export hubs. In 2023, Saudi Arabia began looking into incorporating methanol-to-olefins processes within the decarbonization cycles of its petrochemicals. Such projects showcase the strategic ambitions LAMEA is pursuing to position themselves as a global supplier. The regions’ plentiful renewable energy resources combined with a maturing industrial base enable sustained long-term scalability.

Key Developments

In recent years, the Low-carbon Methanol Market has experienced several crucial changes as the players in the market strive to grow their geographical footprint and improve their product line and profits by using synergies.

• In March 2025, Mitsubishi Gas Chemical Company (MGC) is constructing a methanol demonstration plant at its Mizushima facility to utilize CO₂ and industrial by-product gases. In collaboration with JFE Steel and Mitsubishi Chemical, the plant will produce 100 tons annually. Operations are set to begin in FY 2026 under a Japanese government fuel innovation program. The project aims to validate methanol synthesis from captured emissions, supporting carbon recycling. Its mobile design allows future deployment across multiple sites in Japan. This underscores MGC’s push toward sustainable, circular chemical manufacturing.

• In July 2024, Cepsa, in collaboration with C2X (backed by A.P. Moller Holding and Maersk), plans to invest USD 1.15 billion in Europe’s largest green e-methanol plant at the Port of Huelva, Spain. The facility will initially produce 300,000 tons annually, with future capacity reaching up to 1 million tons. Using green hydrogen and captured CO₂, it aims to supply sustainable marine fuel and cut emissions in the shipping industry. Maersk has already committed to using methanol-fueled vessels, supporting early market demand. The project could create 2,500 jobs and avoid 1 million tons of CO₂ emissions each year. Operations are set for 2028, pending a final investment decision in 2025.

Companies like WasteFuel, Veolia, Thyssenkrupp Uhde, SunGas Renewables, and Södra are advancing low-carbon methanol through large-scale, tech-driven projects. Their focus on carbon capture, green hydrogen, and circular production enhances efficiency and sustainability. Strategic partnerships and government support are boosting scalability and market impact. These moves are shaping global leadership in the evolving low-carbon methanol landscape.

Leading Players

The Low-carbon Methanol Market is highly competitive, with a large number of product providers globally. Some of the key players in the market include:

• WASTEFUEL
• Veolia
• Thyssenkrupp Uhde
• SunGas Renewables
• Sodra
• Proman
• OCI
• Mitsubishi
• Methanex Corporation
• Enerkem
• Cepsa
• Carbon Recycling International
• AVEL Energy
• AVAADA
• ANDRITZ
• Others

These firms apply a sequence of strategies to enter the market, including innovations, mergers and acquisitions, as well as collaboration.

The global Low-carbon Methanol Market is being driven by industrial and energy leaders such as WasteFuel, Veolia, Thyssenkrupp Uhde, SunGas Renewables, and Södra, who are pioneering large-scale production and deployment of green methanol solutions. These companies are integrating advanced technologies like carbon capture, green hydrogen electrolysis, and biomass gasification to deliver low-emission alternatives for marine, transportation, and chemical sectors. Their commitment to sustainability, circular economy models, and global partnerships gives them a strong competitive edge in meeting climate targets and scaling impact.

Regional innovators such as Carbon Recycling International (CRI), AM Green (India), and Transition Industries (Mexico) are accelerating adoption through modular methanol plants and feedstock integration tailored to local contexts. These firms leverage government incentives, flexible infrastructure, and strategic CO₂ sourcing deals to enable affordable and scalable low-carbon methanol production. Their agility and focus on cost-effectiveness are expanding market presence in emerging economies with rising clean energy demands.

Specialist companies like Element 1 Corp, Goldwind, and HIF Global are targeting specific applications such as fuel cells, hybrid methanol systems, and synthetic fuels for global export. These firms emphasize rapid development cycles, lightweight and high-efficiency systems, and alignment with green logistics infrastructure. As competition intensifies, success in the low-carbon methanol market will hinge on technological differentiation, low lifecycle emissions, and the ability to meet diverse regulatory and commercial needs worldwide.

The Low-carbon Methanol Market is segmented as follows:

By Type

• Biomethanol
• E-Methanol

By Production Route

• Power to Methanol
• Biomethane Reforming
• Biomass Gasification
• Waste to Methanol

By End-Use

• Chemical
• Fuel

By Feedstock

• Biomass
• Carbon Capture & Utilization (CCU)
• Renewable Hydrogen + CO₂
• Natural Gas with Carbon Capture

Regional Coverage:

North America

• U.S.
• Canada
• Mexico
• Rest of North America

Europe

• Germany
• France
• U.K.
• Russia
• Italy
• Spain
• Netherlands
• Rest of Europe

Asia Pacific

• China
• Japan
• India
• New Zealand
• Australia
• South Korea
• Taiwan
• Rest of Asia Pacific

The Middle East & Africa

• Saudi Arabia
• UAE
• Egypt
• Kuwait
• South Africa
• Rest of the Middle East & Africa

Latin America

• Brazil
• Argentina
• Rest of Latin America