Researchers from the Potsdam Institute for Climate Impact Research (PIK) have proposed a “minimal methanol economy” as a strategic gap-filler for sectors where electrification falls short, particularly in long-haul shipping. Philipp Glaum, Fabian Neumann, Markus Millinger, and Tom Brown argue that while electrification remains the most cost-effective strategy for decarbonising sectors like land transport and building heating, other industries require fuels with high energy density and specific chemical properties. These include long-haul aviation, shipping, backup power, and iron ore reduction.
The researchers highlight that hydrogen, often touted as a solution within a broader “hydrogen economy,” presents significant challenges. Hydrogen’s small molecule size and low volumetric density make it difficult to transport and store efficiently. Building a pipeline network for hydrogen demands precise coordination between supply, demand, and storage, adding layers of complexity and cost.
In contrast, methanol offers a more practical alternative. As a liquid at ambient conditions, methanol is far easier to transport and store. It can be used in low-volume applications without the infrastructure constraints associated with hydrogen pipelines. Methanol also serves as a better drop-in fuel to replace methane, integrates decentralised biomass wastes and residues into the energy system, and is already in high demand as an industrial feedstock and for producing transport fuels.
The researchers’ energy system model for Europe reveals that deep decarbonisation is most cost-effective when hydrogen can be widely transported and utilised for backup power and heat. However, a methanol-based system incurs only a modest additional cost—approximately €24 billion, which represents just 3% of the total system costs in their default scenario. This cost difference remains consistent across various assumptions about carbon sequestration, green imports, and biomass availability.
The study underscores that the minimal expense of adopting a methanol economy is justified by its ability to circumvent many of the logistical and regulatory hurdles associated with scaling up hydrogen infrastructure. By leveraging methanol, industries can achieve significant decarbonisation while avoiding the pitfalls of hydrogen’s infrastructure demands. This approach ensures a smoother transition to a low-carbon future, particularly for sectors that are harder to electrify. Read the original research paper here.