By Anita Khuller
India is poised to play a significant role in the global energy space as it is likely to account for 25 per cent of the rise in global energy demand by 2040, recording a compound annual growth rate (CAGR) of 3.5 per cent. However, at present, India imports around 37 per cent of its total primary energy demand. Its dependence on crude oil and natural gas imports increased from 73 per cent and 17 per cent in 2005-06, respectively, to 81 per cent and 40 per cent 10 years later. This is due to the dismal growth in domestic oil (CAGR of 1.4 per cent) and natural gas (0.01 per cent) production over the past decade. In this scenario, methanol and dimethyl ether (DME) can play a key role in reducing the country’s dependence on imports and helping it achieve energy security.
Methanol is a single carbon compound, which can be produced from coal, natural gas and biomass (products that are capable of producing syngas), whereas DME can be produced from methanol or directly from syngas. Methanol is an efficient fuel (octane number 100) and emits lower NOx and particulate matter (PM) than gasoline, and no SOx. It can be blended with (or completely substituted by) gasoline to be used as a transport fuel, along with other applications. However, methanol is more corrosive than gasoline and may require new equipment for its storage and distribution.
Like methanol, DME is an efficient fuel, and burns with lower NOx and PM emissions than diesel, and produces no SOx. It is a viable and clean alternative for diesel and can be blended with liquefied petroleum gas. Methanol fuel is used in China in various blends, ranging from M5 to M100. In Europe and North America, blending of fuel is limited to gasoline blending in low percentages. Mid-level or high-level fuel blends of alcohol could enable manufacturers to design high efficiency engines, which will compensate for the low energy density of methanol.
The commercialisation of methanol vehicles has gained new momentum in China. Methanol consumption in the country increased to 69.5 million metric tonnes in 2017. It alone produces 65 per cent of the world’s methanol, and utilises it for transport. In Guizhou province, around 5,000 methanol-fuelled taxis have been in operation, accounting for nearly about 75 per cent of the total methanol vehicles in the country. The government has also launched 13 methanol filling stations. Other countries, including Israel, Italy, Japan and South Korea, largely use methanol as a fuel.
In a recent international report by Research and Markets, “Methanol Market – Growth, Trends, and Forecast (2019-24)”, released in July 2019, the demand for methanol-based fuel from the marine industry has opened up new opportunities for growth. The global market for methanol is expected to register a CAGR of 5.64 per cent during the forecast period (2019-24), even though the methanol market is partly fragmented, and is dominated by very few players, including Methanex, Sabic, Methanol Holdings (Trinidad) Limited, LyondellBasell Industries Holdings BV and PETRONAS. The Asia-Pacific region dominates the global methanol market, with China and India as the largest consumers.
Current status in India
Even though India is at a nascent stage in methanol production and usage, it has a huge potential with a large set of applications. There are five main producers of methanol in India today – Gujarat Narmada Valley Fertilizer & Chemicals Limited, Deepak Fertilizers, Rashtriya Chemicals and Fertilizers, Assam Petrochemicals, and National Fertilizers Limited.
As per Niti Aayog’s report “India’s Leapfrog to Methanol Economy” by Dr V.K. Saraswat and Ripunjaya Bansal, if the country moved to 15 per cent blended fuel by 2030, both for transportation and cooking, it would save $100 billion in crude imports annually. Blended fuel will also help reduce fuel prices by at least 10 per cent, making it cheaper to run vehicles, the report estimates. A comprehensive plan has been drawn up to replace 20 per cent of crude imports with methanol.
According to Saraswat, India is ready for 15 per cent methanol blending in petrol, and Niti Aayog will soon bring out a cabinet note to make it mandatory for passenger vehicles to run on methanol-mixed petrol. “The cost of petrol will come down by Rs 3-4 per litre when we would make it mandatory for passenger vehicles to run on petrol blended with 15 per cent methanol,” he says. Also, the Ministry of Road Transport and Highways will introduce 60 buses, that will run on methanol. These buses will be initially imported. India will also commission nine ships that will work on methanol. The rules for methanol marine vessels have already been issued.
Trials for 15 per cent blending of methanol have been completed. The Indian Oil Corporation will be responsible for carrying out blending of methanol in transport fuel. It is currently awaiting cabinet approval to proceed.
Other applications
Niti Aayog is also promoting the use of methanol as cooking fuel in households as well as transport fuel. It is in talks with the Uttar Pradesh and Assam governments for the distribution of 20,000 and 50,000 gas stoves, respectively, powered by methanol. It is planning to implement this in Maharashtra as well. A plant each will be set up in Bengaluru and Assam for manufacturing methanol cooking stoves based on technology sourced from Sweden.
The shipping industry is fast transforming its fuel usage to methanol. At least seven ships of 50,000 deadweight tonnage worldwide have already converted into methanol-based engines. Keeping pace with global trends, the Inland Waterways Authority of India (IWAI), in December 2018, announced its plan to use methanol as a marine fuel by retrofitting its work boats with engines that can run on green fuel. Cochin Shipyard will retrofit the boats at its facility in Kolkata. The shipyard has recently formed a joint venture with Kolkata-based Hooghly Dock and Port Engineers.
The IWAI has placed orders with Cochin Shipyard for procuring six new vessels that can run on methanol. In addition, it has adopted a strategy for creating a bunkering facility on National Waterways (NW-1) which would fuel the boats. It has also tied up with German and Swedish players for some of the work.
Challenges ahead
“We will require 10 mt (million tonnes) of methanol by 2022,” says Saraswat. The current capacity of methanol in India is 2 mt per year. Under the Methanol Economy Program launched by NITI Aayog, the production capacity is expected to increase by up to 20 mt annually by 2025, using Indian high ash coal, stranded gas and biomass.
To this end, the first step would be to create an innovation fund, which will support the R&D activities for methanol/DME in India. Moreover, India must set up a mega coal-based complex for the production of power, methanol and fertilisers in an integrated manner, which would significantly reduce the cost of various commodities produced. It is necessary to have an adequate methanol production capacity so that the user industries are assured of supply. In parallel, flexi-fuel vehicles, which can run on methanol/DME fuel blends, need to be developed and introduced in the market. Separate programmes are required for the development of methanol/DME cooking stoves and for converting diesel-powered railway locomotives to methanol/DME-based engines.
India should also look at options of setting up methanol/DME manufacturing facilities in Iran or Qatar as both these countries have huge natural gas reserves and can provide the resource at very low prices. Methanol/DME produced abroad can be imported to India for its direct application or for further conversion to chemicals like olefins. While India may end up importing methanol in the above scenario, it is likely to be economically advantageous as compared to importing crude. However, Niti Aayog has decided to call a halt to the promotion of methanol as an alternative fuel for petrol-run vehicles, and has shifted its focus to electrification of vehicles. That said, it will continue to promote the use of methanol-run gensets, telecom towers and other stationary power units besides methanol-blended fuel for cooking, as India goes all out to reduce its oil import bill across sectors.
A task force has been constituted to work towards the development of an overall framework for methanol production, distribution and utilisation in the country. The government is likely to go ahead with the target of 15 per cent methanol/DME blending in gasoline/diesel by 2022, which could result in savings of around $8 billion (based on the 2016-17 price of crude oil, which is likely to rise) by 2022. In a recent development, Coal India Limited has announced its plan to set up a coal-based methanol plant in West Bengal and has even invited bids from licensors of coal gasification technology, which is a step in the right direction. It has also identified 14 blocks for the production of methanol from coal.