Creating a Common Market in Future Fuels: Methanol

Transcription

1 Washington Hudson Institute 7 May 2015 Creating a Common Market in Future Fuels: Methanol Greg Dolan, CEO Methanol Institute SINGAPORE WASHINGTON BRUSSELS BEIJING

2 About MI MEMBERS INCLUDE: World s leading methanol producers Distributors Technology companies PROVIDES MARKET SUPPORT: To traditional markets & derivatives Leads the development of new emerging markets and applications Delivers safe handling tools to global distribution chain

3 2015 Members

4 Alternative Fuel Drivers Scale: The feedstock base needs to be large enough to support global transportation market. Sustainability: There needs to be a viable pathway to low- or nocarbon transport, while reducing smog. Subsidy: Can t rely on government support forever, so someone needs to make money.

5 Methanol Made From Many Resources

6 Methanol Value 6

7 (000s tonnes) 80,000 70,000 60,000 50,000 40,000 30,000 20,000 10,000 Chemical Commodity to Energy Resource CAGR: Energy: 10.8% Total: 6.0% CAGR: Energy: 12.7% Total: 8.1% E 2014E 2015E 2016E 2017E Chemical MTBE/TAME Fuel DME MTO/MTP (Merchant) Source: IHS Chemical 2014 Update, April, Excludes integrated methanol demand for methanol to olefins and propylene 7

8 Methanol is a Global Energy Resource Out of the ~64 million metric tons (21 billion gallons) of methanol sold globally in 2014, energy and fuel uses represent ~45% of total demand. Direct Methanol Fuel Blending Diesel Substitution MTBE Biodiesel DME MTG/MTO Fuel cells From , direct methanol fuel blending has increased at an annual rate of nearly 23%. 8

9 Examples of Transportation Fuel Use PASSENGER CARS SHIPPING TRUCKS & BUSES

10 Methanol-Gasoline Blend Options M3 M15 EU allows M3 (EN228) Blended a.o. in UK and NL China uses M15 Estimated 7 million metric tons ~75% of cars build by international automakers Trials in Australia, Israel, a.o. M20 M30 Automakers in US call for higher octane to facilitate greater engine efficiency (higher compression, turbocharging, downsizing) Fit with epure drive toward E20 in Europe M ASTM D5797 standard revision M100 dedicated vehicles (e.g. Geely) Use of SI technologies in Light and Heavy Duty vehicles Few changes needed to existing vehicle technologies at low cost

11 Different Technology Options in HDV Segment DIESEL BLENDS DME DUAL FUEL MD95 SPARK IGNITION BENEFITS High break thermal efficiency Low emissions Low soot Easy handling Compatible with existing engine technologies Opportunities for optimization Affordable

12 US Methanol Resurgence Shale Gas Revolution leading a resurgence of domestic methanol production. By some estimates, US methanol production increase from 3 million tons (1 billion gallons) in 2014 to 28 million tons (9.3 billion gallons) by US again becomes net exporter of methanol in next 2-3 years. New methanol production means billions of dollars of investment, thousands of permanent jobs, and tens of thousands of construction jobs. 12

13 North American Projects

14 US 114 th Congress Fuel Choices and Deregulation Act was introduced Sen. Rand Paul (S. 889) and Rep. Rod Blum (H.R. 1944) to provide a CAFE credit for automakers that introduce fuel choice enabling vehicles. Open Fuel Standard Act to be reintroduced requires automakers to introduce Fuel Choice Enabling Vehicles. According to April 2015 poll by RFA and Morning Consult, 69% of voters support the federal government requiring automakers to build cars that run on fuel sources other than oil. 14

15 Renewable Fuel Standard vs. Domestic Fuel Standard The RFS calls for 36 billion gallons of renewable fuels by 2022, but there is no viable pathway to get there. By law, cellulosic ethanol requirement for 2013 was one billion gallons, EPA reduced to 6 million gallon, then 800,000 gallons Legislation has already been introduced in both the House and Senate to modify or repeal the Renewable Fuel Standard. US EPA has completely mismanaged RFS program, playing into Republican hands. Easier to buy a unicorn than MI argues that Congress a gallon of cellulosic ethanol needs to repeal and replace Hit blend wall for E10, little the RFS with a Domestic commercial interest in E15, Fuel Standard opening door and E85 FFV CAFE credit to the use of domestic natural expires 2017 model year gas for methanol fuel production. 15

16 China Methanol Fuel Status Estimated that 7 million tons of methanol blended with gasoline as M15 in 2014, against total gasoline consumption of 105 million tons. China adopted national standards for M85 and M100 issued in MIIT high proportion methanol demonstration that will serve as the basis for M85 vehicle standards was launched in 2012 in Shanxi, Shaanxi, and Shanghai, and is now expanding to other provinces and cities. 160,000 vehicles converted to methanol fuel, mostly taxis. M15 truck loading in Shaanxi province Geely Chairman LI Shufu with methanol cars

17 Rally Racing with GEM Fuels Methanol Institute, Methanex and OCI NV (Natgasoline) sponsored GEM fuels in 2013 and 2014 World Rally Championship. GEM Fuels: 37% Gasoline; 21% Ethanol; 42% Bio-Methanol 2013 Junior WRC and 2014 Fiesta Trophy Results: 24 young drivers in 10 Rally Race events across Europe drove 16,000 km Consumed 38,000 liters of GEM fuels Saved 66,000 kilograms of CO2

18 Australia Methanol Fuel Blending Methanol Fuels being commercialized in Australia Project led by Coogee. Methanex is a partner Path to energy security Methanol excise tax free status for 10 years (~A38c/litre, ~$US 480/t) Successful road trials and testing programs completed Commercial roll out of GEM 8 planned in 2015; GEM15 & GEM56 in the future

19 Israel Methanol Fuels Demonstrations Israel fundamentals: Large gas finds in Israel Strategic need to reduce oil dependence Technology focus Prime Minister Netanyahu established Fuel Choices Initiative. M15 demonstration underway, M70 demonstration launched.

20 Marine Fuels in Transition Bunker fuel usually made from diesel has been historically used in the shipping industry. With over 90,000 commercial vessels moving around the world s oceans, shipping consumes 370 million tons of fuel (Heavy Fuel Oil and Middle Distillates). Bunker fuel has been highly polluting; high SOx, NOx, particulate emissions. 20

21 SOx and NOx Regulations Driving Market The International Maritime Organization has adopted regulations for SOx and NOx that are transforming the shipping industry. While SOx reductions may be met with low sulfur fuels, the combination of SOx and NOx reductions driving shipboard solutions.

22 Methanol Marine Fuels Launched in March 2015, Stena Germanica features methanolfueled marine engine in EUsponsored effort. Methanex s Waterfront Shipping has ordered seven new vessels powered by MAN dual-fuel methanol/diesel engines. MethaShip project led by Lloyd s Register with German shipbuilder and shipyard designing cruise ship and ro-pax ferry over next three years. 22

23 Methanol vs. LNG Methanol Capital costs for ship conversion 1/3 that of LNG. Methanol can easily be stored at any port in the world, again at a fraction of the cost of LNG storage. Major engine manufacturers confident engines can meet SOx and NOx requirements. LNG ships already use LNG as a fuel, while methanol is a cargo. LNG industry has head start in promoting the fuel for marine engine use. Medium speed LNG duel fuel engines can meet SOx/NOx requirements, but slow speed engines cannot meet NOx, and will need SCR or EGR.

24 Conclusions Given often inconsistent public policy, methanol fuels will succeed because: Methanol has a wide range of feedstocks making methanol a long-term sustainable fuel option. There are no technical barriers to using methanol as a transportation fuel. There are significant economic advantages to methanol fuel use.

25 Thank you for your kind attention! Greg Dolan CEO Methanol Institute