The role of green methanol and green ammonia in the transition to a zero-carbon economy
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The Chinese news agency Xinhua recently published an article by Qin Haiyan, Secretary-General of the Wind Energy Professional Committee of the China Renewable Energy Society, on the production and consumption of green methanol and green ammonia in China. I found the article interesting, so I decided to elaborate on the topic a bit more.
Developing green methanol and green ammonia projects is a strategically important pathway for strengthening energy security and building a new energy system dominated by renewable energy sources. China's targets to peak carbon emissions and reach carbon neutrality are creating unprecedented opportunities for hydrogen-based energy and green fuels.
The core question is: why is it so important to develop the production and consumption of green methanol and green ammonia?
China's high dependence on imported oil and gas creates energy-security risks. At the same time, the country has large agricultural and forestry resources and produces around 2 billion tonnes of agricultural and forestry residues every year. Combining this biomass carbon source with large-scale wind and solar resources, and with hydrogen produced through water electrolysis, could support the large-scale production of green methanol.
In theory, annual methanol production capacity could reach 1 billion tonnes, which would be enough to directly replace almost 500 million tonnes of imported crude oil in energy-equivalent terms. Green ammonia, produced from renewable hydrogen and nitrogen separated from air, is another carbon-free energy carrier that does not depend on fossil resources. Together, green methanol and green ammonia could form a new model of green, low-carbon energy supply and strengthen energy security.
The same logic is increasingly relevant for Europe. Europe does not have China's scale of biomass residues, but it does have strong offshore wind potential, industrial CO₂ sources, port infrastructure, and a rapidly tightening regulatory framework for maritime fuels. Under FuelEU Maritime, ships above 5,000 gross tonnage calling at European ports must reduce the greenhouse-gas intensity of energy used on board, starting with a 2% reduction in 2025 and rising to 80% by 2050.
Studies show that wind and solar capacity may need to be 3–8 times larger than peak power-system demand if a system is to provide reliable electricity while significantly reducing power-sector emissions on the path to carbon neutrality.
Large solar and wind plants connected to the grid create major fluctuations in output, but they also generate large amounts of green electricity with almost zero marginal cost. Using this electricity to produce green hydrogen through electrolysis, and then synthesising green methanol and green ammonia, is not only a way to absorb variable wind and solar generation. It is also a key pathway for making full use of low-cost renewable power.
This approach can help balance the power system, reduce system-regulation costs, and provide society with cleaner, more stable and more diversified energy services. It also supports deep decarbonisation in sectors that cannot be fully transformed through direct electrification alone.
In the future energy system now taking shape, green methanol and green ammonia occupy important and complementary positions.
The ultimate purpose of green methanol is to replace oil as a core chemical feedstock.
Green methanol is a key product connecting renewable energy with the modern chemical industry. Its main value is not necessarily in being burned as a fuel over the long term. Its deeper strategic value lies in serving as a basic chemical feedstock that can replace oil and support an entire green chemical value chain.
Through the methanol-to-olefins process, or MTO, methanol can be used to produce ethylene and propylene at scale. These then feed into a wide range of products, including polyethylene, polypropylene, high-performance synthetic materials and fine chemicals.
This can replace traditional petrochemical routes and improve the security and self-sufficiency of the chemical industry. Simply burning green methanol as a fuel would underuse its long-term resource value. Its real potential is to become a foundation stone of the green chemical industry.
This point is highly relevant for Europe as well. The first commercial-scale e-methanol plant in Denmark, located in Kassø, is designed to produce 42,000 tonnes of e-methanol per year using renewable electricity and captured CO₂. Besides shipping fuel, the plant's output is also intended for industrial users such as Lego and Novo Nordisk, showing that e-methanol can link maritime decarbonisation with chemicals and materials production.
The ultimate purpose of green ammonia is to become a universal fuel carrier in the zero-carbon economy.
Green ammonia production is relatively simple in principle: it requires green electricity, water electrolysis to produce hydrogen, and air separation to obtain nitrogen. It does not require a carbon source. When produced with renewable electricity and managed carefully across the value chain, it can offer very low lifecycle emissions.
Green ammonia has several advantages: relatively high energy density, mature storage and transport experience from the fertiliser industry, and the ability to move hydrogen-derived energy over long distances. In addition to its traditional role as a raw material for fertilisers, green ammonia could provide a zero-carbon solution for sectors that are difficult to electrify directly, including shipping, power generation and high-temperature industrial combustion.
It can also serve as an efficient medium for storing and transporting hydrogen energy. This could enable large-scale, low-cost interregional trade in clean energy and support a restructuring of global energy flows.
At present, shipping is the most promising entry point for the use of green methanol and green ammonia.
International shipping remains one of the hardest sectors to decarbonise. In 2023, shipping produced more than 0.86 gigatonnes of CO₂, equal to roughly 2–3% of global CO₂ emissions and around 10% of transport-related emissions.
The International Maritime Organization's 2023 strategy aims for net-zero greenhouse-gas emissions from international shipping by or around 2050, with indicative checkpoints of at least 20% emissions reduction by 2030, striving for 30%, and at least 70% reduction by 2040, striving for 80%, compared with 2008.
Europe is already turning these targets into market pressure. Maritime transport has been included in the EU Emissions Trading System since 2024. Shipping companies must cover 40% of reported 2024 emissions in 2025, 70% of reported 2025 emissions in 2026, and 100% from 2027 onward.
From the perspective of industrial maturity and application conditions, hydrogen and green ammonia have broad long-term prospects. However, in the short term, the conditions for their large-scale use as fuels are still limited.
Hydrogen faces several practical barriers.
First, storage and transport are difficult. Hydrogen requires either cryogenic liquefaction at around -253°C or high-pressure storage, often around 70 MPa. This creates demand for expensive storage and transport equipment, strict insulation and safety standards, and significant space requirements.
Second, safety management is complex. Hydrogen molecules are extremely small and prone to leakage. Hydrogen also has a wide flammability range, which makes leak detection, risk control and emergency response more challenging than for conventional fuels.
Third, the entire value chain must be built almost from scratch. Hydrogen production, storage, transport, refuelling and terminal power-supply systems are all specialised systems requiring new infrastructure, standards, operating procedures and maintenance capabilities.
Overall investment costs are high, construction cycles are long, and it is difficult to create a replicable large-scale application system in the short term. Hydrogen remains an important long-term technological direction, but at the current stage it is not yet suitable for rapid mass deployment in shipping.
Green ammonia is an ideal universal fuel for the zero-carbon economy, but it also lacks the conditions for large-scale deployment today.
Several practical barriers remain.
First, safety risks are significantly higher than for methanol. Ammonia is toxic, volatile and corrosive. Leakage can pose serious risks to workers and the environment. Storage, transport, loading, unloading and emergency-management standards are strict, which increases costs. A mature large-scale safety-management model has not yet been fully established.
Second, end-use combustion technologies are not yet fully mature. Ignition control, combustion stability and equipment compatibility are still at the experimental or demonstration stage. They are not yet at the level needed for large-scale commercial operation.
Third, existing storage, transport and bunkering systems cannot be used directly. A specialised infrastructure system must be built or upgraded, requiring major investment, new standards and a long industrial-development cycle.
This makes large-scale green ammonia use difficult in the short term, even though its long-term potential is very strong.
Using methanol as the starting point helps overcome technological barriers and open a path toward large-scale industrialisation.
For shipping, green methanol is currently a pragmatic solution. It is highly compatible with existing systems for fuel storage, transport, bunkering and ship propulsion. It remains liquid at room temperature and pressure, so terminals, transport vehicles, bunkering vessels and onboard fuel tanks do not require the same level of modification as hydrogen or ammonia systems.
Existing marine engines can often be adapted with an additional methanol fuel-supply system to enable dual-fuel operation. Modification costs are lower, the technology is more mature, and large-scale use cases can be developed more quickly.
This is why green methanol has become one of the first serious alternative-fuel options for container shipping. In Europe, the market is already moving from pilots to early offtake agreements: Hapag-Lloyd is expected to use around 70,000 tonnes of e-methanol for five large container ships from 2027, while North Sea Container Line is expected to use around 25,000 tonnes of e-ammonia for a smaller vessel under a ZEMBA-backed tender.
As demand for decarbonisation in shipping grows, green methanol production capacity could scale from millions of tonnes to tens or even hundreds of millions of tonnes. This would support equipment localisation, process optimisation and the development of a complete industrial chain.
Most importantly, it can help break the classic deadlock: no scale → high costs → no market. Shipping can become the first major use case that creates demand, matures the technology and reduces costs. This would then lay the foundation for broader use of green methanol in the chemical industry.
As green ammonia production technologies, safety-management systems, storage infrastructure and bunkering facilities mature, shipping could gradually move from methanol to green ammonia and achieve deeper decarbonisation.
Green ammonia production is simpler from a feedstock perspective because it does not require a carbon source. From an emissions perspective, it can also be cleaner if renewable electricity is used and ammonia slip, NOx and nitrous oxide risks are properly controlled.
Before green ammonia can be deployed at large scale, methanol can serve as a transition fuel. It can help shipping build the first generation of zero- and near-zero-carbon fuel systems, including port bunkering, vessel operation and safety management.
In this sense, green methanol can remove market, technology and governance barriers for the later adoption of green ammonia.
In the future, green ammonia may become not only a core shipping fuel but also a fuel for power generation, heavy industry and other hard-to-electrify sectors. It could become a universal zero-carbon fuel carrier supporting the decarbonisation of final energy use across society.
Green methanol and green ammonia are two complementary strategic pathways for building a new energy system, improving energy security and reaching carbon neutrality. Each has a distinct role in the transition.
According to recently published information from China's National Energy Administration, green hydrogen production in China is moving from pilot and demonstration projects to a new stage of large-scale development. By the end of March 2026, completed and under-construction renewable hydrogen production capacity exceeded 1 million tonnes per year, including more than 250,000 tonnes per year already in operation and more than 900,000 tonnes per year under construction.
China has also built around 8 million tonnes of oil equivalent per year of green fuel production capacity, including about 700,000 tonnes per year of green ammonia and 380,000 tonnes per year of green methanol. The sector is still at an early stage and costs remain high, but the direction is clear: green fuels are moving from demonstration toward industrial deployment.
In December 2025, the first phase of what was described as the world's largest integrated green hydrogen, ammonia and methanol project entered operation in Jilin. The project is planned around 3 GW of renewable power generation capacity and annual production of 800,000 tonnes of green synthetic ammonia and methanol.
In April 2026, construction also began on a major integrated green methanol complex in Shawan, Xinjiang. The project is designed for 3.6 million tonnes of methanol per year and 13.5 GW of photovoltaic hydrogen production capacity, with the goal of replacing a large share of coal input with green electricity and green hydrogen.
The broader takeaway is clear: green methanol and green ammonia should not be seen only as fuels. They are industrial platforms. Methanol connects renewable power, biomass carbon and the chemical industry. Ammonia connects renewable hydrogen, fertilisers, shipping, power generation and long-distance clean-energy trade. Together, they could become two of the most important molecules in the transition from a fossil-based economy to a zero-carbon industrial system.
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