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Methanol as Fuel Substitute Gets Chilly U.S. Reception

Photographer: Doug Kanter/Bloomberg

Coal is piled near methanol tanks in Xinxiang, Henan province, China. Close

Coal is piled near methanol tanks in Xinxiang, Henan province, China.

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Photographer: Doug Kanter/Bloomberg

Coal is piled near methanol tanks in Xinxiang, Henan province, China.

Backers of using methanol from natural gas as a substitute for gasoline got a chilly reception from a federal official who said he is skeptical the fuel will gain widespread adoption for use in cars and trucks.

Industry representatives face obstacles promoting methanol as a way to cut greenhouse-gas emissions and boost engine performance, Patrick Davis, director of the Energy Department’s Vehicles Technologies Office, said yesterday in Washington.

“There’s a lot of choices out there and they’re all vying for a fairly limited market,” Davis said at an industry event. “It is going to be a fight for any fuel to succeed.”

Using the fuel would reduce reliance on imported oil and offer a hedge against oil-price shocks that raise gasoline prices, said John Hofmeister, founder of Citizens for Affordable Energy and president of Shell Oil Co., the U.S. unit of Royal Dutch Shell Plc (RDSA), from 2005 to 2008. He also is a member of the United States Energy Security Council, which sponsored yesterday’s event.

Globally, about 40 percent of methanol is used by energy companies, said John Floren, chief executive officer of Vancouver-based Methanex Corp. (MEOH), the world’s largest supplier. The company is dismantling two plants in Chile and plans to reassemble them in Louisiana.

“We expect a lot of new plants to be built here in the U.S.,” Floren said.

Fracking Gains

Advances in drilling techniques -- including hydraulic fracturing, or fracking -- have boosted U.S. production of natural gas by 35 percent from a decade-low 18 trillion cubic feet in 2005, according to the Energy Information Administration.

Methanol plants worldwide can produce about 100 million metric tons (almost 33 billion gallons or 90 billion liters), and each day more than 100,000 tons is used as a chemical feedstock or as a transportation fuel, according to the Methanol Institute, which co-sponsored the conference.

Industry expansion depends on passing a law forcing automakers to produce cars that run on methanol, and approval by the U.S. Environmental Protection Agency to use it as a transportation fuel, Hofmeister said. Better lobbying of lawmakers on Capitol Hill is needed, he said.

Consumer Values

“Methanol matters for the same reason that ethanol matters, which is it’s an alternative to oil,” Hofmeister said in an interview. “It would help if people on the Hill understood the value to the consumer and the importance in the fuel mix.”

Methanol may make inroads as a fuel for heavy-duty trucks, said Matt Brusstar, deputy director of the EPA’s National Vehicle and Fuel Emissions Laboratory. The agency is studying engines that can run on methanol and diesel, he said.

“There are very few barriers right now to introducing the technology,” Brusstar told the conference. “It’s possible that methanol can achieve a longer lasting success.”

Ethanol producers outspend methanol makers on lobbying by 50 to 1, said Gal Luft, senior adviser to the United States Energy Security Council, which backs oil alternatives.

“As we expand the industry, that gives us greater resources to do the kind of lobbying we need to do,” Gregory Dolan, executive director of the Washington-based Methanol Institute, said in an interview.

One hurdle is a lack of infrastructure to produce and deliver methanol to fueling stations, Davis said.

“There are lots of competitors out there,” he said. “It’s not at all completely clear that methanol has the suit of attributes that would favor it as a winner.”

To contact the reporter on this story: Jim Efstathiou Jr. in New York at jefstathiou@bloomberg.net

To contact the editors responsible for this story: Jon Morgan at jmorgan97@bloomberg.net Steve Geimann

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