Recently, I talked to Greg Dolan, CEO of the Methanol Institute about the methanol markets in China, India and elsewhere globally, as well as renewable methanol, methanol for shipping and as a diesel substitute. Following is an except from our discussion, which you can listen to or download below or in ITunes.
We can talk about methanol being a future-proof fuel because we do have renewable pathways already and then there’s the high level methanol blends. There’s the M100 cars and taxis that Geely is doing in China. They’re also doing M100 heavy duty vehicles, so FAW has an M100 heavy duty engine that they’re selling for trucks. M100 engines are being put in buses. Geely is doing M100 buses, and heavy- and and medium-duty trucks, so there’s also that use of methanol for heavy duty engines, and of course methanol is also a derivative for blend stocks like biodiesel, FAME, and also DME and OME. They are all good diesel substitutions in which methanol can play a significant role.
If you look at our current system, vehicles running on gasoline and diesel, those are high-energy density fuels. Often we see public policy really supporting low-energy density fuels, whether it’s added electric, hydrogen fuel cells, or to some extent even compressed natural gas, liquefied natural gas. Those are low-energy density fuels. The alcohol fuels, both methanol and ethanol, are much more practical alternatives that really close that energy gap between the existing liquid fuels we’re using today, and those more aspirational low-energy density fuels.
For years you’ve seen policies from governments, whether it was California or Europe or even China that had been supporting increasing promise of zero-emission vehicles. And often what they find, and I’ll use China as an example, is that if you get more of those EVs and fuel cell vehicles on the market, the government really has to step in and provide heavy levels of subsidies. So right now, if you’re a municipal bus authority in China you can practically get an electric bus for free, with the level of supports provided by the central government. That is not sustainable. You can’t do that on a long-term basis. In fact, China is looking at doing away with a lot of those subsidies in 2020.
Now one of the policies that we’re working on in China is, with the Ministry of Industry and Information Technologies, MIIT. MIIT began a pilot demonstration looking at methanol-fueled vehicles in 2012. And this is really M100 cars, trucks and buses. The program began in five provinces, expanded to a number of provinces and cities, they completed the pilot demonstration stage at the end of last year. All the pilot programs were very well managed and accepted, 1000 vehicles, 200 million kilometers of experience.
So what MIIT is doing now is developing a methanol policy paper. It’s in its final review stages, recently the Ministry of Environmental Protection signed off on this paper, and it’ll put methanol on the map of public policy, moving towards promotion. What we’re looking at the Chinese government doing is moving towards a double-credit program. So they’ll basically provide disincentives for people that buy gasoline and diesel vehicles and incentives for people that buy cleaner vehicles, whether it’s battery electric, natural gas, hydrogen, and methanol. So we’re sort of bringing methanol into that public policy framework in China.