Centre likely to shelve plans to export methanol to Bangladesh

Centre refocusing on 15% methanol-blended petrol strategy under NITI Aayog's national plan

The Centre may tone down or even shelve its plan to export methanol to Bangladesh, as the government refocuses its strategy around the alternative fuel. Promising results on research into methanol-based petrol production at scale is the latest trigger behind the move.

State-run Oil India (OIL) is running ‘advanced-level’ tests, and the results are promising, officials told Business Standard.

Growing internal demand projections and increasing consumer appetite for newer alternative fuels have prompted the government to again consider methanol as a credible plant-based fuel, they added.

This comes even as Assam Petrochemicals, a joint venture between OIL and the Government of Assam, had earlier firmed up plans to export the fuel to neighbouring countries.

Methanol is a low-carbon, hydrogen-carrier fuel produced from high ash coal, agricultural residue and CO2 from thermal power plants and natural gas.

Under its ‘Methanol Economy’ roadmap, the NITI Aayog has said it is the best pathway for meeting India’s commitment to COP 21. NITI has argued for the introduction of M15 petrol — a 15 per cent blend of methanol with petrol.

Although slightly lower in energy content than petrol and diesel, methanol can replace both these fuels in the transport and energy sectors, comprising diesel generator sets, boilers, process heating modules, tractors and commercial vehicles.

Methanol is especially in focus for retail cooking use, partially replacing LPG, kerosene and wood charcoal. Blending of 15 per cent methanol in gasoline can result in at least 15 per cent reduction in the import of gasoline and crude oil.

In addition, this would bring down greenhouse gases’ emissions by 20 per cent in terms of particulate matter, nitrogen oxide, and sulphur oxide, thereby improving the urban air quality.

“It is now evident that a balanced mix of alternative fuels would be required to ensure energy sufficiency. The last two years have shown that we need a multi-pronged approach. The average cost of methanol technology has also reduced and incremental changes in efficiency are being made,” a NITI Aayog official said.

While India should ultimately become an export hub for alternative fuel in the region, safeguarding domestic demand would be first, he stressed. The discussion on methanol heating up has coincided with the government increasingly harnessing ethanol as a transport fuel.

In February, it rolled out E20 (20 per cent ethanol blending in gasoline), much ahead of the new deadline of 2025-26. The deadline itself had been brought forward from the initial 2030.
 

“The calorific value of methanol is lower than ethanol; so 1.28 litres of methanol is required to produce as much energy as a litre of ethanol,” the NITI Ayog has said.

“However, methanol can also be the cheapest fuel for India. Its production from coal had been flagged as the most economically-viable option available to the country,” a senior official said.

Talks with Bangladesh

The Assam government was bullish on exporting the chemicals to Bangladesh owing to an expansion project. It added 500 tonnes per day (TPD) of methanol capacity, and 200 TPD of formaldehyde, at a total cost of Rs 1,337 crore to APL.

The 500 TPD methanol plant at Namrup, Dibrugarh, was virtually inaugurated by Prime Minister Narendra Modi last month.

One of the largest methanol plants in the country, it utilises natural gas as feedstock, and has high energy efficiency, zero liquid discharge and provisions for future integration with an acetic acid plant.
 

On exports to the neighboring nation through Meghalaya, a feasibility study had been conducted by a joint group comprising chemical importers from Bangladesh and APL officials. Talks had been held in 2022.
 

Initially, the officials agreed to have a government to government intervention for the certification of chemical products by an accredited laboratory acceptable to both the countries.

But a final deadline has not been agreed upon so far.