A Niti Aayog report has said that India should explore options of setting up a manufacturing facility for methanol/dimethyl ether in Iran or Qatar as these countries have huge reserves of natural gas and can provide the same at very low prices. The report titled ‘India’s Leapfrog to Methanol Economy’ further said methanol/DME produced abroad can be imported in India for its direct application or for further conversion to chemicals like olefins. “Though, India may end up importing methanol in the above scenario, it is likely to be economically advantageous rather than importing crude,” the report, co-authored by Niti Aayog member V K Saraswat and Young Professional with NITI Aayog Ripunjaya Bansal said.
The report, however, also stressed that India must set up a mega coal-based complex for production of power, methanol and fertilizer in an integrated manner which would significantly reduce the cost of various commodities produced.
According to the report, a task force has been constituted which would work towards the development of overall framework of methanol production, distribution and utilization in the country. “The government is likely to go ahead with a target of 15 per cent blending by methanol/DME in gasoline/diesel by 2022 which, if achieved, could result in savings of around USD 8 billion (based on the 2016-17 price of India basket of crude oil, which is likely to rise in the medium and long term) by 2022,” it said.
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Recently, Coal India Limited (CIL) has unveiled a plan to set up a coal-based methanol plant in West Bengal and has even invited bids from licensors of coal gasification technology to set up a coal-to-methanol plant which is a step in the right direction. Therefore, India can and must leapfrog to a methanol economy which could significantly reduce its import dependence and carbon footprint, the report noted. Niti Aayog said the views expressed in the paper are exclusively those of the authors and do not represent the views of the Aayog.
The report pointed out that India is poised to play a significant role in the Global energy space, as it is likely to account for 25 per cent of the rise in global energy demand by 2040. “Our country’s energy demand is expected to rise at a compounded annual growth rate (CAGR) of 3.5 per cent till 2040 as it advances on the path of development,” it said. India imported 37 per cent of its total primary energy demand in 2015-16, whereas the import dependence of crude oil and natural gas has increased from 73 per cent and 17 per cent in 2005-06 to 81 per cent and 40 per cent in 2015-16 respectively.
However, there has been a dismal growth in domestic oil (CAGR –1.4 per cent) and natural gas (0.01 per cent) production over the last decade. Methanol and Dimethyl ether (DME) can play an important role in order to contain the rising imports and improve the energy security of India. Methanol (is a single carbon compound which can be produced from coal, natural gas, biomass (i.e. products which are capable of producing syngas), whereas DME, which is the simplest ether compound, can be produced from methanol or directly from syngas.
According to the report, China is leading the world with the largest production of Methanol & DME. “China with 47 million tonnes (MT) of production in 2015 accounted for 55 per cent of the global methanol production (85MT). China also produced 3.8 MT of DME in 2015 which is highest in the world,” the report pointed out. India is at a nascent stage in methanol production and usage, the report said, adding that but it has a large potential given its wide applications. There are 5 main producers of methanol in India – Gujarat Narmada Valley Fertilizer & Chemicals limited, Deepak Fertilizers, Rashtriya Chemicals and Fertilizers, Assam Petrochemicals and National Fertilizers Limited.