E-Methanol Production and Potential Export in the Northern Denmark Region for 2030 and 2045

Abstract

Denmark has set a target of 4–6 GW electrolysis capacity by 2030, of which a part of the produced hydrogen is to be used for export, while the rest could be transformed further into electrofuels. The North Denmark Region has favourable conditions for the production of carbon-based fuels. The region has high availability of CO₂ sources and a strategic position for establishing CO₂ hubs in the local harbours that could support biogenic CO₂ availability in the future. This paper investigates the potential of the region for exporting e-methanol through 22 energy system scenarios and the impacts on the energy system if this is to be realised by 2030 and 2045, when Denmark is expected to achieve its national climate goals. The analysis highlights the significant potential of this region to contribute to e-methanol production not only to meet the regional demand for methanol for marine transport and aviation but also for export to the rest of Denmark or beyond Danish borders.

1. Introduction

European climate targets and the aim to re-establish energy sovereignty stress the urgency of integrating renewable sources in all energy sectors. As a part of reaching these targets, technologies such as Power-to-X (PtX) or e-fuels are put on the table as one of the crucial solutions for hard-to-electrify sectors, specifically parts of transport and industry. PtX fuels or e-fuels are fuels produced from renewable electricity, hydrogen from water via electrolysis and carbon or nitrogen. The most commonly discussed e-fuels are methanol, ammonia and e-jet. The European Commission has finally recognised the complexity of transitioning the transport sector to renewable energy and has offered a separate set of policies targeting specific subsectors such as marine and aviation in the FuelEU [1] and ReFuelEU [2] initiatives. Paired with a specific demand for hydrogen production and the corresponding electrolysis capacity needed [3], countries with a high potential for offshore wind production are coming forward with targets for electrolysis and industrial actors are making project announcements. EU member states are obligated to publish national hydrogen strategies, and some of the countries have referred to the use of hydrogen for the production of e-fuels [4]. With the RED III Directive [5] supported by the Delegate Act published [6], a much clearer path forward has been defined to realise future targets; the definition of green fuels and the traceability of electrons have been clarified and the additionality requirement has highlighted the need for dedicated renewable energy establishment for e-fuel production.

Denmark is one of the countries with ambitious targets for PtX development as part of an ambitious climate agenda. Denmark has a target to establish 4–6 GW electrolysis capacity by 2030 [7] to be used both for meeting the domestic demand for e-fuels as well as for the export of hydrogen to meet the country’s target to reduce carbon emissions by 70%. With a long list of announced PtX projects [8], and only a few realised, the upcoming commissioning of the projects includes primarily hydrogen and e-methanol. Furthermore, Denmark has the aim of reaching climate neutrality by 2045 and thereby being among the first industrialised countries with a negative emission target.

The methanol pathway is interesting as it can be used not only as an end-fuel for fishing, ferries and shipping but also be further processed to jet fuel (e-SAF) via the methanol-to-jet process. The latest reviews on e-fuels [9,10] indicate that e-methanol is a promising fuel alternative for transport, specifically for ships [11,12,13], and aviation once certified [14,15]. Last autumn, Mærsk inaugurated the world’s first container vessel that sails on green methanol in Copenhagen [16], and 138 orders in 2023 showed an increase in methanol ship orders, making it the upcoming fuel in the sector [17]. A study of Norwegian ship owners taking on alternative fuels indicated that there is still some scepticism about adopting methanol within the next 5 years; however, there is also interest in deploying methanol in some segments of vessels [18].

Galimova et al. [19] investigated the global trading of e-fuels across 92 regions, indicating that Denmark is a part of the region for e-methanol export, while Hampp et al. [20] highlight Denmark as a hydrogen exporter to Germany. Other studies investigating methanol export from individual countries and big export hubs such as Australia [21] have reached conclusions that methanol as a hydrogen carrier together with ammonia could be more economically feasible for long-distance customers. Another study [22] using Egypt as a case investigated hydrogen and e-fuel export to meet 10% of the European demand for these fuels, showing great export potential for sunbelt countries with significant land availability.

With several studies highlighting the Danish potential for exporting hydrogen and e-methanol, this paper zooms into one Danish region, the North Denmark Region (NDR). The NDR consists of 11 municipalities and has the second-highest concentration of CO₂ point source emissions of all Danish regions. Furthermore, the cement factory Aalborg Portland is the single highest point source emitter in the country [23]. The availability of CO₂ and specifically biogenic CO₂ to produce green e-methanol is crucial and forms part of this analysis to determine which of the scenarios can be realised with the regional CO₂ availability. This is a compelling case both due to the high CO₂ availability in the region both currently and in projections for future developments where biogenic CO₂ will contribute with the largest share complimented by emissions from cement clinker production and waste incineration. Furthermore, several harbours in the region have indicated an interest in becoming CO₂ hubs, both for importing CO₂ for storage (CCS) purposes and potentially for utilisation (CCU). NDR ports are also active fishing ports and represent potential purchasers of e-methanol. There are currently six e-methanol projects announced in the region (see Figure 1) reaching almost 900 MW of electrolysis capacity, which can significantly contribute to the national target for 2030. This gives a good ground for investigating the potential for e-methanol production and export from the NDR in comparison to other carriers such as electricity, hydrogen and e-SAF.

This paper addresses a system-level approach to quantifying and realising the e-methanol potential of NDR in balance with the long-term sustainable transition of the regional multi-sector energy system. It is pertinent to analyse the regional resources as this enables the coordination of the development and deployment of the multiple PtX technologies that can contribute to the achievement of a sustainable transition. Furthermore, it assists in maximising the utilisation of the region’s valuable CO₂ resources in the long term.

2. Methodology

The advanced energy system modelling tool EnergyPLAN [27] was applied to analyse 22 scenarios developed for the North Denmark Region covering both the 2030 and 2045 timeframes. These scenarios provide insights into the energy system implications for the region. EnergyPLAN is an open-access model that offers detailed hour-by-hour simulations, enabling a thorough assessment of energy systems at different scales, which has been used in various research publications [28]. EnergyPLAN models the whole energy system considering synergies between energy sectors, including energy production, consumption, storage and transmission, enabling a comprehensive evaluation of different energy sources and technologies. The model provides insights into sustainable energy planning and the role of different technologies within the overall energy system.

The scenarios were constructed based on the IDA 2030 scenario [29] and the Smart Energy Denmark scenario for 2045 [30]. The 2030 scenario reflects meeting the 70% CO₂ reduction target for the entire country, while the scenario for 2045 depicts a 100% renewable scenario and is created as a self-sufficient scenario with sustainable biomass levels [30]. The national IDA scenario was scaled down to the regional level, based on representing 10% of the Danish population, in a study on how the utilisation of the regional CO₂ potential can impact the regional energy system in the future [31]. The model was validated and refined to incorporate the existing energy production facilities within the region, as well as planned expansions and expected retirements. For example, the offshore wind capacity was adjusted based on the approved projects of 80 MW that should be established by 2030, which will be further increased to 1400 MW in 2045. Figure 2 illustrates the primary energy supply of the main NDR models.

When assessing the future energy system, the transport demand was projected using the same methodology as in Kany et al.’s study [32]. The demand for the NDR was determined by scaling down the total transport demand for Denmark per capita in the region as illustrated in Figure 3. It is important to note that this mapping does not necessarily align directly with the volume of fuel sold within Denmark. Instead, it aims to illustrate the overall Danish transport demand, including the international demand from Danish passengers. While the demand mapping encompasses most marine demand, it excludes fishing demand and methanol demand for CO₂ vessels for CO₂ import to the region, which are later included when discussing the export potential. Notably, by 2045, all national ferries are expected to be electrified. As methanol’s applicability in the transport sector is wide, the demand for this fuel could be substantial. The analysis represents an extreme scenario in which 82% of the methanol demand is allocated to the aviation sector, assuming the maturity of the methanol-to-jet pathway for the production of e-jet (e-kerosene). The remaining portion of the methanol demand is utilised by international ferries, national and international shipping, as well as certain long-distance road transport segments.

The analysed scenarios aim to capture the integration of the currently announced methanol projects in the region and the energy system implications of implementing 890 MW of electrolysis, considering the potential for methanol production, as illustrated in Figure 1. Moreover, the analysis examined how the expansion of offshore wind capacities influences the export possibilities for electricity, hydrogen and methanol. The same scenarios were analysed in the 2045 model, with the addition of an ambitious offshore wind expansion. In this expansion, open-door projects were added to the offshore wind capacity that is needed for supplying electricity in the base scenario. An overview of all scenarios is given in Figure 4.

The scenarios for 2030 and 2045 therefore consist of the same demands, and the variables changed are electrolysis capacity, offshore wind installations and CO₂ demand for additional methanol production based on the project deployment or expansions of offshore wind (see Supplementary Materials for more details). The costs and technology data were adopted from [33,34,35].

3. Analysis and Results

3.1. CO₂ Availability

As indicated before, the NDR has a high availability of CO₂. The CO₂ emissions in the region exceed 5 million tonnes (Mt) including both biogenic and non-biogenic CO₂ emissions from different types of sources. Approximately 12–15% of the emissions from point sources in 2021 were biogenic, originating from biogas upgrading, biomass-fired combined heat and power plants (CHPs) and household and commercial waste incineration, among others. The majority of emissions from the local cement plant Aalborg Portland (45%) and CHP plant Nordjyllandsværket (25%) stemmed from cement production processes and the combustion of fossil fuels, respectively. Reaching climate neutrality in 2045 will lead to a drastic decrease in fossil CO₂ emissions and a doubling in biogenic CO₂ emissions within the NDR. The available CO₂ resources in the NDR currently not only surpass the required 0.7 Mt of CO₂ for methanol synthesis in the identified projects but also in the future scenario (see Figure 5). However, the distribution of the sources is not necessarily aligned with the locations of the projects. Nevertheless, as pointed out by Bang et al. [31], the surrounding context and especially spatial and temporal awareness are imperative for energy planning today as part of a fully decarbonised future.

The availability of CO₂ in the 50 km proximity to the planned project sites was investigated to ensure that the projects can use local resources and do not have to depend on large common infrastructure projects. Figure 6 illustrates the results of a straight-line connection between coordinates for the planned e-methanol project sites and the relevant point sources. It is clear that some projects have a high availability of CO₂ in their proximity, while others are subject to limited availability. However, in the case of the Port of Hanstholm, additional biogas plants have been announced in the area, which are not included in this analysis. If realised, these plants would increase CO₂ availability [36].

3.2. Offshore Wind Availability

A screening for the potential expansion of offshore wind in the region was conducted to investigate the potential of regional power purchase agreements for helping to meet local energy demand. In five nearshore areas in the region, there has been interest in establishing new offshore projects with the “Open-Door” scheme [37]. This scheme differs from regular government-run tenders, as it offers developers a self-initiate route to offshore wind investments where they can submit an unsolicited application for a license that allows for preliminary investigation of a specific geographical area. If approved, the project can receive a price premium of EUR 0.3 /kWh on top of the market price. In several areas, there is more than one suggested project, and therefore three scenarios are illustrated in Figure 7—low, high and max application. The low scenario has approximately 2 GW installations, the high scenario has 3 GW installations and the max scenario has 4 GW installations. Figure 8 illustrates the placement of the e-methanol projects and offshore areas.

Unfortunately, the authorities stopped the process, as an assessment indicated that the scheme might violate European Union regulations. The timeline for deployment is currently uncertain, but the scheme still illustrates the potential of offshore wind installations that could be installed at a certain point.

3.3. Energy System Analysis—Production and Potential Export

The 22 energy system scenarios presented in Figure 4 have the same point of departure as the basic scenarios for 2030 and 2045. The only changes made in the system are changes in offshore wind installations and electrolysis capacity in connection to investigating the export of hydrogen and methanol. This also illustrates the strong link between sourcing green electrons and producing methanol or other e-fuels. The 2030 system is not fully decarbonised but reflects meeting the 70% reduction in carbon emissions, while the 2045 system is fully decarbonised. The overview of the electrolysis and offshore wind capacities for different scenarios is illustrated in Figure 9. It is clear that in the 2030 timeframe, the electrolysis capacity can reach almost 20 times higher capacity than in the base model if a high scenario of offshore wind is to be realised, meaning that the offshore wind installations would go from 80 MW to almost 3 GW. In order to realise the announced projects, 10 times higher capacity would be required than for the currently approved projects for 2030, if the electricity supply is to be kept local.

For 2045, the maximum electrolysis capacity is almost six times larger than in the base scenario for the NDR. Here, it is also clear that making the NDR fully decarbonised requires almost half of the electrolysis capacity of the planned projects. Thus, all other scenarios illustrated good results in export potential due to higher electrolysis capacities, meaning that implementing new offshore wind installations presents opportunities for energy export in different forms, namely electricity, hydrogen and methanol.

Due to its conversion efficiency and system integration, the potential for methanol export is the lowest among the three options (see Figure 10). Even though the demands for methanol as end-fuel in the base models for 2030 and 2045 are very similar (0.282 and 0.312 TWh), the demand for e-SAF via the methanol route is significantly higher (0.035 TWh to 1.02 TWh), resulting in lower potential for methanol export. This results in a reduction of 80% in methanol export potential if the e-SAF is produced via this route in the case of low offshore wind implementation and an almost 30% reduction in the case of high offshore wind implementation.

Figure 11 shows the export potential for methanol if the planned projects are realised. Here, additional methanol demand for fueling fishing vessels and CO₂ transport ships used for storage at CCS hubs is included alongside the base methanol demand and e-SAF requirements. The estimation of the potential demand for methanol for fishing is based on the share of income of the region and total fuel used for fishing across all of Denmark based on [38].

As few harbours in the NDR have the ambition to become terminals for CO₂ imports and/or exports, the demand for importing vessels was adapted from [39] wherein the port of Hanstholm served as a proxy for a CO₂ import corridor. Here, it is clear that depending on the additional methanol demand that could arise in the NDR in 2045, it will be necessary to import methanol. This is not the case in 2030; however, here, it is important to highlight that this scenario does not include more offshore installations than those required to meet the demand for planned methanol projects.

As we investigated more scenarios than only the realisation of the planned projects, Figure 12 gives an overview of CO₂ availability. The highest demand for CO₂ is 1.7 million tonnes (Mt) in 2030 and 2.44 Mt in 2045. It is anticipated that in 2045, there will be a need for carbon storage (CCS) of approximately 0.4 Mt in the NDR based on the national target. It is clear from the figure that the availability of biogenic CO₂ poses a challenge in certain scenarios. Therefore, the import of biogenic CO₂ facilitates opportunities for realising scenarios with high export of methanol. If fossil carbon within the region is included, it is possible to meet the demand for carbon for methanol production. However, this could cause a collision with regulations and labelling e-methanol as a renewable fuel of non-biological origin (RFNBO). This does raise the dilemma of importing biogenic CO₂ versus utilising the local CO₂ resources from cement production that will most likely still be there in 2045. According to the RFNBO labelling of green fuels, as long as they achieve a 70% reduction in comparison to their fossil counterparts, the produced e-fuels will be labelled as green [5]. There have been several studies investigating the potential of Denmark to be the storage hub for imported CO₂ [40,41] but not necessarily on the utilisation of the imported CO₂.

4. Conclusions

In the following study, we investigated the potential of the Northern Denmark Region to become an exporter of methanol in comparison to electricity and hydrogen exports. The analysis revealed the strong interdependence between sufficient renewable energy production and the potential for export of all energy vectors investigated. There is a need for a significant expansion of offshore wind to profile the region as an exporter, which is highly dependent on the supporting schemes for expanding offshore wind but also highlights that it is possible to integrate large offshore wind production if linked with methanol production.

The regional demand for methanol has a strong influence on the export potential and additional demand that could occur in 2045, both the significant utilisation of the methanol-to-jet pathway for e-SAF production and the utilisation of methanol for fishing and CO₂-importing vessels, which eliminate the possibility for supplying methanol for other purposes outside of the region. With a geographical location that enables establishing CO₂ import hubs and evident CO₂ availability in the region, the production of hydrogen derivatives such as methanol could be of strategic interest. This is especially the case if the region is not connected to the transmission hydrogen pipeline toward Germany, which according to the current planning of infrastructure development is not the case.

Overall, the findings highlight the potential for methanol production and its integration into the energy system of the NDR. It is possible to integrate large amounts of offshore wind into the energy system by linking it to methanol production, which enables the decarbonisation of the transport sector and positioning of the NDR and its ports as forerunners.