Purpose ESG to invest in Nauticol Energy for CO2-free methanol

Canadian asset management company Purpose ESG will invest in compatriot firm Nauticol Energy which might become the world’s first large-scale net zero methanol producer.

Nauticol Energy is an energy transition company that will produce net-zero and carbon-negative fuels for sectors such as the marine. Its first facilities provide net-zero methanol by harnessing Western Canada’s natural gas, along with carbon capture and sequestration. Methanol is particularly suitable for use in marine fuel to reduce emissions.

Methanol is a clear, odorless liquid that is water-soluble and biodegradable. More than 99 per cent of global methanol comes from coal and natural gas. Nauticol’s methanol will be produced with integrated CCS to permanently store CO2 emissions deep underground.

“We have made significant progress securing regulatory permits and agreements for commercialization, along with earning consistent support from indigenous communities and investors,” said Mark Tonner, CEO of Nauticol.

The plan is to start the construction of the first plant this year. After that, the company expects the start of production in 2026. The initial production capacity is 1.7 million tonnes of net-zero methanol annually.

Nauticol has also secured transportation deals with TC Energy and CN Rail, as well as Port access via Prince Rupert. It has also secured offtake agreements with two investment grade offtakers for 80 per cent of its product.

“Nauticol’s first project is competitively positioned adjacent to abundant natural gas feedstock and vast underground deposits of natural gas in Grande Prairie, Alberta,” said Young Bann, CEO of Purpose ESG. “Methanol can be used as an alternative to conventional transportation fuels and is particularly popular in the marine transport industry. It has not previously been proactively adopted due to heavy pollution caused by conventional coal-based production.”

In 2020, the Maritime Safety Committee approved the formal adoption of the use of methanol as a marine fuel.

Compared with conventional marine fuels, methanol has proven superior performance across emissions categories; up to 80 per cent lower NOx emissions along with the elimination of SOx and PM emissions. Methanol offers significant reductions in CO2 emissions relative to traditional marine fuels where up to 95 per cent can be achieved with renewable feedstocks.

With the rising adoption of methanol as a marine fuel and the growth development of the likes of hydrogen carriers, the methanol market is expected to grow from $24 billion in 2020 to $66 billion by 2030 with a CAGR of 5.5 per cent during the forecast period.