By: Prakriti Sethi
Last updated : February 23, 2026 8:44 am
Leveraging methanol can help India advance hydrogen adoption, strengthen energy security, and support industrial competitiveness while preserving flexibility in its transition pathway
India stands at a defining moment in its energy journey. With a rapidly growing economy, rising energy demand, and a stated commitment to achieve net-zero emissions by 2070, the country is pursuing a transition that must be ambitious, inclusive, and resilient. Hydrogen is widely recognized as a central pillar of this vision, offering the potential for deep decarbonisation across power, industry, and transport. However, translating hydrogen ambition into scalable deployment requires close attention to infrastructure readiness, cost, and operational realities.
India’s target of producing 5 million metric tonnes of green hydrogen annually by 2030 is significant. As the focus now shifts from targets to implementation, the practical challenges of storage, transport, and utilisation become increasingly apparent. Transporting hydrogen from renewable-rich regions such as Tamil Nadu or Rajasthan to demand centres in Maharashtra or Gujarat involves compression, liquefaction, or conversion, each adding cost, complexity, and energy loss.
These constraints do not diminish hydrogen’s strategic importance, but they do highlight the need for complementary pathways that can accelerate deployment under current conditions. There is no single fuel or technology capable of meeting India’s vast and diverse energy needs on its own. A pragmatic, multi-fuel approach aligned with India’s infrastructure, resource base, and industrial structure is therefore essential.
In this context, methanol emerges not as a competing solution, but as an enabling one. Methanol can function both as a hydrogen carrier and as a versatile fuel and feedstock in its own right. Its value lies in making low-carbon molecules usable at scale, sooner, and with lower system disruption. Leveraging methanol can help India advance hydrogen adoption, strengthen energy security, and support industrial competitiveness while preserving flexibility in its transition pathway.
Methanol as a Bridge and Enabler
Methanol is a globally traded commodity with a diversified consumer base and mature markets. It is already a cornerstone of the chemical industry, supporting the production of downstream products such as formaldehyde, acetic acid, olefins and dimethyl ether (DME). These value chains underpin critical sectors including pharmaceuticals, construction, and manufacturing, all of which already consume methanol at scale. This existing demand base means the transition challenge is one of decarbonising supply rather than creating entirely new markets.
A key advantage of methanol lies in its physical properties. Methanol is liquid at ambient temperature, enabling storage and transport using established infrastructure with minimal modification. With supply chains operating across more than 100 ports globally and well-developed safety standards, methanol offers a level of logistical readiness that few alternative fuels can currently match.
Methanol’s strategic value is reinforced by its feedstock flexibility. It can be produced from a wide range of renewable and low-carbon sources, including agricultural and forestry residues, municipal solid waste, biogas, black liquor from pulp and paper production via syngas which is composed of carbon monoxide and hydrogen, and captured carbon dioxide combined with renewable hydrogen. Depending on feedstock and production pathway, renewable methanol can achieve lifecycle greenhouse-gas reductions of up to 95 per cent compared with conventional fuels. It can also significantly reduce nitrogen oxides while virtually eliminating sulfur oxides and particulate matter.
Methanol also plays an important role in addressing renewable-energy intermittency. Power-to-liquid pathways allow surplus renewable electricity to be converted into methanol, effectively storing energy in a transportable and dispatchable form. This improves the economics of renewable assets and reduces risk for investors, while lowering the infrastructure burden associated with long-distance hydrogen transport. In this way, methanol acts as a practical interface between renewable power generation and end-use demand, helping hydrogen function at scale in real-world systems.
Supporting Key Sectors of the Economy
Beyond its chemical role, methanol has demonstrated versatility across multiple energy applications. It is already used globally as a transportation fuel in low-, mid-, and high-blend gasoline applications, as well as in dedicated engines and as a diesel alternative in heavy-duty vehicles. Methanol’s high octane rating enhances engine performance, while its clean combustion enables immediate emissions reductions when used in existing internal combustion engine platforms. This offers a near-term decarbonisation option without waiting for complete fleet turnover.
The maritime sector provides one of the clearest examples of methanol’s deployment potential. International shipping accounts for approximately 3 per cent of global CO₂ emissions and faces limited decarbonisation options. Methanol has emerged as one of the few alternative fuels already moving from pilot projects to commercial adoption, with container shipping leading early uptake. Orders for methanol-fuelled vessels signal growing confidence in its scalability and long-term relevance.
India’s shipping sector presents a particularly relevant opportunity. The Ministry of Ports, Shipping and Waterways has identified alternative fuels as a strategic priority and designated ports such as Deendayal (Kandla), Paradip, and V.O. Chidambaranar (Tuticorin) as green hydrogen hubs to support the production, storage, and bunkering of hydrogen-derived fuels.
Kandla and Tuticorin have begun translating policy intent into action. Kandla port has approved a Rs. 3,500-crore e-project to supply alternative fuels to vessels and awarded a contract for India’s first port-based bio-methanol facility. Tuticorin has launched a pilot-scale green methanol bunkering project in collaboration with SOPAN Group, targeting emissions reductions of up to 95 per cent on a lifecycle basis.
The Sagarmala Programme further supports methanol deployment in inland waterways and short-sea shipping. These routes offer predictable operating patterns and controlled environments, making them well suited for phased fuel transitions. This approach allows India to build technical expertise and infrastructure incrementally, while reducing risk and preparing for broader international deployment.
Economic Impetus and Opportunity
Methanol also presents a meaningful economic opportunity. India currently imports over 40 per cent of its primary energy requirements, exposing the economy to price volatility and geopolitical risk. Reducing this dependency through domestic fuel production is a central energy-security objective. Studies suggest that a 20 per cent methanol blending mandate in transportation fuels could significantly reduce crude-oil imports, delivering substantial foreign-exchange savings.
India is well positioned to scale domestic methanol production using biomass, agricultural residues, and municipal solid waste. As highlighted by NITI Aayog, India generates approximately 60–65 million tonnes of municipal solid waste annually, a large share of which remains underutilised for productive energy recovery. Converting this waste into methanol can support a circular economy, reduce landfill pressure, and create decentralised value chains while contributing to energy security and emissions reduction.
Cost competitiveness is another important factor. NITI Aayog has noted that domestically produced methanol could be at least 30 per cent cheaper than conventional fuels. For households, methanol-based cooking solutions could reduce annual fuel expenditure by around 20 per cent. Across production, distribution, and end-use applications, a methanol-based ecosystem has the potential to generate significant employment, with estimates suggesting up to five million jobs over time.
The Road Ahead
Despite these advantages, scaling methanol’s contribution will require targeted policy action. The absence of comprehensive regulatory frameworks for methanol as a fuel, limited fiscal incentives, and a lack of large-scale commercial production facilities remain key constraints. Coordination across ministries, clarity on standards and safety, and long-term offtake certainty will be essential.
The foundations of a methanol economy have been outlined for several years, notably by NITI Aayog. What is now required is consistent implementation. The next phase—particularly upcoming budget cycles and infrastructure investment decisions—will be decisive. Choices made today regarding ports, shipping, industrial demand, and fuel standards will shape India’s position in the global energy transition.
India has the resources, technical capability, and market scale to become a leader in low-carbon fuels. Realising this potential depends on policy certainty and a recognition that methanol is not a diversion from hydrogen, but a practical pathway that enables hydrogen ambition to translate into commercial reality. With timely and coordinated action, methanol can play a central role in making India’s energy transition both achievable and economically sustainable.