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The technology to produce methanol from wood and hydrogen, presented by international combinators promising to build a billion-dollar plant in Pärnu, has failed worldwide, according to a recent report by Biofuelwatch, an environmental organisation operating in Europe and the US.
The energy transition project developer Power2X, based in the Netherlands, promised to produce half a million tonnes of green methanol a year from one million cubic metres (m³) of wood in Pärnu. Canada's largest pension fund, CPP Investments, is expected to finance the construction of the Estonian plant to the tune of one billion euros, and even more for green hydrogen plants in Portugal and Spain.
«When we first heard about Power2X's plan, we had a sense of déjà vu, as we've seen governments and local authorities elsewhere misled with very similar promises, only to end up with industrial ruins and wasted subsidies,» said Almuth Ernsting, co-director of Biofuelwatch. Biofuelwatch, in cooperation with the NGO Save Estonia's Forests, published a report on 22 October detailing how all attempts to start industrial production using Power2X's alleged method have failed, resulting in tens of millions being written off.
«While working on the report, we became convinced that the Estonian plant will not produce half a million tonnes of biomethanol per year, or anything close to it. It's interesting to wonder why this plant is still being planned,» asked Farištamo Eller, one of the leaders of the NGO Save Estonia's Forests.
Postimees asked Power2x if methanol production is underway anywhere in the world based on the technology they described. «Those projects used a different feedstock, municipal solid waste. This feedstock is very difficult to control in terms of quality and uniformity. The Pärnu facility will utilise woody biomass as feedstock, which is much more uniform in make-up,» Peter Daemen, spokesperson for Power2X, Estonian project director, admitted the fact that no one is producing methanol on a large scale based on the technology presented by Power2X.
Biofuelwatch analysts pointed out that companies that have attempted this have ended in fiasco before reaching production. They looked at what happened to projects recognised by the International Renewable Energy Agency (IRENA) and the Methanol Institute (MI) as technically ready for commercial production in 2021.
Renewable methanol Only two of these plants have come on stream and, according to the study, both were closed due to insurmountable technical problems.
Red Rock Biofuels planned to start producing jet fuel in Oregon (USA) using wood gasification and catalytic conversion (methanol would be one of the components). The US Department of Defense backed the initiative with $75 million and the Oregon state government with $45 million. Despite the huge subsidies, the plant did not start producing fuel and was eventually sold at auction.
One billion euros is expected to be spent on building the Estonian plant, and even more on green hydrogen plants in Portugal and Spain.
In September this year, the new owner announced that he would try to get the factory up and running.
Fulcrum BioEnergy only managed to produce 1,330 litres of fuel from bio-waste using similar technology in Nevada (USA) before the plant was closed and the company went bankrupt, despite a $16 million grant. The reason was that the technology could not be grown on an industrial scale.
Enerkem tried to produce 36 million litres of fuel a year in Edmonton (Canada) using the same method as Fulcrum. Despite subsidies of 40 million Canadian dollars from the city of Edmonton and 23.4 million Canadian dollars from the province of Alberta, the plant was only able to produce five million litres of fuel and was closed in early 2024.
Enerkem has three other similar plants in the planning or construction phase.
«These projects used a different feedstock, municipal solid waste. This feedstock is very difficult to control in terms of quality and uniformity. The Pärnu plant will use woody biomass as a feedstock, which is much more uniform in composition,» Daemen replied, although one of the US projects was based on wood.
Explaining the reason for investing in Estonia, he said: «Estonia has great potential in the renewable energy market and is well placed to capitalise on the growth of green methanol. Rail Baltic offers the opportunity to transport methanol directly to inland chemical producers in Eastern Europe, wind and solar developments are growing rapidly, and shipyards are already building a position of expertise as methanol retrofit hubs.»
Instead of wood waste, however, Power2X claims to be using real RMK pulpwood (0.7 million m³ per year), which is many times more expensive, currently around 73 euros m³.
«The RMK auction is an important step that demonstrates the support and partnership of the Estonian government in ensuring a reliable and stable supply of raw materials. We see a positive outcome as the foundation of our project. Raw material procurement would be based on long-term contracts with RMK and private companies, as well as some short-term wood purchase agreements,» Daemen explained.
Although pulpwood currently costs as little as 48 euros per cubic metre in Sweden, Daemen told Delfi Business that «there is no such wood material left in Estonia» to justify the investment.
There is currently only one wood-based methanol project under development in Sweden, owned by Södra Cell. The capacity of this plant is just over one per cent of what Power2X says it is planning for Pärnu. Södra Cell, which uses wood from its own forestry cooperatives, uses a completely different technology based on anaerobic fermentation rather than wood gasification.
«Power2X itself has no experience with this technology and in fact has not produced anything yet,» the report's authors said. They pointed out the bottlenecks of the chosen technology: the gasification of biomass (or mixed waste) and subsequent catalytic conversion produces acid gases and tar, which need to be removed because they cause corrosion, clogging and fouling of production equipment, as well as environmental pollution.
Another concern is the purification of syngas: according to one research study, catalytic conversions into chemical products only work well when there are no more than parts per billion of impurities in the gas.
Daemen responded: «We are building on the experience of 14 reference plants for gasification of biomass to syngas, with dozens of other examples of syngas to methanol in operation. The combination of these two proven technologies with green hydrogen is an innovation that has emerged from the recent renewable energy boom.» He did not respond to questions about the 14 plants.
What Power2X is actually up to in Estonia - whether they are hunting for EU funding or something else - is shrouded in mystery. In any case, the combinators are taking advantage of the local political blind faith in factories. Peter Daemen and George Cliffe, who have previously developed green transition projects in places such as Saudi Arabia, probably realised immediately that their narratives would find fertile ground in Estonia.
The plan began to take shape in secret a year ago, when Daemen and his local assistant Sulev Alajõe (Eesti200) from Pärnu lobbied the Minister of Economic Affairs, Tiit Riisalo (Eesti200).
On 20 February, RMK announced a proposal to enter into a long-term, favourable contract for the sale of pulpwood to a company that would build a wood chemical plant in Estonia. Nine days later, Power2X submitted a proposal to the City of Pärnu to start detailed planning for the plant.
When RMK announced on 5 May that five companies were interested in buying the wood, Power2X emerged as the dark horse, claiming that the project was already at the feasibility stage. There was jubilation among the factory's supporters that a billion-euro investment in Estonia was finally on the cards.
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Pellet manufacturer Raul Kirjanen's announcement in March that he was moving his billion-dollar investment to Latvia caused a stir. Notwithstanding the fact that there is a question mark over the large-scale plant due to the lack of a patent and slow sales of the pilot plant's production («The bubble bursts? A big question mark over Kirjanen's large-scale factory» PM 1.03.2024)
Daemon and Cliffe offered balm to sick souls.
Tiit Riisalo told Äripäev that the Ministry of Economic Affairs was very positive about such investment plans.
At the end of August, the Alajõe-Daemen tandem lobbied the new minister, Erkki Keldo (RE). Cliffe was also present at the meeting with the new climate minister, Yoko Alender (RE), where a parade photo was taken in honour of the plan for «Europe's largest methanol plant».
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«The methanol plant will give us a competitive edge and confidence to attract energy-intensive and high value-added foreign investment to Estonia, so we must not miss this opportunity. Estonia desperately needs this investment and we have assured Power2X that they are welcome here,» emphasised Keldo in a press release following the meeting.
«The planned green methanol production centre is a very important investment for Pärnu, Pärnumaa and the whole of Estonia. Bringing such a large investment to Pärnu would significantly improve the economic environment of Pärnumaa and all of Estonia, helping us to emerge from a prolonged economic downturn. Such investments support the economic well-being of Estonian residents and create higher-income jobs in areas where the average income is lower than in Harju and Tartu counties,» the Ministry of Climate said in its press release.
Afterwards, Daemen gave an exclusive interview to Delfi.
Even after the suggestion that similar projects around the world have gone wrong, Daemen remained confident about Poxer2X's plans in response to Postimees: «We have great confidence in the development of the Pärnu Energy Hub. Estonia benefits from Estonia has excellent fundamentals and the government and industry are taking concrete steps to unlock the potential. Some of the big improvements we see are the proactive development of the grid by Elering, the introduction of a CFD to promote offshore wind and the game changing Rail Baltica project for efficient logistics. We are excited and proud to be part of these developments.»
The Mayor of Pärnu, Romek Kosenkranius, told Pärnu Postimees that «many such green methanol productions are being developed in Finland in places where offshore wind farms are close by», giving the impression that the same technology as Power2X is being used in Finland. («The state is taking firm steps towards the billion dollar factory in Pärnu, at the same time conservationists are fighting for a rare piece of forest» PPM 11.10.2024)
Kosenkranius clarified to Postimees that he was still referring to methanol production in a broader sense.
In Finland it is planned to produce e-methanol, but out of CO₂ separated from the biomass cogeneration plant, not directly out of biomass. This is a completely different process and technology apart from what is planned in Pärnu.
Danish wind energy company Ørsted, which had planned to use the same technology as the Finns, announced in the summer that it was abandoning the planned project to build a methanol plant in Sweden due to low demand and the slower-than-expected development of the e-fuels market in Europe.
«The risk of the business is still in the hands of the entrepreneur,» says Kosenkranius. «If things have gone badly in other parts of the world, I'm not going to tell you not to do it.» The mayor confirmed that Power2X had not asked for a subsidy from the city and that the city had no plans to provide one.
«The technology risk is taken by the private sector,» said Minister Keldo. He admitted that the ministry had not carried out a background check on the company. «This company has not asked for any investment subsidies from the state,» he confirmed. «When we talk about the future large-scale investment measure (160 million ÜH), it is designed in such a way that the private sector makes the investment, and support can only be received if a real factory and jobs are created.»
However, not all politicians and civil servants are naive. The hint given to Postimees that someone may have done background research on Power2X suggests that Power2X is not a favourite in the eyes of the panel of experts deciding on the RMK timber deal.
«Is it possible that for some reason it makes sense to keep the hope of a billion-euro investment alive?» argues Farištamo Eller. «The law that allows large factories to be built only after a hasty environmental impact assessment and without listening to objections is not popular with the people. The hope of a billion-dollar investment may help to push it through. Judging by the government's communication, it seems that the target is not a methanol plant but phosphorite, which is definitely present underground. It is quite realistic that people will actively oppose open-cast mining, which threatens pollution and loss of groundwater, so a new phosphorite war would be quite real. The law, which would make it possible to roll over local people and environmentalists if necessary, would probably be wasted.»
There is also a local target in Pärnu. According to the previous article in the Pärnu Postimees, the land registry is already preparing to auction off the land, even though a decision on the factory's construction is not expected until 2026.
If the forest is sold, the obligation to protect it disappears. Protecting valuable habitats is optional for private owners. Even if there is no methanol plant, the forest could be cleared.
Environmentalists, led by the NGO Save Estonia's Forests, are fighting to prevent the logging of a recreational forest cherished by the people of Pärnu, which contains 11.3 hectares of valuable habitat.
Farištamo Eller emphasised that old, recreational forests like the one in Pärnu are rare. «Only one per cent of Estonia's land area contains such forests, and they make up about two per cent of the country's forested area. No factory should be planned in such a place, as it would destroy the remaining valuable forest ecosystem. Why not create a nature trail instead to showcase the valuable habitat? Just last week such a trail was opened in Tallinn. We must understand that this would be an irreversible decision: either we preserve this forest or we lose it. The biodiversity of valuable habitats cannot be relocated or artificially restored. A similar forest ecosystem will take at least a couple of centuries to develop elsewhere.»
Power2X technology
The Pärnu facility will utilise a combination of high efficiency gasification and green hydrogen from electrolysis of water to produce a stream known as syngas, a combination of CO, H2 and CO2. The syngas can then be converted into methanol utilizing a methanol reactor.
The produced green-methanol can be safely stored like a liquid much like the fossil based products that the product will replace. Methanol is then used in the chemicals industry to make adhesives and plastics, converted into fossil fuel replacements or utilised in the maritime sector as a fuel.
The Power2X facility will utilise a wide range of existing and proven technologies combined in an innovative manner to best fit the opportunities in Estonia. The plant will include innovative European and Estonian technologies such as Stargate Hydrogen’s electrolysers to act as a innovation engine for the local market. (Stargate Hydrogen has not produced any hydrolyzers yet - Postimees)
Source: Power2X
Marek Strandberg,
Head of the Science and Technology Desk, Postimees
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A recent article from Cornell University's Arxiv, titled «Low-Latency Carbon Balance Analysis Reveals Significant Reduction in Carbon Sequestration on Earth in 2023,» highlights a critical situation for carbon-sequestering ecosystems. Ocean warming is hindering carbon accumulation on ocean floors, while forests and other plants are losing their ability to support our well-being. This decline has occurred abruptly and has been largely overlooked in climate models and the basis for political and economic decisions. The global carbon situation is alarming; in 2023, atmospheric carbon dioxide levels increased by 3.37 ppm, leading to an additional 26.4 billion tons of CO2 in the atmosphere that natural systems couldn't sequester. This shift calls for a re-evaluation of economic practices related to wood use, as past assumptions about forests absorbing enough carbon are no longer valid.
In Estonia, wood waste management is often seen primarily as a waste issue. In many cases, this is true: the wood and paper industries focus on their products and markets, treating wood chemistry mostly as a by-product. For instance, UPM Kymmene in Germany operates wood chemistry on materials considered waste. However, companies like Fibenol are seeking logging permits for 1.5 million cubic meters of wood specifically for production, not waste. Similarly, the Power2X company plans to use wood for its methanol plant in Pärnu, pushing for extensive logging rights. This approach is problematic, as it treats Estonia's forests as waste sources instead of valuable carbon sinks.
Officials assert that logging should not exceed forest growth, but this viewpoint is outdated. Current growth metrics do not accurately reflect carbon sequestration capacity, especially given the rapid pace of climate change, which is outstripping political responses. In business, there's an urgent push for contracts, often overlooking potential risks. The ambition to revive Pärnu as a methanol hub comes with promises of significant investments and powerful hydrogen production—claims primarily based on reports from China.
In the pursuit of local economic gains, crucial facts may be ignored, similar to how a person can fall prey to fraud. While optimism has driven several bio-economy initiatives, the reality is that climate change is advancing faster than Estonia’s climate policies and current laws on a climate-resilient economy. Simply planting new trees to replace those cut down won’t restore forests or enhance carbon sequestration, as the changes we face are more extensive than previously thought.
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