Low-carbon ammonia and methanol hold potential in energy transition but face uncertain outlook

Ammonia and methanol are being promoted as low-carbon fuels and hydrogen carriers to support the global energy transition. They are currently being evaluated as alternatives for clean shipping, power generation, and long-distance hydrogen transport. However, despite strong interest, their large-scale adoption remains slow due to uncertainty in demand outlook in a price-sensitive market, says GlobalData, the data and analytics company.

GlobalData’s Strategic Intelligence report, Ammonia and Methanol in Energy Transition, shows that countries such as Japan, South Korea, China, and members of the European Union are backing low-carbon projects, while companies including Yara, Maersk, CF, and Mitsubishi are exploring large-scale investments to boost their production.

Low-carbon ammonia capacity is estimated to grow to nearly 250 million tonnes per annum (mtpa) by 2030, with more than 460 upcoming plants globally. Low-carbon methanol is projected to follow a similar path, with plant numbers approaching 150 by 2030. Yet many projects are in early stages of development, with some hydrogen-linked initiatives already seeing delays or cancellations.

Ravindra Puranik, Oil and Gas Analyst at GlobalData, comments: “Low-carbon ammonia and methanol could complement the energy transition by acting as fuels and hydrogen carriers, but their role is far from guaranteed. Cost competitiveness, safety standards, and infrastructure development will be critical. Without supportive regulation and faster project execution, many of the current net-zero ambitions may not translate into reality.”

Demand for low-carbon ammonia and methanol is being driven by industries such as shipping, power generation, fertilisers, and chemicals, which see them as pathways to decarbonise existing operations. The report also highlights that low-carbon ammonia and methanol are closely tied to the scaling of hydrogen, acting as carriers for transport and storage. However, their future depends on stronger infrastructure commitments, technology advancements, and regulatory push. Shipping is seen as the most immediate opportunity, but significant investment and regulatory clarity are required to move beyond pilots.

Puranik concludes: “Low-carbon ammonia and methanol initiatives had a promising start earlier this decade. However, the pace of development is already slowing, with some high-profile hydrogen projects seeing cancellations or postponement. Combined with high production costs and technical challenges in handling, this raises doubts about whether low-carbon ammonia and methanol can achieve the scale once envisioned. These challenges underline the gap between announced capacity and what will realistically materialise by 2030.”