Lot 2: Renewable methanol
This lot covers the purchase side (HPA) of renewable methanol in the €900m pilot tender.
At present, almost all methanol is still produced by unabated steam reforming of coal or natural gas, which, according to IRENA, means that methanol production is currently responsible for around 10% of total emissions from the chemical sector.
Renewable methanol (CH3OH) is promoted in the European Union’s hydrogen strategy due to its great potential to decarbonize the transport sector, particularly the maritime sector, heavy goods traffic, and the chemical industry.
€300 million were offered by Hintco to purchase renewable methanol in its pilot tender launched in 2022. Over 500 interested parties from 52 countries across five continents downloaded the tender documents from Hintco’s auction platform.
You will find the results here once the award procedure has been finalized.
Product specifications for methanol
Additional product specifications
In addition to the above-mentioned technical specifications, the product must comply with additional product specifications pertaining to the renewable and emissions savings characteristics of the product. They are based on the RED II and the Delegated Acts (2023/1184 and 2023/1185) and fulfil the requirements set in the grant decision and additional instructions from the provider of funds, BMWK.
They include the following criteria:
- All hydrogen atoms must be derived from water electrolysis
- The electricity used in the production process must derive from renewable sources
- The GHG emissions savings (including transportation) must be at least 73 per cent in comparison to the fossil fuel comparator as set out in the Delegated Regulation (EU) 2023/1185 at 94 gCO2eq/MJ
Environmental and social sustainability
Find out here about the range of tools we use in our pilot tender to ensure that climate protection goes hand in hand with environmental and social sustainability.
Frequently asked questions
Why were ammonia, methanol, and e-sustainable aviation fuels chosen for the first tender?
The hydrogen derivatives in the pilot tender – renewable ammonia, renewable methanol, and eSAF – were selected by BMWK, based on a market analysis and a market consultation carried out in 2021.
The products auctioned in future tenders may vary according to the individual objectives of the respective funding bodies.
Who defines the tenders in terms of process, product, technical requirements, regions, etc.?
The framework conditions for each individual tender, e.g. product, sustainability specifications, and regionality, etc., are solely defined by the providers of the funds covering the green premium/cost of difference. Hintco consults the provider of the funds during the design process and advises on commercial and procurement-related implications of the tender. As all state aid in the EU is subject to European public procurement law, the award process for any tenders funded by EU member states is based on this law.
How is a lot structured? What do “HPA” and “HSA” mean?
A lot is characterized by the double-auction process of a specific product, such as renewable hydrogen, ammonia, or methanol. In each lot, there is one auction for acquiring the product, resulting in the signing of a long-term contract with the winning bidder, called a Hydrogen Purchase Agreement (HPA). The acquired product will then be resold and auctioned by Hintco through shorter-term contracts and potentially in smaller batches.
This auction then results in the signing of several sales contracts, which are called Hydrogen Sales Agreements (HSAs), with various off-takers. This tenure and volume transformation actively contributes to the development of a functioning hydrogen market, as it provides the necessary price signals and liquidity on a continuous basis.