Green methanol project developer C2X has signed a framework agreement with the Egyptian government to set up a $3bn hydrogen-to-marine-fuel plant in the Suez Canal Economic Zone.

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C2X — founded earlier this year by shipping giant Maersk and its parent company AP Moller Holdings — will build, own and operate the facility, as well as the upstream wind and solar farms that will power the H2 production and methanol synthesis processes.

The first phase is expected to produce up to 300,000 tonnes of green methanol per year once it starts up in 2027 or 2028, with the Suez Canal Economic Zone indicating that the project could eventually scale up to one million tonnes annually.

While further details on hydrogen production — such as size and type of electrolyser — are yet to be disclosed, a similarly sized green hydrogen-to-methanol project by Iberdrola in Australia has announced it would use 240MW of electrolysis capacity.

“Egypt has many natural advantages that support a world-class green methanol project including access to high-quality renewables and proximity to the Suez Canal as the most important global trade waterway,” said Brian David, CEO of C2X.

However, while Maersk had originally kicked off the plant in March 2022 with a memorandum of understanding, commercial and technical feasibility studies are still ongoing — so a final investment decision (FID) is still some way off.

C2X tells Hydrogen Insight that in addition to shipping, it anticipates some methanol offtake from the chemicals and aviation sectors.

However, Maersk would likely be the main offtaker for volumes of green methanol from the Egyptian project, having already launched its first dual-fuel ship, dubbed Laura Maersk, and ordered another 25 container vessels capable of running on the fuel for delivery early next year.

C2X executives and Egyptian government officials at a signing ceremony. Photo: SCZone

However, despite announcements that Laura was the first ship to bunker “green” methanol, this was actually produced from landfill gas (biomethane), rather than by combining green hydrogen and carbon dioxide.

Laura’s fuel supplier OCI has previously told Hydrogen Insight that sufficient supply for renewable H2 as a feedstock for methanol is simply not available at present.

C2X is also reportedly exploring the development of projects in Spain, the US, India and Australia, with the ambition of producing three million tonnes of green methanol a year by 2030.

However, Maersk’s own annual demand for the fuel will reach five million tonnes by that year.

Other companies are also taking steps to set up green hydrogen-based methanol supply with the expectation that demand from maritime will take off in the coming years.

Last year, Orsted took FID on a 50,000-tonnes-per-year plant in Sweden due to start up in 2025, while Iberdrola’s aforementioned plant is still in early development but is due to start production in 2027.

Updated to correct expected project start-up date and add further comment from C2X.