Mubadala-owned Cepsa has partnered with C2X, an independent company majority owned by A.P. Moller Holding with A.P. Moller, to develop a green methanol plant in the port of Huelva, southern Spain.

Green methanol is made by using green hydrogen and non-fossil sources of carbon captured from the atmosphere or from agricultural and forestry waste and can replace fossil methanol, reducing carbon emissions in hard-to-abate industries such as long-distance shipping and other industries such as chemicals and plastics.

The project’s aim is to reach an estimated annual production capacity of 300,000 tonnes of green methanol, which Cepsa calculates would prevent the emission of up to 1 million tonnes of CO2. The plant would have the capacity to reach a maximum production of 380,000 tonnes. A final investment decision for this project, which would entail an investment of up to AED4bn (€1 billion), is expected to be made in 2025.

If approved, the project has the opportunity to create 2,500 direct and indirect jobs, further supporting the Andalusian Green Hydrogen Valley being developed by Cepsa and its partners with an ambition to reach a green hydrogen production capacity of 2GW by 2030. Some of the green hydrogen produced will supply the new green methanol facility.

By 2050 the demand for methanol could triple to some 300 million tonnes per annum, with the majority being for green methanol.

The project places Andalusia as one of the most competitive locations globally for the production and transportation of green molecules thanks to its renewable electricity capacity and industrial and port infrastructure, positioning Spain as a leading sustainable energy hub and securing independent and affordable clean energy for Europe.

The project was presented at COP28 UAE in Dubai with the participation of Spanish Prime Minister Pedro Sánchez, Spanish Third Deputy Prime Minister and Minister for Ecological Transition and Demographic Challenge, Teresa Ribera, Brian Davis, CEO C2X, and Maarten Wetselaar, CEO Cepsa.

Spanish Prime Minster Pedro Sánchez said: “This project will not only represent a significant reduction of CO2 emissions. Green methanol will also allow us to advance in the decarbonisation of hard-to-abate sectors, such as shipping or the chemical industry. In other words, this is a significant step towards a future free of fossil fuels. This investment is fully aligned with Spain’s strategy of reindustrialisation and energy transition. We want that 81 per cent of our power generation come from renewable sources by 2030. Green hydrogen will play a crucial role and, thanks to projects like this, Spain stands as a global reference.”

Maarten Wetselaar, CEO of Cepsa said: “This partnership is another milestone in our strategy to make Spain a European hub for green molecules this decade, with viable projects to reduce emissions in sectors that are difficult and urgent to decarbonize. We will work with the Spanish government to develop the regulatory framework needed for this project to be successful and scalable.”

Brian Davis, CEO of C2X said: “We see a growing demand for green methanol to help industries like shipping, aviation and chemicals move away from fossil-carbon based alternatives. While this project has strong fundamentals it will need an enabling framework in order to offer a competitive source of green methanol to its target customers. We look forward to working with Cepsa and the Spanish government as we develop the project.”