Context: Recently, State-run engineering firm BHEL has successfully demonstrated a facility to create methanol from high ash Indian coal.

• By establishing the first-ever, indigenously designed High Ash Coal Gasification Based Methanol Production Plant at BHEL R&D center at Hyderabad.
• The project was funded by the Department of Science and Technology, which provided a Rs 10 crore grant, at the initiative of NITI Aayog, PMO-India, and the Ministry of Coal. 

Key Process

• Methanol is utilised as a motor fuel, to power ship engines, and to generate clean power all over the world.
• "With four years of hard work BHEL successfully demonstrated a facility to create 0.25 TPD methanol from high ash Indian coal using a 1.2 TPD Fluidized bed gasifier. 
• Where as the methanol purity of the crude methanol produced is between 98 and 99.5 per cent,".

Key Importance

• This in-house capability will assist India's coal gasification mission and coal-to-hydrogen production for Hydrogen Mission.
• The majority of worldwide methanol production is derived from natural gas, which is a relatively easy process. 
• Since India doesn’t have much of the natural gas reserves, producing methanol from imported natural gas lead to outflow of foreign exchange and sometimes uneconomical due to excessive prices of natural gas. 
• The next best option is to utilise India's abundant coal. However, due to the high ash percentage of Indian coal, most internationally accessible technology will not be adequate.

About NITI Aayog's 'Methanol Economy' programme

• For day-to-day needs, people are dependent on a finite fuel energy source (fossil fuels), which is not only causing irreparable damage to human life and health and taking a toll on the environment. 
• In this regard, NITI Aayog’s  'Methanol Economy' programme aims to reduce dependency on fossil fuel and provide a sustainable alternative to conserve the environment.

About Methanol

• Methanol is a low carbon, hydrogen carrier fuel produced from high ash coal, agricultural residue, CO2 from thermal power plants and natural gas.

'Methanol can replace both fuels, petrol and diesel in 

• Transport sector (road, rail and marine).
• Energy sector (comprising DG sets, boilers, process heating modules, tractors and commercial vehicles).
• Retail cooking (replacing LPG [partially], kerosene and wood charcoal).

Fossil Fuels

• Fossil fuels are non-renewable sources where stored energy is released through combustion, such as coal, natural gas, petroleum and they account for almost 80% of energy used worldwide. 

How can it help to bring down GHG?

• Blending of 15% methanol in gasoline can result in at least 15% reduction in the import of gasoline/crude oil. 
• This would bring down GHG emissions by 20% in terms of particulate matter, NOx, and SOx, thereby improving the urban air quality.
• Other sources like solar and electrical energy are also emerging as alternative energy sources to support our manufacturing and transportation needs. 

About methanol economy programme

• NITI Aayog's 'Methanol Economy' programme is aimed at reducing India's oil import bill, greenhouse gas (GHG) emissions, and converting coal reserves and municipal solid waste into methanol.

Objectives of Methanol Economy programme 

• The Methanol Economy will also create close to 5 million jobs through methanol production/application and distribution services.
• Rs 6000 crore can be saved annually by blending 20% DME (Di-methyl Ether, a derivative of methanol) in LPG. 
• This will help the consumer in saving between Rs 50-100 per cylinder.

Important Regulations 

• The Bureau of Indian Standards has notified 20% DME blending with LPG.
• M-15, M-85, M-100 blends have been issued by the Ministry of Road, Transport and Highways. 
• Test standards and plans for the M-15 blend are being developed in consultation with the Indian Oil Corporation Limited, Automotive Research Association of India and Society of Indian Automobile Manufacturers. 
• In the railway sector, RDSO is working towards blending methanol in the range of 5-20% through direct fuel injection in locomotives.