The agreement involves Taebaek City, Plagen, Korea East-West Power, Hyundai Corporation, Ssangyong E&C, Optimum Trading, Hanbit Energy, LF Energy and Infrastructure Frontier Asset Management and is aimed at the procurement of raw materials, manufacturing, O&M and EPC of the plant, purchase of the green methanol produced, procuring carbon credits and project financing.
Under the agreement, the first commercial-scale green methanol plant in Korea will be built in the former coal mining city of Taebaek, which will be transformed into a carbon-neutral clean energy centre.
Korea National Coal Corporation closed its Jangseong Mine in Taebaek City in June, and people have been leaving the city over several years during the period of decline of the mine, with the population now numbering 38,702 whereas it was 120,000 some twenty years ago.
“With the decline of the coal mining industry, which was a pillar of the local economy, the risk of urban extinction is rapidly spreading” said Mayor Lee Sang-ho. “The industrial base for green methanol production, which will be a touchstone for the realisation of carbon neutrality and balanced regional development, is an opportunity to open a new decade.”
Taebaek City is considered to be an optimal location for green methanol production due to its abundance of forest residues and renewable energy (wind power) infrastructure. A preliminary feasibility study is currently underway, being carried out by the Ministery of Economy and Finance, at the site of the Jangseong Mine, focused on the construction of a 100,000 tons per year green methanol industrial complex and a 22,000 tons per year green methanol production plant.
“As the coal mining industry, which was a pillar of the local economy, is declining, the risk of the city's disappearance is rapidly spreading” added Mayor Lee Sang-ho. “The base for green methanol production, which will be a touchstone for the realisation of carbon neutrality and balanced regional development, which are big government policies, is an opportunity to open a new decade.”
Government support is expected to enable the construction of the plant to proceed smoothly. It will produce hydrogen and carbon monoxide using forest residues, through a catalytic chemical reaction with water vapour in a high-temperature system of over 800 degrees. This will then be synthesised to produce green methanol. Compared to grey methanol, produced from coal or petroleum, each ton of green methanol displaces 5.5 tons of carbon dioxide, securing US$41 of carbon credits.
The International Maritime Organisation (IMO) has adopted the 2023 Greenhouse Gas Reduction Strategy, aiming to reduce carbon emissions from international shipping, reaching net zero by 2050 and planning to introduce regulations from 2027. Global shipping companies have consequently begun to order methanol-powered ships fuelled by green methanol.
The South Korean Government announced cooperation with the United States to build the world’s first green shipping corridor at COP27 in 2022. The container ship and car carrier corridors between Busan-Ulsan Port and Seattle-Tacoma Port in the US are being promoted with the goal of a pilot in 2027. The green methanol produced in Taebaek City will be supplied as fuel for ships on the US-Korea Green Shipping Corridor.
The Ministry of Oceans and Fisheries is aiming to produce 500,000 tons of green methanol per year by 2030. 100,000 tons per year of that figure is expected to be produced in Taebaek City by 2030, representing 20 percent of the domestic green methanol production target, contributing significantly to the revitalisation of the local economy and national energy security, according to John Kyung, CEO of Plagen.
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