Could the production of European chemicals be achieved without naphtha and steam crackers? What alternative pathways could be viable in the future?

Over the next few decades, naphtha steam cracking will remain the dominant and most efficient process in the European chemical industry. However, naphtha is produced from crude oil, which is linked to several problems: (1) climate change, especially from Scope 3 emissions; (2) a linear instead of a circular economy; (3) most innovation taking place in other areas than crackers; (4) a failure to achieve resilience and strategic autonomy; and (5) Europe’s inability to compete with other regions of the world that have better access to cheaper crude oil and naphtha. Furthermore, (6) renewable naphtha produced from biomass, waste or CO₂ is very expensive (2–3 times more expensive), and (7) other pathways than naphtha and steam crackers are often more efficient for these alternative renewable feedstocks.

These are seven good reasons to discuss what alternative pathways could be viable in the future of Europe’s chemical industry and how they could be implemented. This paper mainly focuses on methanol, ethanol and biodiesel. Before delving into these topics, two brief comments on ammonia production, biotechnology and biomanufacturing and electrochemistry are provided.

Future ammonia production

In the long term, ammonia will probably be produced mainly from green hydrogen and air. However, these pathways are not economically feasible today. With technological progress and scaling up, these pathways could become competitive in the medium and long term. China is a forerunner in this area with solar hydrogen, using the European certification systems (ISCC PLUS and ISCC EU) to cover European requirements: ”Ammonia made from green hydrogen is already being produced at industrial scale and will cost the same as grey ammonia in the near future“.¹

What does this mean for Europe? Europe must keep green ammonia firmly on the agenda and invest in solar hydrogen and ammonia production in southern Europe, North Africa and the Middle East, where the economic conditions are comparable to those in China’s Gobi Desert. Otherwise, we will be forced to import green ammonia from China in the future.

Biotechnology and Biomanufacturing

Biotechnology and biomanufacturing can be used to provide renewable drop-in solutions that can replace fossil-based products in the existing chemical industry’s value chains. However, they also offer access to new intermediates and products beyond existing processes in today’s fossil-based chemical industry, particularly for fine and speciality chemicals, detergents and body care products, as well as for polymer production. For example, several organic acids and alcohols can only be produced efficiently from biomass, primarily by fermenting sugars, but also oil, fats and methanol. In the long term, new biotechnology and biomanufacturing pathways could replace about 20-30% of fossil-based processes and products in 2050². CO₂ emissions from fermentation can be captured and used as a chemical feedstock in a process known as carbon capture and utilisation (CCU).

Beyond the C1 and C2 platforms, bio-based C3 (e.g. lactic acid), C4 and C5 already play a structuring role in EU bio-based value chains. This shows that part of the future chemical industry could be based on direct bio-based intermediates, reducing the need for olefins, syngas or cracker-type pathways.

Electrochemistry

Electrochemistry is a very promising technology. The main question is whether it can be scaled up for a wide range of organic bulk commodities. Electrochemistry is already established on a global scale for some commodities, such as Cl₂, NaOH and H₂ from NaCl via the chlor-alkali process and acrylonitrile dimerisation to adiponitrile (a nylon precursor). Several commodity oxidation and reduction processes (e.g. benzylic oxidations to aromatic aldehydes, CO₂ reduction to ethylene or carbon monoxide) are already being carried out in pilot and commercial electrochemical plants. Electrochemical CO production paves the way for sustainable aviation fuel and broader chemicals production via coupling to green hydrogen to form syngas.

The open question is how quickly these pathways can be scaled up under realistic economic conditions. Whether electrochemistry becomes mainstream depends on power prices, stack durability and plant integration rather than fundamental scalability.

Methanol

Methanol is already today a key product in the chemical industry. It is mainly used for producing chemicals (>80%): methanol-to-olefins (MTO) (30.5%), formaldehyde (23.3%), MTBE (10.2%), acetic acid (7%), chloromethanes (2.2%), MMA (1.7%), methylamines (1.6%) and others (4.8%, dimethyl terephthalate, polyesters, purified terephthalic acid (PTA), chlorine dioxide…), as well as fuels and fuel additives (18.8%).³ The use of methanol for producing polyethylene and polypropylene via MTO has grown significantly worldwide, increasing from almost zero ten years ago to 25 Mt in 2019.⁴

The global methanol industry has undergone dramatic changes this century as demand has more than doubled from about 50 Mt in 2000 to about 100 Mt in 2020. A large part of that growth came from China through methanol production from coal. The changes have included a shift in regional demand, the development of new end uses, and the emergence of new feedstocks and production centres. Demand is expected to increase to 500 Mt by 2050, covering around 15% of the global chemical industry’s expected carbon demand⁵. Currently, there are around 340 methanol plants in operation with a total capacity of nearly 140 Mt/y.⁶

Around 98 million tonnes (Mt) are produced per annum, nearly all of which is produced from fossil fuels, either natural gas (65%, grey methanol, with CCS blue methanol) or coal (35%, brown methanol), the share of biomass derived methanol is below 1%⁷. New data show already a share of 1-2% and a CAGR from 2025 to 2032 for green methanol >30%⁸.
Renewable Methanol supports resilience and strategic autonomy

Renewable methanol can be produced from a variety of sustainable feedstocks, such as

• Lignocellulosic biomass via gasification to produce syngas, which is then converted into methanol; in many forecasts this is the most promising pathway for the large-scale utilisation of biomass for chemicals,
• Plastic waste, biowaste and mixed organic waste can be gasified to produce syngas and then methanol, thereby keeping the carbon in a loop.
• Biogas/biomethane reforming to methanol,
• Direct synthesis of methanol from fossil or biogenic CO2 and green hydrogen.

The Methanol Institute (MI) has partnered with Finland’s GENA Solutions Oy on the development of a robust database of the biomethanol and e-methanol projects pipeline⁹. As of March 2026, the database tracks 263 renewable methanol projects globally, with a total announced anticipated capacity of 48.5 Mt by 2031. The total projected capacity of all e-methanol projects is 23.8 Mt by 2031, while the total capacity of all biomethanol projects is 24.7 Mt, respectively.

Will China win the race?

China is actively implementing a large volume of green methanol plants and a green methanol grid to supply the production of green fuels and chemicals.10 China’s green methanol production is projected to exceed 5 million tonnes by 2027, capturing 40% of the global market share by 2030 and positioning the country to become the world’s largest supplier; production of green methanol is expected to reach 120 million tonnes by 205011. As costs decline and standards mature, green methanol is expected to be widely adopted in the shipping and chemicals industries , becoming cost competitive or even cheaper than green naphtha routes.

For large MTO plants with a capacity of 1 Mt/y the capital intensity could be reduced to €1,800 per tonne per year.

For future methanol production costs from different feedstocks, please take a look to the appendix.

Potential of Methanol as Feedstock for the Chemical Industry

In addition to existing methanol use, renewable green methanol could also potentially replace most petroleum-based hydrocarbons and petrochemicals, either directly or through methanol derivatives, for a potential market requiring billions of tonnes of methanol per year. Production of polyolefins (MTO) and aromatics (MTA, BTX) from renewable methanol could, for example, be greatly expanded. This would facilitate the transition to a sustainable circular green economy where renewable methanol is uniquely positioned as a future-proof chemical feedstock.

In 2005, Nobel Prize winner George Olah envisioned renewable methanol as a cornerstone of future fuel and chemical production. Summarised as the methanol economy, this concept leverages the versatility of methanol: it can be used directly as a fuel or as a chemical building block for producing olefins, aromatics, and other high-demand products.^{12, 13}
In the chemical sector, methanol has the potential to replace nearly all fossil-derived naphtha as a feedstock for chemicals production. Conventionally, naphtha is cracked into olefins (ethylene, propylene) and aromatics (benzene, toluene, xylene, BTX). Methanol-to-olefins (MTO) and methanol-to-aromatics (MTA) technologies enable methanol to serve as the primary feedstock for these chemicals, offering well-studied economic and environmental benefits. The methanol-to-aromatics (MTA) process is a proven route for producing benzene, toluene, and xylenes (BTX). The key difference is that methanol does not directly produce 1,3-butadiene and other C4 molecules such as isobutylene and butenes. These four-carbon molecules are a major byproduct of naphtha steam cracking and are critical monomers for synthetic rubber, but are not part of the standard product slate from MTO or MTA processes. 1,3-Butadiene can be, however, more easily derived from ethanol.

Ethanol

Similar to methanol, ethanol can serve as a renewable platform to essentially the same “building blocks” (olefins and aromatics) that are the foundation of the petrochemical industry.

Ethanol (C₂H₅OH) is an excellent building block. It can be:

• Dehydrated to form ethylene.
• Converted to butadiene via the Lebedev or Ostromislensky processes.
• Transformed into aromatics like benzene, toluene, and xylene (BTX) through ethanol-to-aromatics (ETA) processes.
• Also ethanol has a wide range of direct applications: solvents, acetaldehyde, acetic acid, ethyl acetate, diethyl ether, ethyl chloride and many more
  

Ethanol is produced via fermentation of biomass (sugars) or from CO₂/CO. Today, 99% of ethanol is produced from biomass (bioethanol), with a small proportion produced from CO₂/CO and green hydrogen (e-ethanol).

Bioethanol has a high strategic importance in Europe and there are already huge capacities for bioethanol in the European fuel market (2024: 5.41 million tonnes¹⁴). However, these capacities are at risk because gasoline demand is expected to decrease significantly until 2050. The bioethanol fuel industry is fighting for survival. Which capacities will survive? A rough estimation shows that around 20% of the European demand for ethylene could be met by existing European bioethanol plants. The challenge for policymakers is to support the transformation of the bioethanol industry from fuel producers to suppliers of the chemical industry, for example by introducing bio-based ethylene quotas. Otherwise, all the innovation and investment will have been in vain.

Biodiesel

The biodiesel industry is also facing a decline in demand for its products as fuel. However, one German company has reached a milestone by introducing biodiesel to the chemical industry: In November 2025 Verbio was awarded the ICIS Innovation Award for the “Best Product Innovation from a large company” for its revolutionary metathesis process. This first-of-its-kind olefin metathesis process converts highly abundant seed oil-based biodiesel into medium chain fatty acid derivatives – so far only available from coconut and palm kernel oil and always limited in quantity. By reacting rapeseed methyl ester with ethylene Verbio gets 1-decene and 9-decenoic acid methyl ester (9-DAME). Used as a feedstock for a hydrogenation plant, 9-DAME can be converted into C10 fatty alcohol (1-decanol) and C10 fatty acid methyl ester (capric acid methyl ester) commonly used medium range fatty alcohols and fatty acids, employed in many established surfactants. ¹⁵

Conclusions

In the coming years, oil crackers, particularly steam crackers, will continue to form the backbone of chemical production, although there has been a gradual shift away from crude oil towards lighter feedstocks, such as ethane, in recent years. At the same time, alternative processes, such as those based on synthesis gas, are becoming increasingly important, particularly methanol technology. These developments indicate an increasing diversification of the feedstock base, although petroleum will remain dominant in the medium term.
The global geopolitical situation is forcing countries to make their chemical production more resilient and autonomous. Therefore, it is good news for the chemical industry that there are alternatives to fossil-based cracker chemistry also suitable for Europe, particularly platforms based on methanol and ethanol. As feedstock, methanol and ethanol can cover almost the entire existing chemical sector and can be produced from various fossil and renewable sources.

Competitiveness is largely determined by the price of crude oil, political framework conditions such as CO₂ taxes, Scope 3 emissions and decarbonisation mandates, the importance of resilience and autonomy, and the clarification and further development of alternative pathways. Presumably, the question will not be whether Europe uses more methanol in the chemical industry in the medium and long term, but rather where it is produced and from which sources. This is an opportunity for us to exert our influence. Let Europe be the place for green chemistry.

_{¹ WinGD, Envision 2026: Renewable Fuel Economics – An OPEX illustration based on current costs. https://wingd.com/news-media/brochures-papers/f23dp2re/wingd-envision-energy-renewable-fuel-economics-report.pdf
^{2 Carus, M. et al. 2025: Is there Enough Biomass to Defossilise the Chemicals and Derived Materials Sector by 2050? – A Joint BIC and RCI Scientific Background Report. DOI No.: https://doi.org/10.52548/PIRL6916
3} International Centre for Sustainable Carbon 2022: Methanol Production and Markets. https://www.sustainable-carbon.org/report/methanol-production-and-markets/
⁴ IRENA AND METHANOL INSTITUTE 2021, Innovation Outlook : Renewable Methanol, International Renewable Energy Agency, Abu Dhabi.
⁵ Kähler, F. et al. 2023: RCI Carbon Flows Report: Compilation of Supply and Demand of Fossil and Renewable Carbon on a Global and European Level. DOI No.: https://doi.org/10.52548/KCTT1279
⁶ International Centre for Sustainable Carbon 2022: Methanol Production and Markets. https://www.vgbe.energy/wp-content/uploads/2022/09/Methanol-production-and-markets-ICSC-322-Exec-Sum.pdf and https://www.sustainable-carbon.org/report/methanol-production-and-markets/
⁷ IRENA AND METHANOL INSTITUTE 2021, Innovation Outlook : Renewable Methanol, International Renewable Energy Agency, Abu Dhabi.
⁸ DataM Intelligence 2025: Green Methanol Market Size, Share Analysis, Growth Insights and Forecast 2025-2032. https://www.datamintelligence.com/research-report/green-methanol-market
⁹ RENEWABLE METHANOL, https://methanol.org/renewable/
¹⁰ Why China Is Winning the Green Methanol Race. https://industrydecarbonization.com/news/why-china-is-winning-the-green-methanol-race.html
¹¹ World`s Largest Green Methanol Project Successfully Validated in China. https://www.bloominglobal.com/media/detail/worlds-largest-green-methanol-project-successfully-validated-in-china
¹² George A. Olah, Alain Goeppert and G. K. Surya Prakash: Beyond Oil and Gas: The Methanol Economy. Wiley-VCH, Weinheim 2006
¹³ Kolmeijer, H. et al. (2026): A feasible methanol economy for a green future, DOI: 10.1039/D5GC04615G Green Chem., 2026, 28, 174-185
¹⁴ ePure 2025: Key figures 2024, https://www.epure.org/wp-content/uploads/2025/09/250908-DEF-PR-European-renewable-ethanol-Key-figures-2024.pdf
¹⁵ Verbio 2025: How European biodiesel will help the surfactant industry, https://www.epure.org/wp-content/uploads/2025/09/250908-DEF-PR-European-renewable-ethanol-Key-figures-2024.pdf https://verbiolifechemicals.com/company/news/detail/how-european-biodiesel-will-help-the-surfactant-industry}

Author

Michael Carus

Source

nova-Institute, original text, 2026-05-28.

Supplier

European Union
nova-Institut GmbH

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