Issue link: http://read.ca.pwc.com/i/346337
Up front Summer 2014 23 burning versus some of the petroleum products," Floren explains. As environmental concerns become more critical, methanol is part of the solution. In China, for example, fuel blending (mixing methanol with gasoline) helps reduce emissions and pollutants. And at concentrations of up to 15 per cent, methanol can be used in any car, with no retrofitting required. "The amount of methanol being used in China today, just for gasoline blending, is about seven million tonnes out of a 57-million-tonne global market," Floren says. "The demand growth there is just exponential." Evolving environmental regulations present opportunities elsewhere. In Northern Europe's Baltic region and on the coast of North America, sulphur emission restrictions due to take effect in 2015 will require ships to use cleaner fuel. For ships operating in the region, there's a choice to make. "You can put scrubbers on the stacks, but it's very expensive and takes a lot of dry-dock time," Floren says. "Liquefied Innovation gap While most CEOs in the energy sector want to improve their company's ability to innovate, only a minority has already started. 17th Annual Global CEO Survey: Key findings in the energy industry (PwC, 2014) Download the full report | www.pwc.com/ceosurvey inSightS online Develop an innovation ecosystem Alter research and development, and innovation capacity Change technology investments 41 % aspire to 53 % aspire to 24 % have started or completed changes 49 % aspire to 29 % have started or completed changes "Pretty much everything in this room would have methanol in it," says the three-decade chemicals industry veteran. "So it's a building block." Historically, global gross domestic product drove methanol consumption, with Western industrialized economies accounting for a disproportionate share. Economic mobility was the major growth engine: as people become more affluent, they consume more products – cars, homes and furniture, for example – that require the chemical. The methanol market has traditionally expanded between three and five per cent annually. "But what's more exciting now are the applications for energy," says Floren, who became CEO in January 2013 after more than a dozen years with Methanex in management roles that included Senior Vice-President, Global Marketing and Logistics. Ten to 20 years ago, use of methanol as an energy source comprised about 20 per cent of global demand for methanol; today it's about 40 per cent, and it will probably make up half of global demand by 2018. The reason? First, the cost of oil has risen steeply relative to the price of natural gas, methanol's primary feedstock. For years, the ratio ($barrel of oil versus $mmbtu for natural gas) was approximately 10:1 for oil and natural gas, respectively; today, Floren notes, it's more like 25:1. However, that isn't the sole factor driving increased use of methanol fuel. "Methanol is very clean- natural gas works from a new build perspective, but it's challenging and costly to retrofit a ship to run on it. You can use marine gas oil, which is very expensive and may be in significant demand in the coming years. Or you can use a product like methanol." A ship retrofitted to run on methanol can also use less-expensive bunker oil when feasible. "When you're inside an area that has these restrictions, you can run on a 95-per-cent methanol and five-per-cent bunker fuel blend and meet the air-quality standards. And when you're outside, you can run 100-per-cent bunker," Floren says. "You have what we call a dual The leaders A Methanex plant in trinidad and tobago.