Scouring for alternative energy opportunities? One market that has generated attention is bio methanol, praised for its high performance and low emissions.
The global bio methanol market was valued at US$53 million in 2019, and it is expected to reach US$251.1 million by the end of 2026, according to Research Guru’s Global Bio Methanol Market Report. This represents growth at a compound annual growth rate (CAGR) of 24.5 per cent during 2021-2026.
Named ‘bio’ for its origins from a renewable source, bio-methanol is chemically the same as conventional methanol. One of its advantages is it reduces fossil fuel and greenhouse gas emissions compared to traditional methanol. Bio methanol has been successfully produced in lab-scale reactors.
As the market grows, more investing opportunities emerge. So far, there are already a few engaging performers worth checking out ….
First up is Methanex (TSX:MX), which manufactures and sells methanol.
Customers of this Vancouver-based company use methanol as a feedstock to produce end-products, including adhesives, foams, solvents, and windshield washer fluids. The firm also sells its products to the oil refining industry, where the methanol is blended with gasoline to produce a high-octane fuel or blended as a component of biodiesel. Methanex distributes its products through a global supply chain that includes the operation of port terminals, tankers, barges, rail cars, trucks, and pipelines.
Methanex played a role in the first-ever net-zero voyage fuelled by bio-methanol.
The dual-fuel vessel “Cajun Sun” successfully completed its run thanks to Methanex and its partnership with Mitsui O.S.K. Lines Ltd. (MOL).
The Cajun Sun was operated by Methanex’s subsidiary, Waterfront Shipping and chartered from MOL. It departed from Geismar, U.S., in January and arrived in Antwerp, Belgium, on February 4. By blending ISCC-certified bio-methanol that has negative carbon intensity with natural gas-based methanol, net-zero greenhouse gas emissions on a lifecycle basis were achieved for the 18-day trans-Atlantic voyage.
Waterfront Shipping pioneered methanol as an alternative marine fuel in 2016 when Methanex and MOL built the world’s first ocean-going methanol dual-fuel tanker, “Taranaki Sun.”
Methanex’s Senior Vice President, Low Carbon Solutions, Mark Allard, stated that the team was out to bring a tangible solution to transition towards net-zero emissions in the marine industry through this blended methanol product, using bio-methanol produced from renewable natural gas at the Geismar facility.
“As the world’s largest methanol producer, we are establishing a network of relationships with leading renewable natural gas suppliers and assessing other pathways, including carbon capture and storage and e-methanol, to provide solutions for the marine industry and other customers.”
MOL is headquartered in Tokyo, Japan and operates 800 vessels transporting resources, energy, raw materials, and finished products. Involved in shipping methanol since 1983, MOL owned the first methanol-fuelled ship in 2016 and acquired a 40 per cent stake in Waterfront Shipping in 2022.
MX stock is up 46 per cent year-to-date and has risen 12 per cent since this time last year.
Patriot Transportation Holding Inc. (NASDAQ:PATI) is a regional tank truck carrier in North America.
The Jacksonville, Florida-based company’s business consists of hauling petroleum-related products and dry bulk commodities and liquid chemicals. Patriot currently has 18 terminal and satellite locations spread across the states of Florida, Georgia, Alabama, and Tennessee. The company also provides delivery service in the liquid chemical and dry bulk business, primarily from distribution facilities or manufacturing facilities to the end-user.
In its Q1 2023 fiscal results, the company said its focus has remained squarely on increasing revenues to allow management to raise driver pay, improve its retention, and increase its margins, all of which were accomplished. Year-to-date, PATI stock is up 11 per cent.
Finally, Univar Solutions Inc. (NYSE:UNVR) manufactures and sells a variety of specialty chemicals and chemical-based products.
Operating out of the village of Downers Grove in DuPage County, Illinois, the company sells chemicals to a variety of end-users, including customers in the coating and adhesives, agriculture, chemical manufacturing, food ingredients, cleaning and sanitization, pharmaceuticals, personal care, and mining industries.
Univar also offers a range of services that include automated tank monitoring, chemical waste management, and specialty chemical blending.
In late February 2023, the company reported record net income of US$545.3 million compared to US$460.6 million in the prior year. Adjusted net income was US$569.6 million compared to last year’s US$381.1 million.
Speaking on this news for investors, Univar’s President, and Chief Executive Officer, David Jukes, explained that last year, the company reached high-water marks in its financial results, customer satisfaction, employee engagement, and safety.
“We believe our operating agility and deep industry expertise, coupled with our service model that puts the customer at the centre of all we do, is driving outstanding results. And we believe that our balanced capital allocation strategy, anchored to meaningful capital returns to shareholders, will enhance long-term shareholder value.”
He added that the company was also recently named to Newsweek’s list of America’s Most Responsible Companies in 2023.
“Our focus on environmental sustainability, social impact and good governance is just one way in which we are fulfilling our purpose and commitments to our people and communities.”
UNVR has moved 21 per cent since this time last year and is up 11 per cent year-to-date.
This market segment is fairly niche, but those companies advancing their reach in this business appear to be on track to see impressive dividends.
