Economic feasibility and political risk of an e-methanol trade route between Côte d'Ivoire and Germany

The transportation sector is the largest contributor to overall carbon dioxide emissions in the European Union, particularly in Germany. The German Federal Environment Agency has proposed carbon-neutral e-fuels as a viable solution for the part of the transportation sector that cannot be completely electrified. However, producing e-fuels requires large amounts of water and electricity from renewable sources, such as solar energy. Those regions of the world with high solar energy potential often face water constraints and higher levels of political risk. To address these problems, this study offers an economic assessment of a novel technological approach, combining off-grid solar, direct air capture, and water electrolysis for sustainable water-conscious e-methanol production in arid regions. An extensive levelized cost analysis integrating political risk factors was conducted for a sample production site in Côte d'Ivoire. The results indicate that carbon-neutral methanol is not cost yet cost-competitive with fossil-based methanol (EUR 1.15/kg) but may become economically feasible by 2030 (EUR 0.74/kg) and 2050 (EUR 0.47/kg). However, the political risk may increase production costs by up to 17%, and thus could deteriorate the economic feasibility, calling for an effective risk management. Hence, various tailored mitigation strategies are proposed for enhancing the economic viability of the production and export of e-methanol. For the methanol industry this implies that West Africa may become a potential destination region for future investments, and for policymakers it implies that improvements in the institutional framework conditions are necessary to promote such investments.