Technical progress of dimethyl ether and economic analysis of its substitution for diesel

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Dimethyl ether (DME) is the simplest fatty ether, also known as wood ether or methyl ether. It is primarily used as a propellant in aerosol products, as a refrigerant alternative to Freon, and as a solvent; it can also be utilized in the synthesis of chemicals, making it quite versatile in its applications. 1 Current market applications and future development of dimethyl ether: Currently, the global production capacity for DME is around 150 kt/a, with a production volume of about 100 kt/a; in China, the production capacity is approximately 10 kt/a. Currently, global DME consumption is mainly concentrated in the following areas. 1.1 Used as aerosol propellants, refrigerants, and foaming agents. After the 1960s, the aerosol industry experienced rapid development, and chlorofluorocarbons were primarily used as propellants in aerosol products. In recent years, people have gradually become aware of the destructive effect of chlorofluorocarbons on the atmospheric ozone layer, and have begun to use alternative substances. Research shows that dimethyl ether, as a substitute for chlorofluorocarbons, possesses properties such as non-corrosivity, non-toxicity, water solubility, and good solvency, making it an ideal aerosol agent. In addition, it has a low cost and is inexpensive, and has become a substitute for chlorofluorocarbons in civilian aerosol products in Western European countries. Furthermore, its tendency to liquefy easily has also drawn the attention of researchers, and many **technologies are being developed to use dimethyl ether as a substitute for chlorofluorocarbons as refrigerants. Dimethyl ether can also be used as a blowing agent for foam plastic products. Aerosols are currently the main sector for DME consumption; in 1995, the United States used approximately 12.8 kt of DME in this sector. 1.2 Dimethyl ether is used as a solvent and chemical raw material; it can also be used to produce chemical products such as dimethyl sulfate and dimethyl sulfide. 1.3 Dimethyl ether as a fuel: DME possesses the key properties of a fuel; its calorific value is approximately 64.686 MJ/m3. It contains oxygen in its composition, which enables complete combustion without the formation of carbon deposits or residual substances, making it an ideal clean fuel. However, at present, its application in the fuel sector is limited by issues such as high costs, limited research on production and application, and low enthusiasm for substitution. The largest potential market for DME applications in the future is as a substitute fuel for diesel. Currently, the global consumption of fuel for transportation is around 500 Mt. If significant breakthroughs are achieved in the use of DME as a substitute fuel, the demand for it will be enormous. Research progress on using 2 DME as a substitute fuel: DME can be used directly as a vehicle fuel, and its combustion performance is better than that of methanol. In addition to the advantages of methanol fuel, it overcomes the shortcomings of poor cold-start performance and acceleration characteristics. According to American sources, DME has a high cetane number, making it an ideal fuel for diesel engines. Some institutions in the United States have done extensive work on using DME as a substitute for diesel, conducting comparisons of their combustion performance. Test results on medium-duty trucks show that DME and diesel are comparable in terms of thermal efficiency and hydrocarbon CO emissions. Its nitrogen oxide emissions are about 25% lower than those of diesel. The emission standards meet those of California, USA. However, compared with the revised emission standards for passenger cars in the United States, some indicators have not yet been met, and further research on the application of DME is needed. The comparison data are shown in Table 1 (experimental data and standards for medium-duty trucks). Table 1 Comparison of DME fuel emissions and U.S. emission standards, in g/kW·h. Item: DME; U.S. standard: 2) CO: 3.50 vs. 1) 3.40; NOX: 0.57 vs. 1) 0.40; Non-methane hydrocarbons: 0.10 vs. 0.13; Particulates: 0.06 vs. 0.08. Note: 1) Values are for improved internal combustion engines. 2) It is the standard for diesel buses in the United States from 1996 to 2000. The Department of Automotive Engineering in the School of Energy and Power Engineering at Xi’an Jiaotong University in China has carried out extensive research, with the support of Ford Motor Company in the United States and the National Natural Science Foundation of China. By using DME as a substitute for diesel, it has been possible to achieve ultra-low emissions from diesel engines. Compared to diesel engines, the use of DME eliminates carbon soot emissions entirely; nitrogen oxide emissions are reduced by 50% to 70%, unburned hydrocarbons emissions are reduced by 30%, and CO emissions are reduced by 20%. These emission levels not only meet the European II and III standards but are also close to the emission standards that will be implemented in Europe in 2005 as well as California’s ultra-low emission standards in the United States. It is reported that a coal-based dimethyl ether plant with a capacity of 830 kt/a is planned to be built in Ningxia region of our country, and it is said to have passed the evaluation conducted by China International Consulting Corporation. The project plans to invest 4.78 billion yuan, attract foreign investment, and has signed a cooperation agreement with Canadian company McNair Technologies; the technology to be used is that of American company Aerodynamics Inc. The main advantage of this project is the raw coal, as the Lingwu mining area in Ningxia possesses coal resources with a very low ash content, very low sulfur content, very low phosphorus content, a low melting point, and good gasification properties, amounting to over 27,000 Mt. DME can also be used as fuel for combined cycle power generation units. Power generation systems generally use syngas as fuel. During periods of low power generation demand, syngas can be converted into DME products, which can then be stored for use during periods of high demand or for export. Its effect is similar to that of using methanol as fuel in combined-cycle power generation. According to reports, BP of the UK, together with Indian Oil Corporation and GAIL India, have decided to jointly build the world’s first large-scale DME plant in the Middle East. The product will be used as fuel for power plants, with a production capacity of 1,800 kt/year, and the total investment is estimated at around $500 million. Advances in 3DME production technology: The main industrial production methods for dimethyl ether are the methanol dehydration process and the direct synthesis from syngas. The methanol dehydration process was industrialized in the 1980s, and it can be further divided into the liquid-phase methanol method and the gas-phase methanol method depending on the reaction phase. The liquid-phase methanol process initially used sulfuric acid as a catalyst. This method offers advantages such as low reaction temperatures (below 100 °C), high conversion rates (90%), and good selectivity, but it also has disadvantages including severe equipment corrosion, significant wastewater pollution, and harsh operating conditions. This process has been abolished abroad. The gas-phase method uses catalysts such as crystalline aluminum silicate to carry out the gas-phase dehydration of methanol to produce dimethyl ether. This method was first developed successfully by Mobil and Esso companies; China’s Southwest Research Institute of Chemical Engineering and Shanghai Petrochemical Research Institute have also developed their own technologies. The reaction temperature for this method is higher than that of the liquid-phase method (above 200 °C), and the one-pass conversion rate of methanol (around 80%) is also lower than that in the liquid-phase method, although the production cost is similar. The technology currently used in the vast majority of devices worldwide is the vapor-phase dehydration method. The direct synthesis of dimethyl ether from syngas involves carrying out the reactions of synthetic methanol formation and methanol dehydration in a single reactor. This method is further divided into two types: the gas-solid phase method and the three-phase bed method. Compared with the methanol dehydration method, the one-step process has advantages such as a shorter process flow, lower investment costs, and reduced energy consumption, and it can achieve a higher one-pass conversion rate. According to reports, the one-step process for synthesizing dimethyl ether results in a cost that is about 25% lower than that of the methanol dehydration method. The main companies developing this technology abroad include Air Products and Chemicals in the United States and Topsфe in Denmark, among others; there are also reports of industrial plants for the one-step synthesis of dimethyl ether having been built. Research in China is also in its early stages; institutions such as Tsinghua University, Zhejiang University, the Southwest Chemical Industry Research Institute, and the Lanzhou Chemical Industry Research Institute are all engaged in research on this process. The pilot-scale production of dimethyl ether via a one-step process, developed jointly by the Lanhua Research Institute, Lanhua Fertilizer Plant, and Lanzhou Institute of Chemical Physics, has passed the technical appraisal organized by the former Sinopec Corporation, and industrial scale-up is currently underway. It is reported that the Southwest Chemical Research Institute has also successfully developed this technology and built multiple industrial plants, with a production capacity reaching tens of thousands of tons. The one-step syngas-based DME production technology developed by Zhejiang University has been implemented in a 1,500 t/a industrial plant at Hubei Tianli Company. The one-step syngas process is the future direction of development. 4 Economic Analysis of Dimethyl Ether as a Substitute for Diesel 4.1 Production Costs of Dimethyl Ether Abroad According to relevant foreign sources, based on the situation in the United States in 1998, the estimated investment cost for constructing a large-scale DME plant with an annual production capacity of 2,370 kt/a in the Gulf region of the U.S. is shown in Table 2. (To illustrate the proportion of raw materials in the total costs, the investment and cost figures for constructing the same plant in the Middle East are also included in Table 2 for comparison.) Table 2 Comparison of Investment Estimates for DME Production Technologies in the United States and the Middle East

**United States** **Middle East**
Methanol vapor dehydration technology Air Products’ one-step syngas technology Methanol vapor dehydration technology Air Products’ one-step syngas technology
Total investment amount / million USD: 1,131.39 37.81 224.51 013.0
Total plant investment: 844.36 98.19 28.77 67.9
Investment within the plant boundary: 645.15 37.07 09.75 90.7
Oxygen production: 225.0 Syngas production: 145.0 Methanol production: 584.5 DME production and purification: 60.6 167.0
Investment outside the plant boundary: 199.1 161.1 219.0 177.2
Other engineering investments: 211.1 174.5 232.2 192.0
Working capital: 75.9 65.2 63.75 3.1

Product cost / USD·t-1: 217 208 108 96
Cash cost: 177 175 645 9
Variable cost: 160 157 454 0
Net raw material cost: 130 151 293 6
Utilities: 30 51 64
Fixed cost: 181 171 181 18
Depreciation: 40 33 44 37

The plants using methanol dehydration technology in Table 2 are equipped with corresponding methanol production facilities; the methanol production technology employed is LuCheng’s low-pressure natural gas synthesis technology. The one-step syngas plant uses natural gas as the starting material. For methanol dehydration technology, if raw materials are purchased rather than constructing a dedicated methanol plant, building a plant of the same scale in the U.S. Gulf region would require an investment of approximately $78.7 million. When the methanol price is $168 per ton, the product cost is $267 per ton, which is $50 higher than the cost of products produced using a methanol production facility (267 – 217 = 50). As can be seen from the data in Table 2, natural gas prices have a significant impact on product costs. In the Middle East, where natural gas is inexpensive (around 0.14 yuan/m3), constructing plants of the same scale using the same methanol dehydration process results in a product cost that is 110 dollars per ton lower compared to the Gulf region of the United States, where natural gas is more expensive (around 0.74 yuan/m3). When the one-step syngas process is used, the product cost is reduced by approximately 112 dollars per ton, representing a reduction of around 50% in both cases. 4.2 Economic analysis of alternative diesel The product costs of the facilities shown in Table 2 are used as the basis for analysis. In the Gulf region of the United States, the price of diesel fuel in 1998 was 132 dollars per ton. The calorific value of 1.8 L of DME is equal to that of 1 L of diesel; therefore, DME becomes competitive only when its price is below 93.4 dollars per ton. In other words, considering the cost of methanol dehydration plants in the United States at 217 dollars per ton, DME is economically viable when the price of diesel exceeds 304 dollars per ton. It is clear that, at the current level of technology, whether in the United States or the Middle East, the lowest cost of DME is 96 dollars per ton; therefore, DME does not yet have an advantage over diesel in terms of cost. In areas where natural gas prices are high, the cost of raw materials accounts for a large proportion of total costs, and product costs are highly sensitive to changes in raw material prices; therefore, any future reduction in product costs relies on a decrease in natural gas prices. In areas rich in natural gas resources, where raw material costs are very low, depreciation costs are relatively high; thus, the scale advantage of DME plants has a significant impact on the cost of the products. In comparison with our country, its natural gas reserves are relatively limited, and the prices are relatively high. Undoubtedly, natural gas prices will be an important factor affecting DME costs. Since there are no similar facilities in our country, we use as a reference the investment costs and utility consumption associated with methanol dehydration processes in the United States. To build a DME plant with an annual production capacity of 2,370 kt/a in our country, 1,280 m3 of natural gas is required per ton of DME produced. Assuming that the price of natural gas is 0.480 yuan/m3 at the wellhead level for fertilizer manufacturers in our country, plus a purification fee of 0.040 yuan/m3, resulting in a total cost of 0.520 yuan/m3, the production cost of DME is approximately 1,527 yuan per ton (including taxes; this can be considered the minimum cost at which DME can be produced profitably). 1 ton of diesel and 1.41 tons of DME have the same calorific value. Since it is still unknown whether a consumption tax will be imposed on DME as a fuel in the future and what the tax rate will be, it is assumed for now that no tax will be levied. When the diesel price is 2,153 yuan per ton (including various taxes), the economic viability of the two options is the same; when the diesel price exceeds 2,153 yuan per ton, DME has a competitive advantage. In 2000, the average annual ex-plant price of 0# diesel by Sinopec Group was 2,613 yuan per ton, which was higher than 2,153 yuan per ton. It can be seen that DME has a certain competitive advantage at an annual level; of course, these figures are based on the low price of natural gas at 0.52 yuan per cubic meter. The production costs of DME and the diesel prices that achieve the same economic viability at different natural gas prices were studied, and the results are shown in Table 3. It can be seen that, in order to be competitive with the price of 0# diesel in China in 2000, the price of natural gas must not exceed 0.78 yuan/m3. Table 3: DME production costs for the methanol dehydration process under different gas prices, along with the corresponding critical diesel prices.
Natural gas price / yuan·m⁻³: 0.45, 0.52, 0.60, 0.70, 0.78
Total cost of DME (including taxes) / yuan·t⁻¹: 11,437, 15,271, 16,301, 17,571, 18,531
Corresponding critical diesel price / yuan·t⁻¹: 12,026, 15,322, 18,298, 22,478, 26,131
If a one-step syngas-based production facility is constructed, the investment and consumption figures are based on a plant with a capacity of 2,370 kt/year in the Gulf region of the United States. Assuming a natural gas price of 0.520 yuan/m³ and a consumption of 1,470 m³ of natural gas per ton of DME produced, the cost of DME is approximately 1,405 yuan/t. The diesel price that is competitive with this cost is 1,981 yuan/t; if the diesel price is higher than this amount, then DME offers economic advantages. If the cost of DME can compete with the average diesel price in 2000, which was 2,613 yuan per ton, then the natural gas price should not exceed 0.83 yuan per cubic meter. This price is 0.05 yuan/m3 higher than the competitive price of methanol dehydration technology units (0.78 yuan/m3). Clearly, the one-step syngas process technology has a greater competitive advantage. All of the above are based on an economic comparison, at several natural gas price levels, between the case where no consumption tax is imposed on DME and the diesel price (including consumption tax). If a certain consumption tax is imposed on DME as a fuel in the future, it will have an impact on the economic viability of using DME as a substitute for diesel. DME holds promising prospects in the fuel sector, and research in this area is in full swing. However, due to various factors such as the prices of crude oil and natural gas, technical maturity, and **relevant policies, the large-scale use of DME still carries a certain degree of uncertainty; it is expected that widespread adoption in this field will take some time. 5 Conclusion The one-step process for producing DME from syngas is the direction of technological development. Several companies have claimed to have developed one-step processes, but on a relatively small scale; the production technology for large-scale industrial facilities at fuel grade still needs further development and improvement. Whether DME can replace some of the traditional fuel markets depends on its cost-effectiveness. This is influenced by various factors, such as crude oil prices, coal or natural gas prices, fiscal and tax policies, and supporting infrastructure. In short, given that the DME market has not yet seen significant growth and the fuel sector has not been vigorously developed, the time is not yet right to build large-scale DME facilities. However, it is essential to be clear that DME holds extremely broad market prospects. Furthermore, in our country’s fuel market, the imbalance between diesel and gasoline has persisted for a long time, hindering the development and balance of the refining industry. Coupled with the use of ethanol-blended gasoline, this contradiction becomes even more prominent. Therefore, our country should strengthen research on using DME as a substitute for diesel in order to resolve this contradiction.