Methanol has many desirable combustion and emissions characteristics, including:

• lean combustion characteristics
• low flame temperature (leading to low NOx emissions)
• low photochemical reactivity

It is also a liquid, which makes storage and handling much simpler than gaseous fuels.

At current and foreseeable prices, the most economical feedstock for methanol production is natural gas, especially natural gas found in remote regions where it has no ready market. The most common methanol fuel is M-85, a methanol-gasoline blend.

The greenhouse gas (GHG) reduction potential of methanol is dependent on the feedstock. Burning M-85 derived from methane results in total, lifecycle GHG emissions slightly lower than a gasoline vehicle. But lifecycle GHG emissions from wood or cellulose derived methanol are approximately 60% lower than gasoline.

Light-duty methanol vehicles have emissions of NOx and CO similar to gasoline vehicles. Emissions of VOCs are roughly half those of gasoline vehicles and lower ozone reactivity of the VOC results in lower ozone impacts. Emissions of formaldehyde (a primary combustion product of methanol) are higher than those from gasoline or other alternative-fueled vehicles but can be controlled with a catalyst.

The major barrier to widespread use of methanol is its high cost and price volatility. There is little prospect for it to become price-competitive with conventional fuels unless world oil prices increase greatly.